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KTV in China: On the path of decline or looming for another rise?

Have you ever experienced an authentic Chinese lifestyle? If so, KTV must have been on the itinerary! KTV is a necessary component of life of young Chinese, with 24/7 operation, non-stop drinking, microphone hogs as well as a large variety of party games being its signature features.

However, despite being favored by so many people, the KTV industry’s evolution is rocky and challenging; its market outlook is getting very alto in recent years. So, what’s the history of the KTV industry in China, and where does its future lie?

KTV with Chinese characteristics

Invented in 1971 by a Japanese musician, Daisuke Inoue, KTV was initially an entertainment for business occasions. By playing the recorded soundtracks on a TV-sized machine, business servers and clients can sing along to the tune and relax before getting down to their projects.

KTV was first introduced to China in the 1980s and instantly became popular, especially among young people. Unlike Western-style karaoke, which often involves singing with a mic in front of a big group of people, KTV in China involves booking a personal room for you and your friends. In China, KTV rooms are decorated to be fancy, glitzy, and over the top. There’s a big TV screen in the room playing the music video and lyrics, together with a small screen for song picking, temperature control, and light effect adjusting. KTV places also provide food and beverages, from mini-stores inside or online menus. Depending on the room size and time slot, the prices can vary (weekend evenings are more expensive than other times). An average KTV party usually costs a few hundred RMB but split between the number of people who go, it’s fairly affordable.

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Source: 摄图网, fancy KTV rooms in China

The demise of the KTV industry in China

The KTV industry in China experienced exponential growth and flourished into prosperity in the 2010s, however, this bloom did not last long. Nowadays, the KTV industry is rapidly going downhill and looking like a  declining industry.

Indeed, according to a recent market report by Forward, in 2020, the market size of the KTV industry in China was 80.7 billion RMB, a YoY decrease of 22% from 103.4 billion RMB.

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Source: Forward (前瞻产业研究院), designed by daxue consulting. the market size of the KTV industry in China 2016 to 2020

Moreover, the annual profit of the KTV industry in China was recorded to be 59.7 billion RMB in 2020, less than half of that in 2019.

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Source:  Forward (前瞻产业研究院), designed by daxue consulting. the profitability of the KTV industry in China 2016-2020

Last but not least, companies are exiting the KTV industry; the number of KTV companies in China portrayed a 7.6% slump from 2019 to 2020.

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Source:  Forward (前瞻产业研究院), designed by daxue consulting. the number of KTV enterprises in China 2016-2020

Why is the KTV industry in China declining?

1.  Banning songs with “illegal” content

According to the Ministry of Culture and Tourism in China, since Oct 1st, 2021, China has established a blacklist of karaoke songs that has banned those containing “illegal content” from karaoke venues across the country. The ministry said banned contents would include those which endanger national unity, sovereignty, or territorial integrity and violate state religious policies. Although it happened previously as well that songs were getting removed from the karaoke music library, this time the scope was much larger and had a heavier impact due to the issue of official documents. For example, songs by famous Chinese singers like Eason Chan (陈奕迅), A-Mei (张惠妹), and Jolin Tsai (蔡依林) were removed for containing only a few lyrics of “illegal” content.

2.  Disastrous effects of COVID-19

Pre-pandemic, Karaoke shops were bustling with young Chinese workers, students and party-goers, unwinding from their busy urban lives. However, things changed drastically after the pandemic broke out in China in 2020. With the introduction of strict social distance mandates and operational regulations, as well as customers’ mounting fears, KTV places were patronized by far fewer customers compared to before, if not forced to shut down. Today in 2022, although most places in China are well under control, COVID cases still emerge from time to time, resulting in KTV operations being unpredictable and hard to manage.

3.  Rise of alternative forms of entertainment

Another factor that delivers a fatal blow to the KTV industry in China is the emergence of other forms of entertainment over recent years. The most representative examples are “Script Kill (剧本杀)” and “Quanmin Karaoke (全民k歌)”:

Script Kill – as one of the most popular offline activities with more than 30,000 venues in China at the end of 2020, Script Kill is a live-action role-playing game that follows loose scripts of murder mysteries or other fictional settings. The game involves a small group of people and a pre-written script, usually about a murder case. Participants play their respective roles in a story and communicate with each other in the hunt for clues to solve cases. According to Lily Chen, an active user of Script Kill in China, karaoke occasions are highly stressful and awkward for people who cannot sing well, whereas Script Kill doesn’t require any special skills – just a quick brain and some social skills.

Quanmin Karaoke – a leading karaoke app available on mobile devices which has attracted more than 300 million downloads and created an industry value of 7.3 billion RMB in China. According to Cui Yihua, an active user of Quanmin Karaoke, using this app is very convenient since it is free, and versatile, and you can get a music-studio-generated voice effect for an affordable price.

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Source: Quanmin karaoke website, Qing Han’s user page

The changing consumer demographics of KTV

KTV was initially strategized as entertainment for younger generations in China. However, the overall decline of the KTV industry and young people adopting alternative entertainment has led the elderly to step in and fill the void. According to Meituan, an online service platform in China, during the first half of 2021, KTV clients aged 60 to 70 rose by nearly 30% compared to the same period in 2019, while those aged between 70 and 80 have doubled. Hence. singing is becoming a source of entertainment in the the silver economy.

On the path of decline or looming for another rise?

Under the endless waves of emerging business formats, each industry has a limited lifespan in China. The descending market outlook of the KTV industry in China caused many to wonder whether KTV will disappear in the near future, the answer of which, however, is no.

According to the manager of Mei KTV, Wuxi branch, “social space” is a foothold of the KTV industry in China. KTV, as a social platform, has irreplaceable functions. Indeed, KTV is a common meeting place for business people since singing in a loud environment can help both sides lower their mental guard. Besides, KTV companies are looming for a possible fightback also by adopting new business strategies. For example, several KTV venues now are incorporating other forms of entertainment into their services, such as Script Kill and board games. The price is cheaper compared to other entertainment values so that customers will not be drawn away. Additionally, KTV parlors are also adding other songs to their music collection as a means to cater to the increasing demand of older generations.

Key takeaways about China’s KTV market

  • In comparison to the West, karaoke in China is different as Chinese people prefer the privacy of having a private space and singing with close companions.
  • Although the KTV industry in China is declining, as witnessed by the shrinkage in market size, profitability, and the number of enterprises, there is still a chance of a fightback since KTV brands are embracing new strategies.
  • The heavy ban on songs with “illegal” content, the impact of COVID-19, and the rise of alternative forms of entertainment are the major reasons behind the KTV industry’s decline in China.
  • KTV in China is getting increasingly popular among older people as part of the silver economy.

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