Do Non-monetary Virtual Gifts Enhance or Diminish Voluntary Paid Gifts on a Live Streaming Platform?

Abstract

This project empirically investigates the impact of a live streaming platform’s viewer-engagement improvement efforts on viewers’ voluntary paid gift giving outcomes. Live streaming platforms employed various strategies such as gamifying viewing and community engagement to increase viewer side engagement. A common gamification strategy is to grant platform ‘coins’ that viewers can exchange for VIP passes or non-monetary gifts that can be given to streamers during live-streams. Given that live streaming platforms utilize Pay-What-You-Want (PWYW) pricing mechanism, it is unclear if increased access to non-monetary gifts substitutes or augments viewers’ voluntary monetary gift sending behavior. To answer this question, we work with a major live streaming platform in Asia and analyze individual-level virtual gift sending records between May and December of 2019. The analyses reveal that encouraging non-monetary gift sending behavior increases viewers’ monetary gift sending behavior by 105.24%. Mechanism analyses suggest that free gifts facilitate habit-forming, resulting in an enhancement rather than a substitution of monetary gift sending. Furthermore, we also provide evidence of attention-seeking gifting behaviors. Consistent with the proposed mechanisms, our heterogeneity analyses suggest that streamers with a previously lesser popularity benefit more from the policy. Our research contributes to the live streaming and platform policy literature and offers guidance to live streaming practitioners in engagement feature designs.