China's lottery industry bets on digital sales growth
Low barriers to entry and high profits are attracting new online players
"A healthy attitude is the cornerstone of success! Try once more, every time is a new start!"
Every time a message like that flashes on her phone, Lily knows she didn't win the lottery. But the 35-year-old Beijing white-collar worker, who just bought a ticket through Tencent's WeChat platform, cracks up all the same.
"Each time it comes up with something different to cheer you up, which is fun," she said.
Lily is the kind of buyer the mainland's lottery industry is betting on.
"People with higher incomes, at least those with a smartphone and are younger, are the new generation of lottery consumers," said a vice-president of a listed lottery company who asked not to be named.
He said he expected lottery sales on digital platforms to grow 50 per cent in 2014, on 2013's 42 billion yuan (HK$52.9 billion). In 2013, digital sales on the mainland accounted for 13 per cent of the 309 billion yuan lottery market, which was up 18.3 per cent on the previous year.
With the migration of consumers away from traditional stores to computers and phones, market players expect sales to be driven up by the convenience afforded by mobile platforms. More new products are also being designed specifically for digital distribution, adding to sales.
The 2014 Fifa World Cup led droves of mainland punters to buy their first digital lottery ticket, many of them through WeChat and Alipay.
The vice-president of the listed lottery company said there were more than 100 websites selling lottery tickets on the mainland at present and predicted mergers and closures in the near future.
Xia Yu, founder and chief executive of Chuanqi, said the online market was developing rapidly, with about 300 million people buying tickets online in the country at present.
"There are many small websites because all you need is to set up an online platform," he said. "That done, it's easy to make money."
Xia pointed out that almost all top internet companies have started lottery units. "The online lottery market is developing fast, the barrier to entry is low and profit is high."
According to Xia, every digital platform in the country, big or small, is making money on the back of rapid sales. "I believe there will be consolidation in the industry at some point as there are just too many players, but the question is how, as we are all making a profit and have no survival issues."
A report by Beijing-based lottery industry consultancy Caitong said that total lottery sales on the mainland in the third quarter amounted to 101 billion yuan, of which about a quarter came through online sales.
The top five lottery websites have nearly two-thirds of the market, leaving many smaller players scrambling for the rest, according to the report.
