Humans are social creatures. We want to connect and communicate. In my previous post I looked at virtual events in the age of social distancing. Benedict Evans wrote an excellent piece on forced experiments on a large scale as a result of Covid-19. The first mass experiment is remote working. The tools for working from home went from a nice-to-have, to must-have, almost overnight.
The second forced experiment, I believe, is consumer entertainment, or how we fill our leisure time outside of work (but still at home). As a fund that invests in Entertainment tech and gaming, we at Remagine Ventures are naturally interested in this. What does this second experiment mean? Livestreaming is set to be a big winner. In this post, I cover the rise of why this is the case, and offer lots of examples of verticals and applications as well as opportunities for startups and streamers.
Livestreaming is increasingly key to work and play
Pre-Covid-19, livestreaming had been mostly associated with gaming. But as A16Z points out in the “The rise of lifestyle streamers“, a new audience has emerged, hungry for non-gaming content. On Twitch, for example, the fastest growing category is “Just Chatting“. IGTV (Instagram live) is where the ‘influencers’ go live to feed pop culture, and Youtube Live offers a bit of everything.
The appetite for livestreaming during lockdown has grown to:
Work – Working remotely is pretty much ubiquitous now for knowledge workers, and teams, customers and suppliers still need to connect. Zoom went from 10 million users at the end of 2019 to 200 million at the end of March – all in a matter of three months (though its worth saying that its also seen a number of organisations and governments ban its use in recent days over security concerns). Google reported that it is adding 2 million users to Hangouts every day and had over 2 billion minutes of chat in March, growing 60% day-over-day. Almost overnight, webinars, internal communications, and product demos suddenly switched to livestreaming.
Education – Universities are facing a tough challenge adapting to online teaching. Some business schools have had students make demands for refunds while others have announced that they may not reopen until Jan 2021. In “How Covid-19 is Accelerating the Disruption of Higher Education“, Scott Galloway predicts that the future of high education is far from MOOCs or Masterclass, but it’s certain that livestreaming will be part of it. Harvard University has started offering 63 free courses during Covid-19. For K-12 education, livestreaming is more focused on targeted activities (football, piano, science).
Play – Livestreaming and gaming go hand in hand. Twitch, Mixer, Caffeine, Facebook Live and Youtube live are filled with gaming streamers. Some of them, like Ninja or Shroud became huge stars, making over $500,000 a month. People are craving all sorts of entertainment, to take their mind off things, so a new crop of streamers is gaining popularity – more on those below.
Social – when Epic Games acquired HouseParty, the ‘face to face’ social network, it had yet to find its moment. But quarantine has accelerated adoption, from 130,000 monthly installs to 50 million signups in the last month, more than a 70x increase in the rate of downloads, according to Houseparty’s CEO, Sima Sistani. The live group interaction, coupled with excellent video quality shot the app to the top of the social category.
The ascent of livestreaming
Livestreaming is by no means new, but the pandemic and quarantine serve as a catalyst to rapid change and adoption. Adam Fisher described this well:
“Compelling opportunities are likely to appear in previously stubborn markets that have resisted fundamental technology change for too long. The crisis may dislodge whatever was blocking technology adoption, forever altering the trajectory of markets such as telemedicine and other types of business infrastructure and service modernization”Adam Fisher, Bessemer, “Letter to a young investor“
Netflix is great, but as consumers don’t have sports or late night shows to watch on TV, streaming may now feel too pedestrian. Livestreaming of all sorts became a possible substitute, as people crave a close substitute to in-real-life engagement. Netflix knows it is competing for viewers attention, and I’ve speculated on VC Cafe in the past that the Streaming Wars might escalate from the streaming platform into live content. Coming back to Twitch as an indicator, DJs and musicians are entertaining fans from their living rooms.
Livestreaming is relevant across categories and age groups:
- Music/ live streamed concerns of all sorts – from big acts to emerging artists, musicians are turning to live streaming to connect with their fans.
- Watch people sleep – people are gaining thousands of followers and literally make money in their sleep by letting others watch them asleep on TikTok live. New York Times has the story.
- Charity fundraising – most sporting charity events are off, so people have found creative ways to raise money. Like the inspiring story story of 99 year old Capt Tom Moore who raised £14 million for the NHS by walking 100 lengths of his back yard.
- Live entertainment shows – HQ Trivia is back from bankruptcy with an unnamed buyer and regular programming is set to return soon. In the past, Trivia attracted hundreds of thousands concurrent viewers for its interactive game shows, paying cash prizes for the winners.
- Video gaming – according to a recent report by Verizon, video game play in the US increased by 75% in peak hours. Twitch, Mixer and Caffeine are perhaps the most well known for hosting live gaming streams, but Google and Facebook are picking up as well – Facebook Gaming launched the ability to host tournaments, and Google is giving two months free for Stadia, its cloud gaming platform, which also offers a one-click to stream. We made two investments in this space at Remagine Ventures – Madskil and Novos.
- Live fitness classes – from Peloton to to PE with Joe Wicks on Youtube, live fitness is picking up in popularity and there seems to be a grow.
- Clubbing – people are paying real money to get into Zoom nightclubs.
- Goats – you can pay $100 to invite a Goat or a Llama to join your next corporate Zoom call with Goat2Meeting.
- Professional content – Webinars and more webinars how to deal with the impact of Covid-19 on______ (fundraising/ hiring/ sales/ marketing/ pick your word) seems to be a popular topic we can’t get enough of, but there are plenty of chats offered on a variety of topics on a daily basis. How to find them all is the question I tried to answer in my previous post.
- Patreon has seen a surge in registrations. It grew from 150,000 total users by 30,000 (20% of its total base) in March alone, according to the Patreon blog.
- Eating – when I was in Taiwan and Vietnam over the summer, I noticed several people livestreaming their meals (especially hot pot!). In Korea it’s a popular thing. Restaurants in Wuhan are now using live streaming models to signal customers that it’s safe to come in again.
- Porn – Pornhub has made their premium tier free and strippers are moving their business to online streaming to earn an income from home.
Big opportunities remain
As social distancing is here for the next foreseeable future (some estimates say 12-18 months), travel restrictions and bans on public gatherings will make a ‘return to normal’ a gradual process. So where are the opportunities for startups?
Kids entertainment – from my own experience doing remote lessons for our kids (fitness, piano), this is a need for both kids and parents.
Live e-commerce – livestreaming e-commerce sales are already very popular in China, and one could imagine a QVC for the Gen Z generation.
Combatting loneliness/ dating – you may have read ‘my girlfriend is a chatbot‘. As dating is happening online, people will be looking for companionship online, in all forms.
Therapy/ mental health – some of the side effects of isolation are anxiety, increase in addictions, divorce, domestic abuse. More people will require help and while the category is already crowded, opportunities remain.
Until today, the main beneficiaries of the rise of livestreaming are the platforms, generating revenue from advertising, revenue share on subscriptions, etc, and the top creators who managed to make this into a living.
The rapid adoption of livestreaming during the pandemic will create new winners – tech startups supporting streamers, engagement tools for viewers, better monetization models, and hopefully can ‘win’ too: in the form of mass training, entertainment and education. If you’re building something in this space and could benefit from our feedback, please sign up to the Remagine Ventures office hours.