MBar (Mini KTV) entering Singapore

Not long ago, M-Bar, a mini karaoke service wildly popular in China, made its inroads to Singapore.

The concept of mini karaoke is simple – a small, soundproof, and air-conditioned booth fitting up to 2-3 people stationed in shopping malls and other places of high consumer traffic. For a small fee (per song or per time slot), patrons can sing their favorite songs, record them in ‘semi-professional’ quality, and share them on social media (and with rankings of course).

M-Bar is a leading player owned by UBox, a listed company that specializes in automated vending machines. UBox’s machines include general vending machines, coffee machines, fresh juice machines and several other categories.

Good that UBox management has been friends with us for a while, and we tested M-bar during the early days of its entry in Singapore.

Location

M-Bar pretty much copied its strategy from China: the kiosks are mostly installed in schools and shopping malls, where the consumer traffic is high, and most people are not pressurized with time.

M-Bar did not consider locations such as tourist spots (‘repeat purchase rate is very low’ and ‘people from other countries sing different songs, for which we need to pay for the copyright’), or bus terminals where everyone was rushing for something.

The Missing Sharing Feature

The manual surface was designed only in English whilst the functional logic was entirely the same as the ones in China. This might be a challenge for some customers here who prefer Mandarin.

A highlight of M-Bar was the social sharing function, like in China, where customers can upload their recorded songs (and scores) to friends on WeChat.

There are two major benefits here: 1) viral marketing, many people, after seeing shares from their friends, flock to find nearby booths to do the same; 2) increased stickiness, people will sing the same song multiple times before they share, to improve the shared score.

There is a slight challenge in Singapore, as Singaporeans do not use WeChat to the same extent the Chinese do. The team said they would work on sharing on other platforms such as Facebook and YouTube, which are much more popular in the island state.

As for the equipment, M-Bar currently offers standard earphones and microphone sets. There is room for improvement of sound quality. Our friends at UBox mentioned that M-Bar is exploring partnerships with equipment brands such as Beats to enhance the users’ audio experience.

Payment options

M-Bar accepts a wide range of payment methods from Apple Pay, credit cards, to EZ Link (local contactless transport cards) and NETS (a local settlement network) etc., lacking QR based methods, which was the standard in China.

WeChat and Alipay, the most popular QR-based payment methods in China, are not integrated with the kiosks in Singapore, in line with the strategy of not targeting the tourists. (Most POS accept these two for Chinese tourists).  

So far, M-Bar has done a good integration with major local payment methods. The NFC payment is rather slow but that is a universal problem with all NFC payment terminals here in Singapore.

M-Bar might explore stored value cards moving forwards for frequent users, and it is not clear whether this will be interoperable with other UBox machines or joint ventures, such as the unmanned restaurant Chef-in-Box, a JV with local food and catering company JR Group.  

Copyright

We understand that it took a long while for M-Bar to acquire all the copyrights for different categories of songs. One challenge was that the licensing organizations had never dealt with such a model, and could not quite determine whether it is considered Karaoke, or online broadcast (as there is a focus on sharing on social media).

Singapore has a diverse ethnical and language makeup, thus M-Bar provides a variety of songs from all languages for customers to choose from, and pay a hefty fee for that.

Business model

In terms of pricing, M-Bar offers S$2 for one song, in addition to SGD$6.5 per 15 minutes, S$12.5 per 30 minutes, S$24 per hour packages. They are not expensive compared to M-Bars in China or karaoke lounges in Singapore.

Let’s assume that each day the machine is occupied for 3 hours at the cheapest (S$24/hour) and free during weekends. This generates roughly $1600 per month. The costs are mainly rent, maintenance, electricity (minimal), network (4G), and copyright charges.

So far with $1600 per month, they are able to make the unit economics work – of course, the scale needs to be considered for this business to be viable.

Challenges & opportunities

We believed the China-based M-Bar has done a pretty good job localizing its successful model with the local Singaporean market. However, some tougher challenges await as more kiosks are being installed throughout the country.

First, a lack of WeChat’s presence in the Southeast Asia may restrict M-Bar from building a successful experience-based, Karaoke social platform in the market.

The business model targeting fragmented time from customers would ultimately face with the bottleneck for business development. We suggested M-Bar can develop services specified on different customer demands, such as “recording room for bar singers,” given when M-Bar is provided with higher standard equipment.

Furthermore, M-Bar should consider partner with Facebook in addition to their original WeChat accounts.

Despite young customers are diving an open Southeast Asian market for new ideas, M-Bar should take marketing as the key. The current model went through a long period before it became popular among the Chinese market, so does it need time to introduce itself to the case of Singaporean market. In Singapore, there are also many users who had previous experience with M-Bar in China, and they could become promoters for the business locally.

Especially in Singapore where YouTubers are so popular, M-Bar can also consider partnerships with Vlog celebrities & influencers.

Besides, the current charge-based model cannot maximize its profitability while M-Bar would need to consider increasing standards of the equipment but lower its operating cost. Launching differentiated charging is one method, building a strategic partnership with equipment providers may also help. They could have also taken mirrors from Ubox vending machine, which harness their customer data to lower its operation cost by 30-50% against its competitors. It is believed that once they provide a full coverage in the Southeast Asia the cost will be even lower.

What’s next

To sum up, Singapore has been the first move for M-Bar entering Southeast Asia. The market will be further expanded if the model is successful here.

Besides, Karaoke has been a general leisure event in countries like Thailand and the Philippines, whereas in China, Karaoke has been popular amongst factory workers.

Studies showed that 90% of the factories over 3,000 workers in China have installed Karaoke machines, and there are many factories, which have moved to Southeast Asia region for the past two years.

M-Bar certainly has great market potential long as it fulfills the local demand and handles problems such as payments, copyrights, and operation while maximizing its distribution from China into the Southeast Asia.

And of course, while competition will surely come, but equally sure that they will not come as fast and aggressive as the competitors in China.