The government in China has been cracking down on gambling for several years now. In light of the country’s strict laws on gambling activities, law enforcement and other agencies constantly monitor different activities and investigate cases of illegal gambling or other gambling-related crimes.
Amid the crackdown on gambling, online content platforms have reportedly taken action by removing live streaming features like lucky draws, actions that slashed their revenues for the latest quarter. As reported by Reuters, Tencent Music, as well as NetEase’s Cloud Music, have excluded live streaming features from its offering.
Analysts have previously voiced their concerns that such live-streaming features may be used for illegal gambling. However, none of the companies have officially addressed such concerns but rather released other reasons for the halt of certain live-streaming features.
For example, Tencent confirmed that the recent change seeks to make it more “music-centric.” Yet, upon releasing its second quarter of 2023 results earlier this month, the company confirmed that Tencent Music has seen a decline of 24% year-over-year in its social entertainment revenues, where the live streaming segment is positioned.
Similarly, Tencent’s game broadcasting platform that resembles Twitch, Huya, also posted a decrease in its social entertainment revenues for Q2 2023 that dipped by 16% year-over-year. Addressing the changes to its live streaming features, Huya said it sought to elevate the experiences for its customers and create a “healthier” atmosphere.
On the other hand, NetEase’s Cloud Music, a popular music streaming service, reportedly also excluded some live streaming features. The change was described as an improvement of its “internal controls mechanism” in combination with “stricter monitoring over irregular user activities.” Unsurprisingly, Cloud Music’s social entertainment revenue in Q2 this year also fell by 24% when compared to the corresponding period in 2022.
The Crackdown on Gambling Continues While the aforementioned companies haven’t officially linked China’s ongoing crackdown to the halt of some streaming services, analysts predict further impact. 86Research’s analyst, Charlie Chai, predicted that the ongoing efforts against gambling may eliminate between 20% to 70% of the revenue from live streaming. According to him, this depends on the popularity of each of the streaming platforms.
“We expect the anti-gambling crackdown… to eliminate 20% to 70% of live streaming revenue, depending on each platform’s exposure.“
Charlie Chai, analyst for 86Research Earlier this summer, the Payment and Clearing Association in China confirmed that some $277 million in payments for illegal gambling platforms were blocked for last year alone. The report reaffirms the dedication of the country to fight against such activities at all costs and reduce the money leaking into illegal gambling.