Mini-KTV: A No.1 Hit

By Huang Ge Source:Global Times Published: 2017/7/11 19:33:40

Small karaoke booths may be the future of the sharing economy thanks to low risks and quick returns: experts

Two mini-KTV booths in a shopping mall in Nanning, capital of South China's Guangxi Zhuang Autonomous Region Photo: IC

Telephone box-like mini-KTV booths have been appearing in shopping malls across the country in recent years. With the increasing popularity of the new entertainment-sharing service, it has also become attractive to capital markets. Analysts say that the short period of time to get returns as well as relatively lower risks are reasons why mini-KTV is favored by investors. Although its growth is driven by the context of the sharing economy, some challenges still remain, including whether business operators can master big data technology to understand the markets.

Starting from this year, an increasing number of small karaoke booths that resemble telephone boxes have been popping up in countless shopping malls across the country.

Different from traditional karaoke rooms, the mini-KTV booths are self-serviced and more personalized. By scanning a QR code via Chinese popular instant messaging app WeChat, customers can use the system to record a song or even an album. The whole album process takes no more than one hour, which is far less than the time it would take in the traditional recording industry.

"It is very convenient and I often use the entertainment service when I have some time to kill, such as the 20 minutes before a movie starts," said a 20-something Beijing resident named Vincent Chen.

"I can book the booth for at least 15 minutes and the recording will then be automatically sent to my phone through WeChat," Chen told the Global Times on Monday. "Then I am able to also share my songs to other social media platforms."  

As the combination of traditional entertaint and digital technology continues to enjoy great popularity, analysts say that the business pattern behind mini-KTV reveals the rising momentum of the sharing economy in China.

Expanding nationally

Mini-KTV booths first entered domestic markets in 2015 in cities like Guangzhou, capital of South China's Guangdong Province, and Xiamen, East China's Fujian Province, and then spread to other cities across the country.

Common KTV brands include M-Bar, Minik and WOW.

Created in Xiamen in June 2016, M-Bar has expanded to about 140 cities in 29 provinces with more than 5,000 KTV entertainment units, according to media reports. It would cost a user 20 yuan ($3) for 15 minutes using an M-Bar KTV system, 38 yuan for 30 minutes and 58 yuan for one hour.

Minik, which is backed by Guangzhou-based Aimyunion Technology Co, was launched into the markets in the second half of 2015 and has now spread to more than 500 cities in the country, domestic news portal reported on June 29. Users can spend 6 yuan on one song in a Minik unit or 20 yuan for 15 minutes of karaoke time.

The number of users registered with Minik reached more than 10 million by the end of June, with over 6 million stable fans, the report said, noting that apart from those common brands, more and more small and medium-sized brands are beginning to beef up efforts to grab some shares of the market.

"The development of mini-KTV meets the demands of young people in current society, who live fast and fun lives and are eager to make good use of their spare time," Liu Dingding, a Beijing-based independent analyst, told the Global Times on Monday.

Liu said that the rapid growth of China's mobile payment tools in recent years also facilitates the advancement of the mini-KTV service.

"But such types of entertainment services are designed just for a niche market, especially for those living around densely populated areas like shopping malls in first-tier cities," Liu noted.

Currently, mini-KTV markets in first- and second-tier cities have saturated, causing new franchisers to be advised to explore markets in third- and fourth-tier cities, domestic financial news portal reported on July 4, citing a sales person with mini-KTV operator Huanle Changba.

Investment fever

The rising popularity of the mini-KTV services has made the industry attractive to investors in recent months.

In February, Changba, a Chinese app providing karaoke services through mobile devices, invested over 10 million yuan in Aimyunion Technology, which supports Minik, media reports said.

Also, M-Bar announced the same month that it had received 60 million yuan additional investment from Beijing-based Ubox, China's largest Internet-enabled vending machine system.

The short period of time to gain returns is one of the many qualities of mini-KTV favored by investors, analysts said.

The cost for a mini-KTV unit currently stands at around 30,000 yuan to 40,000 yuan in a first-tier city shopping mall. Costs include rent of a booth location, installation charges and Internet fees, the report said.

It usually takes two months for each mini-KTV unit to earn back costs, or at most six months in areas with less customer flow, according to the report.

The risks of investment in the new and emerging mini-KTV sector are comparatively low thanks to its light business pattern and low costs, Men Changhui, a senior analyst of Beijing-based Internet technology firm InnoTREE Co, told the Global Times.

Currently, start-ups in the growing mini-KTV industry are receiving angel investments. Whether this could further advance the industry to the next step to get venture capital still needs to be determined, Men noted.

At present, the rising sector, which is labeled as part of the ''sharing economy'', could acquire better financing channels and further impress Chinese Internet users, Liu said.

Effective strategies 

China's offline mini-KTV markets' valuation is forecast to reach 3.18 billion yuan in 2017, an increase of 92.7 percent on a yearly basis, according to data released by Guangzhou-based market consultancy iiMedia Research on May 29.

By 2018, the market will continue to grow 120.4 percent year-on-year to 7.01 billion yuan, the data showed.

Despite the rising growth of the sector, however, mini-KTV operators are confronted with some challenges, analysts say.

For instance, operators should know how to employ big data to analyze the market situation and then strategically install mini-KTV booths in areas that attract ample customer flow, according to Liu.

Good location plays a key role in the successful operation of a mini-KTV booth. A booth placed in a dark corner of a quiet shopping mall will not make profits, analysts warn.

Share services such as mini-KTV, mobile chargers and umbrellas are managed by similar business strategies that take advantage of the ''sharing economy'' brand in order to make profits, Liu said.

The sharing economy aims to "cut capacity" for individuals, as well as business owners, in order to make full use of idle resources, Men said.

Sharing-economy sectors, like bike-sharing and home-sharing services that tapped into the market earlier, have demonstrated stable growth, and more new sharing services are expected to emerge in the Chinese markets in the coming years, Men said.

''Identifying a core business profit pattern is the key force for driving their growth,'' he said.

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