KTV lovers make mini-KTV-sharing a lucrative business model in China

Shaped like telephone booths and located in shopping malls and movie theaters, shared-mini-KTVs have become the latest fad for young Chinese city dwellers, thereby, drawing increased interest from investors.

The mini-KTV phenomenon and the shared-power-bank are considered to be the next big commercial opportunities after bike-sharing, which took the country by storm this past year.

What can one expect from the appearance and experience of a mini-KTV?

The telephone-booth-shaped mini KTV is equipped with a touch screen, a large display, two microphones, two headsets and two stools. Once users scan the QR code and enter the system, they can choose the songs they want to sing either on their smartphones or on the touch screen.

While users are singing, the system grades each song they sing and automatically tunes their voices to make them sound better. Users can also save these soundtracks on their mobile phones and share them with their friends on WeChat, a popular SNS app.

Users are charged either by time or by the number of songs they sing. They use mobile payments apps like WeChat Pay or Alipay to complete their transactions. The price is approximately RMB 8 (USD 1.2) for one song and RMB 38 for half an hour of use. The price is also subject to supply and demand forces, similar to Uber’s pricing strategy.

Photo from Mida miniK

AllTechAsia spoke with three mini KTV users who all said they enjoyed its convenience and flexibility over that of traditional KTVs. They went on to say that mini KTVs had better sound quality and that they liked the recording and sharing functions. However, they complained about the relatively high price and the sanitation conditions of the microphones and headsets.

Currently, there are more than 10 mini-KTV startups competing in the marketplace, including Youchang M-bar, Leishi WOW, Mida miniK and Lingda miniK. Youchang M-bar and Leishi WOW have attracted funding worth hundreds of millions of yuan. These startups have, collectively, distributed more than 20,000 mini KTV units to the market.

Investors believe mini KTVs are a lucrative business because they can recover their costs quickly and start making money. Some entrepreneurs have told local media that the cost to buy an individual mini-KTV unit is somewhere between RMB 20,000-30,000, with a total cost of purchasing and setting up the machine, including space rent, internet fee and installation cost, running between RMB 30,000-40,000. Each machine earns about RMB 500 per day, thereby, taking two-six months to recover initial costs.

The mini-KTV industry is expected to enjoy continuous and even faster growth. According to iiMedia Research, a market research firm, the mini-KTV market size in China is expected to reach RMB 3.18 billion in 2017, a 92.7% increase from last year. The market is forecasted to grow a further 120% in 2018.

Analysts of iiMedia Research said the mini-KTV industry is still in its early stage of development. The availability, ease of use, and integration with current technologies will be key differentiators in deciding this commercial battle.

(Top photo from sohu.com)

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