Xiaoxiang Huyu (小象互娱) raised 30 million yuan (approx. US$ 4.8 million) series Pre-A from Tencent at a valuation of 300 million yuan (approx. US$ 47.8 million). This funding round will be used in recruitment of influencers and acquisition of popular short videos’ intellectual property (IP), which is the company’s first priority in the nearest future.
It’s believed that Xiaoxiang Huyu is Tencent’s first move in game MCN (Multi-Channel Network) and its third investee in game-streaming after Douyu and Huya.
Founded in 2017, Xiaoxiang Huyu is an influencer agency focusing on game-streaming. Its business is based on content made by Internet celebrities and is expanded to the building of KOL matrix and incubation of short video IP.
DOU Yuxiao, founder and CEO of Xiaoxiang Huyu, was once in charge of revenue for game streaming pltforms YY Live and Huya and was also one of the core founders of Panda.tv, a video streaming platform. A long history of engagement in the game-streaming industry enables DOU to be familiar with the production and creation of game content and to gain a great quantity of KOL resources.
According to DOU, the core driven forces of MCN platforms are content creation and commercial capacity. And Xiaoxiang Huyu has the following competences: ① abundant premium resources; ② the ability to create high-quality contents with high throughput; ③ powerful and diversified channels.
In terms of premium resources, Xiaoxiang Huyu values top-tier KOLs in game-streaming as they have lots of followers.
On one hand, Xiaoxiang Huyu is making great efforts to attract the current top-tier game KOLs to its platform. The company has signed contracts with about 15 such KOLs who have millions of subscribes. On the other hand, the company is fighting for the launch of its own top-tier game KOLs by fishing in the talent pool.
According to Xiaoxiang Huyu, influencers of the company generate 550 million views on a monthly basis across platforms including Jinri Toutiao and Tencent’s content platform Qiehao.
Short videos generated by Xiaoxiang Huyu’s influencers include: rough-processed ones for improvement of IP value; slightly-processed ones to glue fans; processed ones for guaranteed exposure of influencers; creative ones for expansion of IP influence. At the same time, Xiaoxiang Huyu is working on the incubation of original IP with programs to endorse it.
Concerning content distribution, Xiaoxiang Huyu enjoys varying degrees of guaranteed flow and stable exposure in Tencent-supported channels including QZone, QQ Browser, Kuaibao.QQ.com and QQlive given that it is an investee of Tencent. Other than that, the company has reached cooperation with self-media platforms NetEase’s Wangyihao, Baidu’s Baijiahao and Toutiao’s Toutiaohao, as well as short video streaming platform Tik Tok.
Xiaoxiang Huyu also tries to help game companies target individual players with the influence of top-tier KOLs and short video IPs. The investment from Tencent should add some tailwinds for the communication between the Xiaoxiang Huyu and game companies.
As MCN is a user traffic-driven economy in nature, Xiaoxiang Huyu mainly relies on brokerage for influencers as well as publicity and release of games to generate profits. Specifically, the company creates contents for multiple platforms to collect commissions; and it also promotes and releases games for game companies.
Currently, not only does the live-streaming industry in China witness a slow-down development, but also MCN platform is not new—let alone the game development, whose update cycle is far shorter than the incubation period of top-tier KOLs. However, Xiaoxiang Huyu can help complete the game streaming ecosystem of Tencent. In the long run, Tencent can promote and release games based on these premium resources and platforms.
Distinguished from other live streaming content relying on rewards to turn a profit, game streaming has potentials for durable monetization. And game influencers have a more robust vitality than a single game.
What DOU said is a bull’s eye: “No matter how fast the game updates, top-tier KOLs will remain the same in that they occupy the capability to attract fans and user traffic.”