Market analysis of my country's KTV industry in 2015

Looking back at the past ten years of the KTV industry, we will find that KTV is an industry with almost no core competitiveness. The popularity accumulated by the pioneers relying on the advantages of the market gap is not stable. Instead, the rising stars are constantly promoting the renewal of the industry with their own innovations and services. Every stage of development of science and technology or social situation is a reshuffle of the KTV industry. Those who lack competitiveness are eliminated, and those who are full of innovative vitality become the mainstream of the industry. The market analysis information of my country's KTV industry in 2015 is as follows:

In Beijing, Shanghai, and Guangdong, former leading brands in the KTV industry, such as Qiangui and Lesheng, have gradually ushered in a cold winter, and many stores have quietly closed down. In contrast, KTV companies that rely on the Internet, such as Changba Maisong KTV and 9158KTV, have emerged as a new force, relying on special services to continuously attract the huge consumer groups of "post-80s" and "post-90s" and seize the entertainment consumption market.

Despite this, the increasingly fierce competition in the KTV industry, the continuous emergence of participants, and the overall shrinking market situation still add a touch of uncertainty to the development of KTV companies and even the entire industry. The industry is facing a reshuffle, how should KTV companies break through?

Survival pressure promotes the transformation of old KTVs

5pm to 9pm used to be the peak period of KTV traffic, but now, Qiangui KTV on Huixin East Street is quite deserted. In the carefully decorated hall, except for a few staff members, there are few customers, and the lively scene of the past is no longer there. An unnamed person in charge told reporters that due to the approaching Spring Festival, there are more corporate celebrations and gatherings with relatives and friends, and the business has been much better recently than in the same period in the past. However, in general, KTV business has been declining in recent years, and the attendance rate has barely remained at 40% to 50%. When asked about the reason, the KTV industry market survey and analysis report stated that the entire KTV industry market is approaching saturation, and the diversification of entertainment projects in the Internet era has led to a decrease in the number of people who use KTV as their main entertainment consumption project. In addition, the eight regulations issued by the central government at the end of 2012 and the issuance of various bans in 2013 have greatly suppressed the "three public" consumption in various places. "After the government strictly controlled the "three public" consumption, the entire entertainment industry was tightening, and KTV, as an entertainment project, was inevitably affected." He said.

In addition to the decreasing income, the year-on-year increase in operating costs has become the last straw that broke the camel's back for traditional chain KTVs. The continuous increase in operating costs such as raw materials and land rent has made it particularly difficult for these old KTVs to continue their high-quality route; and the copyright fees for KTV songs are also a considerable expense. When the reporter asked whether they were willing to cooperate with e-commerce companies to expand the market through group buying and other means, the heads of several KTVs all said with a wry smile, "The operating costs are very high, and the group buying prices are too low. We can barely survive the price war with small KTVs for a while, but we can't hold on for a long time."

In 2014, the operating pressure of traditional KTV companies also came from the full entry of emerging KTV companies that rely on the Internet and connect online and offline. Lesheng KTV, which is also located in Beijing's prosperous Chongwenmen business district and has a history of more than 10 years, is also deserted during prime time in the evening. A staff member told reporters that the KTV has a total of 42 private rooms, and currently only 17 of them have guests; while just across the street, the Changba Maisong KTV, which just opened not long ago, is doing a booming business. When the reporter arrived at the store, all 20 private rooms in the store were full. During the more than half an hour of talking with the person in charge, four groups of guests were waiting for rooms at the front desk. The introduction of new KTVs has further taken away customers and divided the market, which is like adding insult to injury for traditional KTVs known for their scale, quality and emphasis on supporting services.

The fierce market competition has put unprecedented pressure on traditional chain KTVs and has also given rise to changes in the industry. When talking about future development, the person in charge of Qiangui KTV said that in the next step, the company may introduce a franchise model, relying on mature management experience and equipment to focus on second- and third-tier cities, and achieve scale expansion and development of the company through brand effects; the person in charge of Milexing World KTV believes that in the fierce competition, KTV's hardware facilities and service quality will become the key to seize the market and attract consumers. To this end, the company will continue to improve its hardware level and service quality, and seek opportunities to cooperate with other popular entertainment service industries such as catering and games, and meet people's increasingly diverse consumer needs by enriching its business model.

Hidden worries behind the prosperity of new KTV

At the end of 2014, Changba Maisong KTV in Fangzhuang, Beijing, welcomed the first batch of experiencers. The video community 9158, which expanded its business to offline, also tried to operate a physical KTV store in Hangzhou, Zhejiang. The new KTV represented by these two makes many people believe that the KTV industry has begun to enter the O2O model, and the traditional KTV industry is facing the impact of the new business model.

Changba Maisong KTV is a physical KTV store opened by the mobile APP "Changba" and Maisong mass-market KTV offline. It focuses on social functions, which is also in line with the original positioning of the APP "Changba" as "social networking with music as the bond". Another representative of the expansion of the O2O model KTV is the video community 9158, which is more like a show, with many people listening to the host singing in a room. Recently, 9158 has conducted a physical store pilot near the University Town of Hangzhou, and held a K song competition between colleges and universities, attracting audiences through events. The person in charge of 9158 said that the current pilot will be used as a flagship store, and more KTVs will be attracted to join in the future. In both of the above methods, users can call online activities through the APP, book rooms through their mobile phones, and consume directly after arriving at the store. All payment links can be operated online through mobile phones. Not only can they sing the songs provided in the software, but they can also upload the accompaniment they downloaded or made for singing.

The new O2O model KTV is more oriented to the younger generation. According to a store manager of Changba Maisong KTV, the store's customer flow reaches a peak every afternoon and just after get off work. Within two weeks of opening, there was a turnover of nearly 280,000 yuan, and the number of customers reached more than 200 batches. The person in charge said that such performance is relatively ideal for this store with only 26 private rooms. In order to maximize profits, Changba Maisong physical stores do not have a lobby, and the display equipment in the room uses projection to reduce costs. According to the price list of Changba Maisong KTV, the unit price of a mini private room during the prime time at night is 25 yuan per hour, and the price of alcohol is also comparable to that of retail stores. The new O2O model KTV allows customers to actively consume in the entertainment experience, and also shares the rent and other costs by increasing the room change rate to achieve small profits and quick turnover. In terms of management, all consumption data is recorded online, and offline management costs will be reduced accordingly.

3f048490d5854e0fb800081117e38049.jpgIndustry insiders believe that the main source of income for pure online APPs is advertising and the sale of some virtual goods, and the profitability is poor. However, the O2O model of acquiring and investing in chain-type mass-market KTV stores, developing offline KTVs, and using offline activities to complete business can make up for the shortcomings. In addition, as software such as Baidu Music and QQ Music have successively added K song functions, whether in terms of funds, teams or promotion dimensions, the market division of mobile K song software will become more and more fierce. Only by expanding offline business can it stand out from the trend of homogeneity.

Compared with the heavy asset model of traditional KTVs that first build stores, the O2O model of KTVs' acquisitions and investment in offline physical stores is a low-risk, low-cost solution. However, the relevant person in charge also said that the profit model of O2O KTV is still under exploration, new functions and new models need to be further developed and utilized, and strategic cooperation projects have not been implemented. Therefore, the development of the new O2O KTV industry is just "crossing the river by feeling the stones".

KTV industry should actively seek change with market orientation

KTV, which entered mainland China in the 1990s, was once a popular leisure activity for young people in cities and led the entertainment consumption of a generation. However, with the rise and development of the Internet and the gradual development of smart phones as portable entertainment terminals, people's social patterns and entertainment methods have changed, and the social function of KTV has been weakened, and its further development has also been affected. Whether it is new or old KTV, the current development faces considerable challenges.

Facing the impact of internal and external environments, where should KTV companies go? Chen Shaofeng, deputy director of the Institute of Cultural Industries of Peking University, said that in the future, traditional KTV may appropriately reduce the individual scale and expand the coverage scale according to regional consumption needs and consumption capacity; at the same time, segment the population, and innovate profit models and tap market potential by launching theme activities and cooperating with communities and enterprises. As for the new KTV, Chen Shaofeng believes that the new O2O model KTV can rely on the huge user resource advantage of online APP, conduct big data analysis through user consumption records, gather people with common hobbies and consumption habits, further deepen social behavior, and expand network marketing in a more targeted manner, so that online and offline resources can form a synergy to promote the development of KTV. At the same time, he also pointed out that the new KTV should avoid blind price wars, invest more energy in development, attract consumers with better services and diversified projects, and thus achieve healthy and long-term development.

"In the Internet era, traditional KTV, with its emphasis on service quality and hardware conditions, provides people with a good consumer experience that is completely different from the new KTV. Its existence and development have played an important role in meeting the needs of mid-to-high-end consumers and activating the cultural market." Qi Yongfeng, professor at the Institute of Cultural Development of Communication University of China, said, "At the same time, the emergence of emerging enterprises has also driven traditional industries, prompting them to continue to use Internet thinking to develop, so as to better adapt to the needs of mass cultural consumption." He said that in the short term, the KTV industry will not have a brand monopoly, but will move towards integration and development. In fact, faced with diversified consumer demands and a changing consumer market, it is imperative for new and old KTVs to seek transformation and tap into their advantages.