Investors will be more cautious in putting money into "content producers" as the industry faces more risks after China's online regulator recently shut dozens of entertainment social media accounts, industry experts told the Global Times on Monday.
About 30 WeChat accounts mainly covering celebrity scandals have been closed, the Guangdong Province office of the Cyberspace Administration of China (CAC), the Internet and mobile app regulator, said in a notice on Saturday.
Some of the accounts won investors' attention because of their popularity, but the closure will definitely hurt their investors, Xiong Gang, chairman and founding partner of China ASB Ventures, an investment management company, told the Global Times on Monday.
The Beijing office of the CAC said in a notice on Wednesday that 60 popular celebrity gossip social media accounts were closed in line with the country's new cybersecurity law, which was effective on June 1.
The closed WeChat accounts include Dushe Movie, a movie criticism app that had more than 2 million followers.
Germany-based Bertelsmann Asia Investments led a series A funding round in Dushe, valuing it at 300 million yuan (.13 million), according to a report by financial news portal China Money Network in August 2016.
Xiong warned that investors need to weigh risks before choosing these projects, adding that it's very important for "content producers" to comply with the law in China.
Xiong said that his company will instead invest in sectors based on technology innovation, which offer relative stability.
There is still potential in the media industry, however.
In 2017, the independent media in China will be more regulated and sites producing high-quality content will more easily get investors' attention, said a white paper released in February by Beijing-based topklout.com, a research company focusing on independent media.
"We have invested in some projects in the entertainment industry such as video platforms," Yu Wenhui, founder of the Guangzhou-based investment company Thunderstorm VC, told the Global Times on Monday.
The projects his company invested in are mostly operated on several platforms, not like some accounts that are limited to WeChat, because having only one platform is risky, according to Yu.
Of the accounts that were closed on WeChat, some may seek new channels and opportunities.
"But it costs a lot to regain public attention and attract investors," Yu noted.
Some experts said that the closures' impact will be limited.
"Although some of the social media accounts are quite popular, it's still hard to monetize their estimated value" anyway, said Chang Zongfeng, co-founder of Shanghai-based crowdfunding company baichouhui.com.
Investors will be more cautious as they will need to know whether a site's content is in line with the country's cybersecurity law, Chang told the Global Times on Monday.