Fortune befriends the bold: Livestreaming star goes it alone
The decision by livestreaming star Dong Yuhui to sever ties with New Oriental Education & Technology Group and go it alone highlights the fraught environment of livestream operators and hosts.
Dong left East Buy, the e-commerce arm of tutoring giant New Oriental Education & Technology Group, and will purchase his Time with Yuhui brand from its parent for 76.6 million yuan (US$10.5 million), according to a stock exchange filing last week.
Investors and online shoppers have been divided in their reaction.
Shares in New Oriental, a private tutoring giant, which are traded in both Hong Kong and New York, plummeted about 20 percent after Dong's decision was announced. However, Time with Yuhui added more than 100,000 new followers on its Douyin account in two days. Douyin is the Chinese version of TikTok.
The split between Dong and East Bay reflected deepening business conflicts.
"East Buy failed to restructure to company promptly to fully reflect Dong's contribution to the business when he became a major value creator in the online business," wrote Yin Sheng, a columnist and a former editor at Forbes China.
It might be hard for the company to return to immediate growth in new business momentum because it lacks star power on par with Dong. Developing talent requires a long term investment and also bit of luck, he noted.
Dong has more than 26.4 million followers on Douyin, the Chinese version of TikTok. He was the second highest ranking seller on Douyin's live-streaming merchants list, with revenue of around 533 million yuan in May. East Bay ranked sixth.
Time with Yuhui, the independent business entity headed by former star anchor Dong Yuhui, moved into new office space earlier this month and severed ties with New Oriental Education & Technology Group.
Despite the impressive performance of Time with Yuhui in the first half, some analysts have expressed concerns about how Dong's standalone venture will fare.
"It's a different matter to manage more than 100 staff at the new venture and support long-term operation, compared with Dong's former task of mainly interacting with viewers as a host," explained senior analyst Mo Daiqing at private consultancy China E-commerce Center, noting there may also be an unavoidable sales decrease for East Buy in its initial stages.
Dong, a former English-language tutor, gained fame with viewers online about two years ago.
He was touted as a live-streaming host more interested in sharing stories and his personal reading habits than in hawking products, but he did bring in big sales from products he endorsed.
Dong, 31, was born into a rural family, and his personal experiences resonated with viewers of similar modest backgrounds.
Cracks in Dong's relationship with East Buy emerged last year. Live-streaming viewers questioned whether Dong himself or the editorial team of East Bay should take credit for his success.
Some were upset about official postings on Douyin claiming it was all down to teamwork and not just Dong's personal input. That escalated into an online boycott, with fans demanding that East Buy offer fairer recognition and payment to Dong.
After the uproar, Dong was made a senior partner in East Bay and head of a more independent Time with Yuhui, but his live-streaming brand remained a wholly owned affiliate of East Buy.
Yu admitted failure to strike a balance between East Buy and Time with Yuhui.
New Oriental founder and president Yu Minhong said in a social media posting last week that he would make arrangements for Dong's payment so that the influencer can walk away with his namesake venture for free, including the undistributed profit from the subsidiary in the first half of this year.
Yu said this company had failed to strike a balance between East Buy and Time with Yuhui. The result was inevitable, he added, but it will eventually benefit his company's long-term strategy and give certainty to its management structure.
Although many anchors reach stardom because they are backed by their companies in the initial stages, some inevitably seek a certain level of independence commensurate with their status and ability to generate revenue, according to Liu Yuanju, an academic and veteran industry watcher from private research agency Shanghai Institute of Finance and Law.
The Dong spinoff reflects an intrinsic conflict in the live-streaming business.
Will popular hosts be satisfied to continue working for someone else and sharing profits, or will they invariably be tempted to go it alone and reap the full benefits of their talent?
