Zhang Qian

    zhqcindy@163.com

    THE once prosperous KTV industry in Shenzhen is now trudging hard, with 70 percent of the venues running on a deficit last year, Shenzhen Evening News reported Thursday.

    Thirteen KTVs in Luohu District, which has a conglomeration of them, were closed between March and June last year, indicating a sagging industry that peaked around 2007 in Shenzhen.

    Data shows that less than 5 percent of the industry is making considerable profits, leaving the majority to endure a nosedive in revenues.

    “It is much more difficult to operate a KTV venue now than in 2008 and we are losing 100,000 to 200,000 yuan (US$15,990-31,980) each month,” said the general manager of a KTV in Buji, Longgang District, identified as Liu.

    Party World, founded in Taiwan, was one of the leading KTV chains in the industry, but 13 of its stores have closed on the Chinese mainland so far. The Party World stores in Shenzhen once enjoyed popularity among young people after first opening in Luohu back in 2007. However, with an array of competitors sharing the market, Party World is no longer taking the lion’s share.

    “Party World is too expensive and the songs they offer are too outdated,” said a 27-year-old Shenzhener surnamed Guo who lives in Luohu. As a KTV fan, Guo said he prefers the KTVs that offer coupons and have high-quality equipment.

    There are multiple factors behind the downturn of KTVs. One of the most prominent is that many newly opened stores compete by lowering their prices to an unreasonable level, making the whole industry suffer and become unsustainable.

    Rising rent and wages are other factors contributing to the downfall. Shenzhen Evening News estimated that a new KTV needs at least one year before turning a profit due to these circumstances.

    Another reason is that hiring long-term employees is more difficult than before.“Young people today are very independent and have their own thoughts about making a living. They just don’t follow instructions as well as the older generation,” said a KTV manager surnamed Qian.

    While traditional KTVs find themselves facing multiple challenges, new venues are springing up in more innovative forms. Karaoke smartphone applications such as Changba can record and give grades to users. Online KTV platform 9158 and the app Sing Together are considering opening physical stores in major cities, attracting their online users to pay in person.

    “Some KTVs may have used online group-selling methods already, but that’s not enough. The entire Chinese entertainment industry has not fully employed the Internet to expand business. Good O2O (online-to-offline) strategy should be considered as high a priority as possible — like offering specific online services such as selling drinks and food, rather than only focusing on group-selling or reservation services,” said Tan Xiaojun, director of Luohu Entertainment Association.

    Tan says the industry’s reformation will inevitably involve the aid of the Internet. Traditional KTVs need to catch up with the trend as well as explore new business models.

    Jiang Wei, PR manager at Sing Together, holds a positive attitude towards their next step of opening physical stores in Shenzhen. He said consumers in Guangdong are more inclined to accept new ways of entertainment than people from other provinces.