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Livestream Shopping Deep Dive 2020, BDMI

Livestream Shopping Deep Dive 2020, BDMI

Rachel Lauren, VC Investor at BDMI, explores the livestream (shopping) market globally. The market has exploded in China, and a comparative analysis reveals how the market may evolve in the US.

Rachel Lauren

December 10, 2020
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  1. December 2020
    Livestream Shopping Deep Dive
    Rachel Lauren

    View Slide

  2. 2 December 2020 · Bertelsmann
    Exploring the State of Livestream Shopping
    Executive Summary
    Section I: Livestreaming Overview
    Section II: Drivers
    • Driver 1: Transaction vs. Ads
    • Driver 2: Cultural Habits
    • Driver 3: Rise of Middle Class
    • Driver 4: Mobile Payments
    • USA Growth Drivers
    Section III: The Livestream Influencer
    Section IV: The Technology Ecosystem (USA)
    Section V: The Livestream Advertiser/Brand
    Section VI: Summary and Capital Markets
    Table of Contents
    This report presents BDMI’s perspective on the current state of the livestream
    shopping market and outlines key trends and themes to watch as the industry
    continues along a path of growth and technological advancement.
    The report sets the stage with an overview of growing global engagement,
    demonstrating livestream shopping’s emergence in public consciousness. A
    comparative analysis of the Chinese vs. USA ecosystem will follow, detailing the
    status quo with observations on emerging trends and the role of technology and
    platforms.
    The report concludes with an overview of capital markets activity related to
    livestream shopping, exemplifying the growing focus on the space by creatives,
    brands, entrepreneurs, and strategic & financial investors.
    The Viewer
    The Brands
    The
    Influencer
    Technology &
    Platforms

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  3. 3 December 2020 · Bertelsmann
    Focused
    Investment
    Theses
    • Next Gen Media
    • Consumer Brands
    Select Fund-of-Funds Investments
    • Enterprise Tech
    • Fintech
    Presented by BDMI, Seed Through Series B Corporate Venture Capital Fund
    BDMI will continue to be active investors in e-commerce and digital media
    Active Early
    Stage
    Investors
    • Series A-B (check size $1m-$5m), leading or following; Seed ($100k – $300k)
    • Covering North America, Europe, and Israel
    • Currently investing out of $150m Fund III
    Financial &
    Strategic
    • Financially-motivated, single-LP venture investor
    • Provide strategic value to both portfolio companies & parent company (global
    media, services, and education company Bertelsmann)
    Collaborative • Syndicate friendly, co-investing with many traditional and strategic VCs
    Team
    Select Investments
    Urs Cete
    Managing Partner
    Keith Titan
    Partner
    Sim Blaustein
    Partner
    Carmen Rivera
    Assistant
    Brendan Brits
    Associate
    Avinash Satish
    Finance Manager
    Rachel Lauren
    Analyst
    Commerce -focused
    investments
    Sold to Oracle
    Q4 2019
    Sold to The Chernin Group
    Q4 2019
    Sold to Connexity
    Q2 2020

    View Slide

  4. 4 December 2020 · Bertelsmann
    BDMI’s Top Livestream Shopping Theses
    1
    The US is 5 years behind China in livestream (shopping), though accelerated by COVID-19
    China’s primary business model for Internet companies has historically been transactional, whereas US companies have relied on ads. As a result, media
    formats in the US have tended to skew towards long-form video and images, as advertising was more difficult to crack in live formats. In China, however,
    livestreaming evolved much earlier given user’s ability and willingness to pay directly for influencer content, as well as the payment integrations/infrastructure
    to do this seamlessly. As US media shifts towards business models outside of advertising (commerce, tipping, subscription), livestreaming becomes a more
    interesting and revenue-generating segment. In addition, with more commerce and entertainment consumption shifting online due to the COVID-19 pandemic,
    familiarity with streaming and viewership has followed.
    3
    Following success in China, brands will look to expand to livestream shopping as a distribution channel
    Socially-interactive livestreaming and gaming are among the most popular new content mediums for younger audiences, and commerce integrations have
    proven to be effective in these environments. Between Twitch / eSports / Fortnite et al., we’ve seen a strong consumer appetite for shared live experiences
    built on audience engagement, gamification, and social interaction. These platforms are monetizing live engagement by integrating transaction
    opportunities that feel organic to the experience. A growing number of marketing dollars are already moving towards influencer marketing, and we see
    livestream shopping as an extension of this ecosystem.
    2
    3 models will compete: marketplace, media, and software; driving viewership & curation will be key
    Many companies are approaching the market with different business models and technology; the market can be boiled down to 3 approaches:
    marketplace, commerce media, and software. As seen historically in many other industries, marketplaces that have been able to successfully create
    network effects and bring each stakeholder to the ecosystem have been able to accrue significant value in their respective markets. In addition, they’ve
    been able to keep their own costs low for content production and product. However, software companies have been gaining steam with brands who wish to
    maintain some control over their livestream strategy, and next-gen commerce media companies are building brands in and of themselves. Given large
    incumbency, we see opportunity for startup entrants in niche categories where they can become a tastemaker, or where sourcing/supply chain is complex.

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  5. 5 December 2020 · Bertelsmann
    Section I
    Livestreaming Overview

    View Slide

  6. 6 December 2020 · Bertelsmann
    Livestreaming, Particularly Livestream Shopping, Emerging Globally
    Europe – Like the USA, in its infancy
    ▪ The market is primarily served by software companies offering
    livestream tech directly to brands (Bambuser, Buywith, LiSa), rather
    than marketplaces.
    USA – Nascent market with several companies trying to break through
    ▪ Livestreaming is popular amongst gaming
    ▪ Large platforms are attempting to offer some livestream capabilities,
    while several startups are offering software to brands or creating
    standalone platforms
    China – Established market continuing to grow rapidly
    ▪ High viewership levels and sell-through rates
    ▪ Several large players competing
    South Korea – More nascent than China but similar viewership
    preferences
    ▪ Naver and Kakao have entered the market
    ▪ Kakao launched Talk Deal Live in May 2020, with 40k concurrent viewers

    View Slide

  7. 7 December 2020 · Bertelsmann
    What is Livestream Commerce?
    Livestream Shopping vs.
    Static Video
    • Real-time selling
    events, creates sense
    of scarcity (and thus,
    higher conversion rate)
    • More intimate
    connection with
    influencer/seller
    • Real-time
    demonstrations, chat,
    Q&A about products
    Youtube: What is Taobao
    Live?
    Watch Here
    (Click the link below)

    View Slide

  8. 8 December 2020 · Bertelsmann
    Chinese Livestream Shopping Market Has Grown Dramatically
    $170bn market size and getting larger
    (1) iiMedia Research Report: China Livestreaming
    (2) Livestreaming Set To Unlock Greater E-Commerce Spending In China, Seeking Alpha Report
    (3) DMR Statistics, Taobao Live
    $0.03B $19B
    $62B
    $170B
    3%
    7%
    17%
    0%
    2%
    4%
    6%
    8%
    10%
    12%
    14%
    16%
    18%
    $0
    $20
    $40
    $60
    $80
    $100
    $120
    $140
    $160
    $180
    2017 2018 2019 2020
    Livestream Commerce GMV % of Total e-Commerce Revenue
    Taobao Live,
    79%
    Douyin, 13%
    Kuaishou, 7%
    JD Live/Other,
    1%
    Launched 2016 by
    Taobao (Alibaba)
    400m viewers in 20193
    $71B GMV for 2020E3
    Launched 2018,
    Chinese Tiktok
    Targets Tier 1
    Cities
    Launched 2018,
    filed IPO 2020
    Targets Low Tier
    Cities
    300m DAU3
    Launched 2019
    Sells large
    appliances
    Partnered with
    Kuaishou to
    expand
    China Livestream Shopping Market (% of Transactions)2
    China’s Growth in Livestream Shopping GMV1
    Summary: Chinese livestreaming continues to grow quickly. Taobao is the largest, while Kuaishou, unlike Taobao and Douyin,
    focuses on lower tier cities and capitalizes on small businesses (such as farmers) trying to sell during COVID-19.

    View Slide

  9. 9 December 2020 · Bertelsmann
    Evolution of Creator Economy and Livestreaming
    China creator economy was built on streaming and donations, USA on video and ad revenue
    (1) Rise and Proliferation of Live-Streaming in China: Insights and Lessons, Zhicong Lu, University of Toronto
    E-Commerce Creator Growth
    2003 - To expand
    the business into
    consumer, Alibaba
    launched Taobao, an
    eBay lookalike
    2004 –
    JD.com
    launches
    B2C site
    Convergence
    2014 – YY Live
    rebrands to Huya
    Douyu, an esports
    streaming
    platform, launches
    2020 – number of livestreaming
    users hits 560m, 62% of internet
    users. Over $2.9B in sales was
    generated on Taobao Live during
    Single’s Day Alone, their version
    of Black Friday.
    2005 – Chat rooms on
    YY are repurposed for
    livestream entertainment
    such as talk-shows and
    singing, payments/tips
    built into platform
    2016 –
    Taobao
    launches its
    livestream
    offering,
    Taobao Live
    1999 – Amazon expands marketplace
    beyond books, to electronic, household, etc.
    2005 –
    Youtube
    launch,
    allowing
    creators to
    make UGC
    content
    2010 –
    Instagram
    launch
    2011 –
    Twitch
    launches
    Youtube
    launches
    livestreaming
    2016 –
    Facebook
    Live
    Launch
    2020 – While most creators
    and influencers generate income
    from sponsorships or ads, many
    are looking for other ways to
    monetize through e-commerce,
    such as merch and product
    creation, though also through
    donations (Patreon).
    China
    USA
    2015 –
    Twitter
    acquires
    Periscope

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  10. 10 December 2020 · Bertelsmann
    We Believe China’s Livestream Market Grew Faster Because…
    Chinese consumers are
    more engaged with
    livestreaming; they are also
    more accustomed to
    tipping/user pay media
    culturally
    China had a mobile-first e-
    commerce ecosystem that
    was fully integrated with
    social media and payments.
    China experienced a rapid
    growth in the middle-class
    and consumerism alongside
    adoption of digital
    technologies
    Dominance of transactional
    business model in China
    (which is more suited
    towards a livestream format)
    vs ad-supported in USA ,
    drove Chinese creators
    towards livestreaming

    View Slide

  11. 11 December 2020 · Bertelsmann
    Section II
    Drivers

    View Slide

  12. 12 December 2020 · Bertelsmann
    Driver 1: Lack of Dominance of Ad-Supported Models in China
    Largest US Internet businesses driven on social/search ads; China mainly transaction-based
    USA Digital Ad Spend Greater than China, But China E-
    Commerce Much Larger
    Ads is a Larger Revenue Generator for USA
    Consumer Internet Companies vs. China1
    Digital Advertising Spend and E-Commerce Sales2
    (1) Respective 10-K’s and financial reports – top 4 ranking based on market cap
    (2) eMarketer, June 2020, Statista
    $0B
    $50B
    $100B
    $150B
    China Digital Ad Spend US Digital Ad Spend
    2017 2018 2019
    $0.0T
    $0.5T
    $1.0T
    $1.5T
    $2.0T
    $2.5T
    China E-Commerce Sales US E-Commerce Sales
    USA Revenue
    Stream
    China Revenue
    Stream
    1. Transactions
    2. Software
    3. Sponsored Items
    Transactions
    Ads
    1. Sponsored Items
    2. Transactions
    3. Software
    Ads
    1. Transactions
    2. Ads
    Subscription Transactions
    Summary: The Chinese Internet economy has been built on transactional revenue vs advertising in the USA, whereas
    livestreaming is more suited to transactional business models vs. programmatic advertising.

    View Slide

  13. 13 December 2020 · Bertelsmann
    Driver 2: Willingness to Spend Directly for Real Time Connection
    Chinese livestream viewers more engaged, watch longer
    Chinese are Watching More Livestreams, More Often and For Longer
    (1) Nielsen US 360 Video Report, The China Guys Livestream Report
    (2) Magid, Rockwater
    (3) A Study of Livestreaming Practices (U of Toronto), State of Digital Publishing
    % of Internet Users Who’ve Watched a Livestream1 How Often Do You Watch Livestreams?2
    42%
    59%
    US China
    25%
    71%
    23%
    50%
    Daily >1 Time/Week
    China US
    Average Watch Time for Livestreams (min)3
    8
    62
    US China
    Summary: Chinese viewers are generally more acquainted with livestreams and watch for longer, while US viewers are
    beginning to watch more

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  14. 14 December 2020 · Bertelsmann
    Viewers in China Older Compared to USA Viewers in China are Primarily Mid or Higher Income
    High Income,
    32.0%
    Middle
    Income, 43.8%
    Low Income,
    24.8%
    0%
    10%
    20%
    30%
    40%
    50%
    60%
    70%
    80%
    90%
    13-17 18-34 35-54 55+
    US China
    (1) eMarketer, UBS, Sina
    (2) Tencent MyApp Big Data
    % of Livestream Viewers by Age1 % of Livestream Viewers by Income in China2
    Driver 2: Willingness to Spend Directly for Real Time Connection
    Livestream viewers in China are older, with more disposable income
    Summary: Livestream adoption in the USA is a habit of young people (primarily gaming viewers) but is more mainstream in
    China. The higher average age of viewers in China translates to generally more disposable income

    View Slide

  15. 15 December 2020 · Bertelsmann
    $-
    $1
    $2
    $3
    $4
    $5
    $6
    $7
    $8
    Video (Youtube) Blogging Images
    (Instagram)
    Livestream
    (Twitch)
    Self-Published
    Books
    Independent
    Music
    Advertising/Sponsorship User Pay (Subscription/Donation/Merch)
    Driver 2: Willingness to Spend Directly for Real Time Connection
    Livestreaming outperformed in China due to customer willingness to spend for engagement
    USA – Creator Earnings by Media Platform in 2019 (in $ billions)1 China – Creator Earnings by Media Platform in 2019 (in $ billions)1
    (1) BDMI Estimates based on publicly available information published by Google/Youtube, IAB, Twitch, Statista, Douyu, Huya, Bilibili, TopKlout, and
    others
    Summary: Chinese consumers are more willing to paying for content/tipping vs. USA consumers (who were traditionally
    accustomed to free content), leading to a larger livestream creator economy in China
    Top Creator Platforms in USA Driven by Ads Chinese Users More Familiar with Tipping
    $-
    $1
    $2
    $3
    $4
    $5
    $6
    $7
    $8
    Livestream (Taobao
    Live, Kuaishou)
    Video (Douyin,
    Other)
    (Micro)Blogging
    (WeChat, Weibo)
    Independent Music Self-Published
    Books
    Advertising/Sponsorship User Pay (Subscription/Donation/Merch)

    View Slide

  16. 16 December 2020 · Bertelsmann
    Driver 3: Rapid Growth of Middle Class Alongside Mobile Adoption
    China’s middle class grew dramatically during a time of rapid digitization
    (1) McKinsey Global Institute
    (2) China Internet Watch, Statista, Business Insider
    Breakdown of China Households1 Smartphone Penetration Rate in China2
    4%
    9%
    17%
    23%
    26%
    31%
    37% 38%
    43%
    45%
    48%
    50%
    53%
    2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
    36%
    10% 7%
    64%
    88%
    87%
    0% 2% 6%
    2000 2010 2020
    Poor Middle Class Affluent
    Summary: The Chinese middle class and affluent grew alongside mobile adoption, leading to a boom in mobile e-commerce
    and mobile content consumption.
    China Middle Class/Affluent Grew Dramatically China Has Adopted Mobile Rapidly

    View Slide

  17. 17 December 2020 · Bertelsmann
    Source: Huya
    Driver 3: Rapid Growth of Middle Class Alongside Mobile Adoption
    Virtual tipping of emojis allows for conspicuous display of wealth
    Ferrari
    99k gold beans ($17)
    Gold Star emoji:
    100 gold beans ($0.017)
    Magic Castle:
    5m gold beans ($856)
    Heart emoji:
    100 gold beans ($0.017)
    Thanks User 1 for the Ferrari!
    Thanks User 2 for the heart!
    User 1:
    Diaosi (lower social
    status, relatively
    poorer) Applause for
    User 2!
    Summary: With the rise in income, people use tipping to conspicuously display their wealth and raise their social status
    User 2:
    Rich patron, looking
    to increase social
    status

    View Slide

  18. 18 December 2020 · Bertelsmann
    Driver 4: Mobile-First E-Commerce
    China’s mobile infrastructure was built for quick payments, donations, and transactions
    19%
    43%
    51%
    75%
    79%
    83% 85%
    15%
    18%
    21%
    24%
    21%
    40%
    45%
    0%
    10%
    20%
    30%
    40%
    50%
    60%
    70%
    80%
    90%
    100%
    2013 2014 2015 2016 2017 2018 2019
    China US
    USA E-Commerce / Social Still Fragmented
    95% of China’s mobile payments go through Alipay or WeChat Pay (Mary Meeker 2017 Report)
    Share of Mobile E-Commerce as % of Total E-Commerce1 E-Commerce
    Social
    E-Commerce
    (1) China: PwC, US: eMarketer, Statista
    Social
    Summary: China’s leapfrog over PC/desktop adoption, direct to mobile, led to more prioritized development of mobile
    payments, content, and social integrations.
    Mobile Dominates China’s E-Commerce China E-Commerce and Social Integrated with Payments

    View Slide

  19. 19 December 2020 · Bertelsmann
    Chat/Comment Countdown
    New followers
    Buy/Inventory Count
    Follow
    Send emoji or
    gift
    Top-up
    Summary: Taobao Live and other social shopping platforms in China have created a gamified UX to drive conversion
    Driver 4: Mobile-First E-Commerce
    Marketplaces such as Taobao Live have dominated, and are feature rich to optimize engagement

    View Slide

  20. 20 December 2020 · Bertelsmann
    4 Growth Vectors for Livestream Market in the USA
    Viewers demand more
    engaging and interactive
    ways to connect with
    creators
    Brands are looking for ways
    to sell products that benefit
    from live demos, especially
    during COVID
    .
    Technological advancements
    in livestreaming allow for
    payments integration, better
    video quality
    Content creators and
    influencers will continue to
    want new ways to monetize
    their audiences

    View Slide

  21. 21 December 2020 · Bertelsmann
    Growth Driver 1: Creator Monetization/Engagement
    ▪ Influencers currently derive revenue primarily from affiliate
    deals or programmatic advertising
    ▪ Influencers want better ways to connect with their
    audience, boost engagement, and ultimately convert
    products they advertise
    Challenge:
    Creators require
    new ways to
    monetize
    Opportunity:
    Livestreaming
    provides more
    engagement with
    viewers, additional
    revenue streams
    ▪ Livestreaming provides an inherently more intimate
    medium, given the ability for Q&A and real-time
    engagement with fans that reach out through chat
    ▪ Companies like Looped allow influencers and celebrities to
    charge for livestream sessions, while free livestream
    sessions allow for the opportunity to collect tips (video
    streaming tipping volume in the US reached $141m in
    2018, avg $59 per viewer)1
    (1) Streamlabs

    View Slide

  22. 22 December 2020 · Bertelsmann
    ▪ Livestream as a form of entertainment has not penetrated
    the US market. Viewers primarily engage with UGC content
    through Youtube videos as well as images on Instagram
    ▪ For non-UGC entertainment, US consumers typically
    subscribe to streaming services (Netflix, Hulu) or purchase
    games
    Challenge:
    Viewers
    demanding more
    ways to engage,
    though less
    familiar with
    streaming
    Opportunity:
    Livestreaming offers
    more engagement
    with creators, USA
    starting to catch on
    ▪ Livestreaming has become a larger part of
    content/entertainment online with the growing
    popularity of eSports (with Twitch leading the pack,
    followed by Facebook Gaming, Youtube Gaming)
    ▪ Twitch has begun to expand outside non-gaming
    categories - their “Just Chatting” genre is now the
    largest non-gaming category on Twitch1 and is 3x the
    viewership of Twitch’s largest competitor, Youtube
    Gaming.
    Growth Driver 2: Viewers More Familiarized with Streaming
    0.0
    0.5
    1.0
    1.5
    2.0
    2.5
    2012 2013 2014 2015 2016 2017 2018 2019 2020
    Millions
    Avg Twitch Concurrent Viewers Just Chatting Avg. Viewers
    (1) TwitchTracker

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  23. 23 December 2020 · Bertelsmann
    Challenge:
    Need for highly
    scalable and
    performant
    technology
    Opportunity:
    Advancement of
    purpose-built
    livestream tech,
    with payment
    integrations
    Growth Driver 3: Livestreaming Becoming More Scalable
    ▪ Livestreaming relies on a strong network
    connection, more so than other forms of
    media, and has typically faced challenges
    with latency and high-quality video
    ▪ Shifts towards edge computing (computing closer to the
    device) and improvements in streaming protocols have
    allowed for higher quality and more scalable streams.
    ▪ 5G will offer a new era of mobile network connectivity,
    allowing livestreaming to work more seamlessly
    ▪ E-Commerce and social platforms working to integrate
    payment gateways directly into their products (Amazon,
    Facebook)
    35%
    31%
    19%
    16%
    High-quality video
    Low end-to-end latency
    Real-time interactivity
    Ability to scale
    Most Important UX Consideration in Livestreaming1
    5G
    <10 ms
    4G
    40-50 ms
    vs.
    (1) Wowza Media Systems 2019 Report, n=391

    View Slide

  24. 24 December 2020 · Bertelsmann
    Challenge:
    Difficulty
    presenting
    products in a
    post-COVID
    world
    Opportunity:
    Livestreaming
    allows brands to
    show products
    remotely
    Growth Driver 4: Need for High-Conversion Distribution Channels
    ▪ Brands are looking for more ways to connect with buyers
    and show their product in an increasingly digital world,
    particularly for products such as appliances, fitness gear,
    cosmetics, and others that require some demonstration
    ▪ COVID-19 has accelerated the path towards retail
    digitization, creating an impetus and need for brands to
    adapt
    ▪ Livestreaming allows for real-time interaction with
    buyers, giving them the ability to ask questions and
    see products perform live
    ▪ Livestreaming has seen higher conversion rates
    compared to tradition retail or even influencer
    marketing
    32%
    3%
    Taobao Live US Influencer Marketing
    Sales Conversion Rate by Channel1
    (1) Taobao Live, Grapevine

    View Slide

  25. 25 December 2020 · Bertelsmann
    Section III
    The Livestream Influencer

    View Slide

  26. 26 December 2020 · Bertelsmann
    Viya is Taobao Live’s top KOL – her
    shows, which air every night for 4
    hours, showcase 30-50 SKUs /
    episode (curated from hundreds of
    products). Around 50% are branded
    products, 30% are snacks, and 20%
    are new/discovery items.2
    Pan-
    entertainment
    (Variety/Talk-
    Show), 44%
    Show Room
    (Singing/Dancing),
    35%
    Gameplay,
    16%
    Others, 6%
    (1) Rise and Proliferation of Live-Streaming in China: Insights and Lessons, Zhicong Lu, University of Toronto
    (2) Bertelsmann Asia Investments
    Chinese Livestream Content Mostly Entertainment Largest Streamers in China
    Breakdown of Livestreams by Content Type (China)?1 Li Jiagi, or the “Lipstick King” tries
    on lipsticks for his audience and
    offers the best possible price for a
    limited time, given his volume buying
    power.
    Summary: Chinese livestream influencers primarily engage in selling, taste tests, and talk shows, and are more QVC style.
    The Rise of China’s Largest KOLs, of Key Opinion Leaders (Influencers)

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  27. 27 December 2020 · Bertelsmann (1) Forbes
    While traditional influencers and Youtube content creators
    use livestreaming as part of their viewer engagement
    toolbox, going live is not a consistent activity.
    The largest consistent livestreamers in the US, by
    follower count, consist of gamers on both Twitch and
    Youtube.
    Tyler “Ninja” Blevins heads the leaderboard, with 37m
    followers across Youtube and Twitch. A recent article by
    Forbes claims he made a total of $17m in 2019 across
    content subscriptions, tipping, and sponsorships, with
    ~$500k a month coming directly from subscriptions.1
    Gamers are the Largest Livestreaming Influencers in the USA
    Ninja is the USA’s Largest Livestreamer
    Summary: USA livestream influencers today are limited to gaming streamers, who currently generate revenue primarily
    through subscriptions or tips, not product sales

    View Slide

  28. 28 December 2020 · Bertelsmann
    Section IV
    The Technology Ecosystem (USA)

    View Slide

  29. 29 December 2020 · Bertelsmann
    There are 3 Approaches to the Livestream Shopping Market in the USA
    1 3
    Marketplace/Platform
    Approach
    Companies that bring
    together independent
    influencers, viewers,
    and brands on one
    platform to livestream,
    watch, and transact
    Software Approach
    Companies that offer
    software to brands
    which allows them to
    livestream and sell
    directly on their
    websites or elsewhere
    on the web
    2 Commerce Media
    Approach
    Companies that
    create scripted
    content, with both
    entertainment and
    sales

    View Slide

  30. 30 December 2020 · Bertelsmann
    The US Market is Diverse, with Startups and Incumbents Across All Segments
    Many players are vying for a spot in this market, though large platforms already exist
    Incumbent Platforms Legacy Media
    Platform/Marketplace Approach Software Approach Media Approach
    Young Startups
    *
    *Inactive
    ***
    **BDMI Investment
    **
    ***Selling to China

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  31. 31 December 2020 · Bertelsmann
    Unclear Which Approach Wins, Though Existing Platforms are Advantaged
    Marketplace/Platform
    Approach
    Large platforms may have
    an advantage vs. smaller
    startups, given large
    existing user/viewer
    numbers. Smaller players
    are focusing on creating
    their own audiences as
    well as bringing brands to
    their platforms
    Software (B2B SaaS)
    Approach
    Some brands have
    expressed the desire to
    be unshackled from large
    platforms for advertising
    budget, and therefore are
    looking to livestream
    software companies to
    give them more control.
    Commerce Media
    Approach
    QVC/HSN have
    historically led this
    category, though
    overcoming content
    production cost has
    been the challenge.
    Other, vertical-focused
    and nimble players are
    emerging as well.
    Amazon Live launched 2019.
    Twitch Just Chatting/IRL
    fastest growing category
    Livestream marketplace for
    shops, $100m valuation
    Launched livestream
    shopping in Summer 2020
    Running QVC
    Livestream on Youtube
    Sells streetwear,
    artwork, and furniture
    through live drops
    SaaS solution for large brands,
    offers managed services as well
    Public Swedish company
    working with large retail brands
    B2B SaaS company offering
    plug-and-play livestream tech
    Sources: TechCrunch, Crunchbase
    Live broadcasting/sales software
    *
    *BDMI investment

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  32. 32 December 2020 · Bertelsmann
    Mainstream Livestream Viewing Happening on Social Platforms
    (1) Hubspot
    (2) IAB Livestream Report
    Where Do You Watch Live Video Most Often (USA)?1 What Types of Content Do You Livestream - Select All that Apply (USA)2
    1%
    2%
    5%
    5%
    6%
    13%
    20%
    48%
    Twitter
    Other Social
    Don't Watch
    Twitch
    Streaming Provider
    Instagram
    Facebook Live
    Youtube
    19%
    23%
    26%
    27%
    27%
    30%
    30%
    Talk Show
    Online Celebrity
    Concert
    News
    Gaming
    Tutorial or How To
    Video by Friend/Family
    Summary: Youtube and Facebook Live are the largest livestream platforms by users in the USA (people watching news,
    friends, etc), though Twitch is the largest by hours watched
    Viewers Watching Most Often on Youtube Americans are Watching Their Friends, Tutorials, Gaming

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  33. 33 December 2020 · Bertelsmann
    Amazon: Making Active Strides in Livestreaming
    Amazon Live
    • In February 2019, Amazon launched Amazon Live,
    which features livestream video shows from Amazon
    talent as well as from brands who broadcast through
    Amazon’s app, Amazon Live Creator. Amazon Live is
    available on the mobile app but is not featured
    prominently. Thus far, driving viewership has been
    dependent on influencers promoting on their own
    social networks.
    Twitch
    • Twitch has thus far focused primarily on eSports and
    game streaming and is currently the leader in the
    space. However, its “Just Chatting” category, which
    primarily includes conversations/vlogs, has also been
    growing and now represents 10% of hours watched on
    the platform (creating opportunities outside of gaming).
    (1) TechCrunch

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  34. 34 December 2020 · Bertelsmann
    Facebook/Instagram: Major Player in Social Commerce, Moving Steadily
    • In May 2020, Facebook announced Facebook &
    Instagram Shops, which allows influencers or brands
    on both platforms to create curated product lists that
    are viewable and purchasable on both apps.
    • The company has also been testing a live shopping
    experience during the summer of 2020, allowing users
    to purchase directly through livestreams with their
    favorite influencers. Sales/viewership numbers have
    not been reported.
    • At the moment, checkout is managed either through
    Facebook’s own payment gateway (Facebook Pay,
    launched in November 2019), BigCommerce, or
    Shopify, though selling fees will be waived throughout
    2020. Facebook has been spending more time
    integrating its own payments engines into its P2P and
    B2C e-commerce offerings.
    (1) TechCrunch

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  35. 35 December 2020 · Bertelsmann
    Popshop Live: New Entrant Challenging the Platforms
    • Popshop Live allows brands and stores to host their own shows from the platform – the platform
    is primarily brand/shop led vs. influencer led.
    • Japan LA, one of the biggest stores on the platform, has done more in sales on Popshop Live
    than its other channels combined; it did $17k in sales in one show
    • Raised a Series A at a reported $100m valuation from Benchmark (previously raised $4.5m in
    funding from investors such as Floodgate, Abstract Ventures, and others, bringing the estimated
    total to $20m)
    Source: TechCrunch, The Information

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  36. 36 December 2020 · Bertelsmann
    NTWRK: Becoming a Tastemaker, Started in Streetwear
    Sources: Bloomberg, Crunchbase
    • NTWRK is a livestream shopping app, focused on streetwear, art, and music-adjacent
    categories. They feature company-produced shopping episodes and drops, pulling in hundreds of
    thousands of viewers
    • Some shows have topped $1m in sales in less than 5 min
    • Launched TRANSFER, a virtual streetwear festival, featuring 30 brands and artists and expected
    240k shoppers/10 million viewers
    • Raised $10m+ in funding from investors such as Live Nation, Foot Locker, and others

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  37. 37 December 2020 · Bertelsmann
    Bambuser: European Livestream Tech Company Shifts to Shopping
    Source: Company Semi-Annual Filings
    • Bambuser’s live streaming SaaS software has historically been used primarily by news agencies
    and journalists. In late 2019, Bambuser departed from this norm by developing its new flagship
    product, Live Video Shopping.
    • Customers include Showfields, Luisaviaroma, Kicks, FRAME, Monki by H&M, and Moda
    Operandi. The company has also hosted live shows with designer Carolina Herrera and
    cosmetician Ole Henriksen
    • In 1H2020, the company generated ~$800k in revenue, according to its public filings
    • The company has raised over $60m in private pre-IPO and post-IPO equity
    Customer
    Closings

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  38. 38 December 2020 · Bertelsmann
    Section V
    The Livestream Advertisers/Brands

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  39. 39 December 2020 · Bertelsmann
    Brands Beginning to Look Towards Livestreaming as New Channel
    Most brands increasing interest in livestream marketing
    Some Marketers Looking Beyond Domestic Trends… …and Many are Currently Streaming
    Very, 8%
    Somewhat, 45%
    Not at All, 47%
    To what extent do international influencer marketing trends
    inform/inspire domestic priorities (USA)?1
    Brands that have/are planning to produce livestream marketing (USA)2
    (1) Rockwater Livestream Report
    (2) Brandlive State of Livestreaming
    Currently
    streaming,
    76%
    Will start to
    stream in
    the next 12
    mo, 8%
    No plans to
    livestream
    in next 12
    mo, 16%
    Budget
    Increasing,
    53%
    Budget
    Staying the
    Same, 41%
    Budget
    Decreasing,
    6%
    Summary: Budget for livestreaming commerce is increasing in the USA, with brands looking to experiment with livestreaming

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  40. 40 December 2020 · Bertelsmann
    Psychology of Brands: Need for Authenticity and Interaction in Marketing
    Why Do Brands Invest in Livestream Marketing?1
    (1) Brandlive Livestream Report
    78%
    66%
    59% 57%
    47%
    43% 43%
    35%
    28%
    Achieve deeper
    interaction with
    audience
    Make videos
    more accessible
    Add human
    element to digital
    marketing
    Engage social
    audiences
    Hear directly from
    product experts
    Increase overall
    viewing time
    Capture emails Learn and adjust
    from real-time
    feedback
    Higher e-
    commerce
    conversion rate
    Summary: Brands are looking for ways to have deeper interaction and add a human element to their marketing

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  41. 41 December 2020 · Bertelsmann
    Psychology of Viewers: Scarcity Creates Opportunity for Brands
    Why Do People Watch Livestreams (USA)?1
    35%
    31%
    27% 26% 25% 25%
    20%
    16% 16%
    12%
    It makes me up to
    date and informed
    I can check
    up/catch up
    anywhere and
    anytime
    I don't want to
    miss out
    I like the more
    personal feel that
    live streaming has
    Watch while away
    from home (at
    work, commuting,
    etc)
    I can interact with
    people of similar
    interests
    I can be the first of
    my family/friends
    to know what is
    happening
    That's the only
    way the content is
    available
    I can interact with
    the
    producer/maker of
    the content being
    streamed
    I don't have any
    other way to
    access this
    content
    (1) IAB Report, Live Video Streaming
    Summary: Top 4 reasons to watch a livestream point to fear of missing out and need for more intimate engagement

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  42. 42 December 2020 · Bertelsmann
    Fashion and Beauty Brands are First Adopters
    Some brands want more control with software, while others are going to the platforms
    (1) Vogue Business, Glossy, TechCrunch, Shorefire
    Artist Takashi Murakami’s art company, Kaikai Kiki, has done many
    sales episodes on NTWRK. During one episode, the company
    raised $1.3m for his print collection (donated to Black Lives Matter
    initiatives).
    On September 25, many beauty brands including Flawless by Gabrielle
    Union, Honest Beauty, Cetaphil, and others participated in Amazon’s
    Beauty Haul Live event. The event lasted 11 hours, and featured
    celebrities and influencers, though sales metrics are unreported.
    On July 9th, Beauty influencer Nikita Dragun featured a beauty tutorial for
    her Dragun Beauty brand, attracting nearly 43k of her 8.3 million followers
    to the livestream. The stream drove 33k product page impressions, and 5k
    products were added to viewers’ shopping bags, according to Instagram.
    Several L’Oreal brands, including Urban Decay, have utilized LiSa’s
    technology to power their online livestream shopping initiatives.
    Japan LA has continued to run livestream shows on Popshop Live’s
    platform, who has reportedly sold more on Popshop Live than with offline
    and online sales combined. On one show, Japan LA did $17k in sales with
    more than 1,500 checkouts.

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  43. 43 December 2020 · Bertelsmann
    Section VI
    Summary and Capital Markets

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  44. 44 December 2020 · Bertelsmann
    Venture Funding Increasing Across Many Bets
    In 2020, more social livestream companies raised venture capital than any previous year
    Social Livestreaming Venture Activity1
    ▪ Venture activity in social
    livestreaming and livestream
    shopping is growing, though it is still
    a nascent market.
    ▪ Venture funding primarily interested
    in platforms – VCs interested in the
    category are making bets on livestream
    destination platforms and believe value
    will accrue there, though some are
    betting on software and media
    ▪ Though venture funding has gone to
    platforms, reported revenue traction
    thus far has mainly been limited to
    software and media companies
    ▪ Multiple unannounced funding
    rounds in Q3/Q4 2020, ~$55mm by
    BDMI estimates
    (1) Crunchbase
    6
    11
    20
    18
    7
    16
    21
    20
    24
    0
    5
    10
    15
    20
    25
    30
    $0
    $20
    $40
    $60
    $80
    $100
    $120
    $140
    $160
    $180
    $200
    2013 2014 2015 2016 2017 2018 2019 2020YTD 2020E
    Millions
    Deal Value Deal Count

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  45. 45 December 2020 · Bertelsmann
    Summary: We See Livestream (Shopping) Poised for Strong Growth in USA
    USA China
    Internet
    Revenue
    • Ad-supported, now shifting to transaction and donation
    (e.g. merchandise sales, Patreon has earned creators
    $350m though donation/subscription)
    • Mix of transactions, donations, and advertising
    • Online video and images is most popular format, driven by
    ad / sponsorship revenue on Youtube and Instagram.
    Livestreaming growing as content medium.
    • Livestreaming surpasses UGC static video given high
    engagement, willingness to pay through donation model,
    and need for trust in a crowded e-commerce market
    • Social, commerce, and payments not fully integrated yet,
    though social and e-commerce players making strides
    • Mega-apps with social, commerce, and payments
    integrated (Alibaba owns Alipay and Taobao)
    • Mature e-commerce market, though still saw fairly strong
    growth over the last 4-6 years (pre-COVID)
    • Fast growing and largest consumer e-commerce market
    (33% 5 yr CAGR in China vs 9% in US)
    Conclusion
    Though livestream consumption is still small in the USA, viewers have been building familiarity with the
    medium (particularly during COVID) as well as shifting towards user-pay revenue models. We feel
    livestreaming will continue to grow, though large social platforms have strong advantages. We believe
    emerging players can drive a wedge into the market by becoming tastemakers in niche verticals.
    Creator
    Economy
    Technology
    Livestream
    Uses
    E-Commerce
    Growth
    • News/live events, broadcasting to friends, gaming; focus is
    not primarily entertainment
    • Pan-entertainment (variety shows, talk shows),
    singing/dancing, gaming; focus is on entertainment

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  46. 46 December 2020 · Bertelsmann
    December 2020
    Thank You

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