Afreeca TV’s Unique Gifting Business Model

Afreeca TV is a peer-to-peer, real-time broadcasting service in Korea. Performers, referred to as Broadcast Jockeys, perform or chat with their viewers during live video shows. While Afreeca TV also retransmits local Korean TV, such as baseball, the focus of this post will be on the gift economy surrounding its user-generated content.

Gift Economy 

Afreeca TV monetizes its content primarily through a gift economy. Broadcast Jockeys receive virtual currency from their viewers as a form of gratitude. This virtual currency, known as Star Balloons, are valued at about $0.10 each and come in packages ranging from $1 to $50. Popular BJ’s can earn thousands of dollars worth of Star Ballons each day, which can later be cashed out for actual Korean currency. For example, in this screenshot one of Afreeca TV’s most popular BJs, Eve, receives a gift of 10,003 Star Balloons from a single viewer. That’s equivalent to roughly a $1,000 gift for a PG-13, group video chat.

afreeca-tv-gifts

The gifting economy means big business for Afreeca TV. When a Broadcast Jockey chooses to convert their collected Star Balloons into Korean won, Afreeca TV takes a 30-40% cut–depending on the BJ’s sales volume. Afreeca TV is a publicly traded company on the KOSDAQ, and in 2012, the company earned $17M in revenue strictly from Star Balloons. It earned an additional $11M off of advertising. That means the company earns 60% of its revenue from gifting. Afreeca TV’s revenue from Star Balloons is projected to grow, boosting the service’s total revenue for 2013 to $38M.

Afreeca TV’s business model is a unique approach to monetizing user-generated, live video shows. US-based live broadcasting sites, such as Justin TV or Ustream, focus on banner ads, video pre-roll, or ad-free subscriptions to generate income. In contrast, Afreeca TV has left its viewers to decide the value of the content they watch. And by gifting the content creators themselves, viewers most likely feel better spending their money on someone they can see and communicate with rather than on a less tangible monthly subscription fee.

Unique Korean Content 

Eating, or rather, watching others eat is a popular content category on Afreeca TV. This type of show is referred to as “Mok-bang”, a mashup of the Korean words for eating and broadcast. Mokbang is most popular during dinner time, and at least one newsite attributes its popularity to viewers who wish to avoid a sense of loneliness when eating alone.

In the video below, BJ Lebi is shown eating dinner while responding to viewer questions, such as: What are you eating? How much can you eat? How often do you use the restroom?

Gaming is the site’s most popular category. 50% of all channels feature BJs playing games such as Starcraft, Grand Theft Auto, League of Legends, or even casual mobile games. Top broadcasters in this category can attract over 50,000 simultaneous viewers–that’s more people watching a game of League of Legends than you can fit in the Stanford Stadium.

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A gift economy can be a risky approach to maintaining any service, but once in place, it can provide a self-sustainable, user-driven ecosystem. Viewers, publishers, and the company seem to be equally invested in the fun surrounding P2P live broadcasting.

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