Don't Do KTV, Create a New Entertainment Species: The Methodology of Star Party's Counter - Trend Growth

On June 29, 2025, Xingjuhui, a Chinese KTV brand covering four floors with large pink - covered exterior walls, opened in Shibuya, Tokyo, the "busiest intersection in the world". For industry observers, beyond the symbolic meaning, this scene poses a huge question mark.

In China, the KTV industry has long been forgotten by capital. According to Tianyancha data, since 2015, over 70,000 KTV stores have disappeared from the Chinese map, and former industry giants have quietly withdrawn. "In recent years, the entertainment industry has diversified significantly, and KTVs are no longer in the spotlight of mainstream capital," an investor in the consumer sector told 36Kr.

However, Xingjuhui shows a remarkable resilience in its data: since its establishment 14 years ago, it has opened over 900 stores in China, none of which have closed due to losses, and the investment pay - back period of its stores is shorter than the industry average.

After becoming a leading brand in the Chinese KTV market, Xingjuhui expanded its business overseas, aiming to gain a foothold in Japan, the birthplace of KTV. Of course, this is not easy. Within a one - kilometer radius of the Shibuya store, there are more than a dozen local KTV brands.

This is undoubtedly a challenging overseas battle, but Weng Peimin, the founder of Xingjuhui (hereinafter referred to as "Brother Xing"), is full of confidence. He announced his global ambition: to open 2,000 stores in China and 300 overseas within three years. In his view, Xingjuhui can change the local entertainment mode with its new scenario and service methodology developed in the highly competitive Chinese market.

Main guests attending the opening ribbon - cutting ceremony of the Tokyo Shibuya store: Weng Peimin, the founder of Xingjuhui; Ding Liye, the chairman of INLAND Real Estate Group; Wang Yongping, the president of the All - China Federation of Real Estate; Zhou Yanbin, the president of Winshang Co., Ltd.; Jiang Yuemin, the chairman of Longbai Fund; Jiang Feng, the editor - in - chief of the Japanese monthly of People's Daily Overseas Edition; Sasaki Kenichi, the founder and CEO of ACEHIGH Co., Ltd., a standing director of the General Chamber of Chinese in Japan

The decline of the KTV industry seems to have nothing to do with this rapidly growing chain brand. Xingjuhui's debut in Shibuya also raises a more fundamental issue than "success or failure overseas": in a traditional industry where the valuation logic has failed and is regarded as a "ruin", is Xingjuhui gambling against industry rules or creating a "new species" that can withstand market cycles?

Not a KTV, but an Entertainment and Social Space

Similar to the fitness industry, the decline of traditional KTVs is essentially the collapse of their financial models. With large operating areas of thousands of square meters, high rents in commercial areas, heavy decoration investments, and huge labor costs, they form a fragile "heavy - asset" structure. Once the customer flow fluctuates, the cash flow quickly dries up, and they are eventually overwhelmed by costs. This is a "death rule" repeatedly verified by the market.

However, the failure of old methods does not mean the industry has no future, at least that's what Brother Xing believes.

Masayoshi Son, the founder of SoftBank Group, listed four criteria for choosing an industry in the early stage of entrepreneurship in his autobiography "Soar Higher": First, there are no strong enough competitors in the industry; second, it can achieve rapid growth and become a leading brand in the country; third, the industry is suitable for young entrepreneurs; fourth, economies of scale can be achieved at the operational level.

These criteria had a profound impact on him. After repeated comparisons, he targeted the KTV industry. Brother Xing found that although there are many competitors in this industry, there are almost no leading enterprises with sufficient dominance. Even affected by the Internet, many KTV enterprises have closed down.

However, the karaoke market will always have an audience. In fact, since the emergence of online karaoke software, "KTVs" have become ubiquitous. Nevertheless, he believes that physical KTVs still have their necessity. The underlying logic is that "people come to KTVs not just to sing, but for socializing, gathering, and emotional release."

In other words, KTVs are a "dopamine business" and a social space.

Aiming at "socializing" and "gathering", Xingjuhui has reinvented the KTV scenario and service, aiming to launch a business revolution of "maximizing space - time efficiency". The revenue model of traditional KTVs is extremely single: box rental fees + limited beverage sales. This makes their profitability completely limited by business hours and limited customer unit prices. Xingjuhui's approach is to transform this single - function space into a "dopamine factory" with multiple scenarios, multiple time periods, and multiple revenue sources.

Brother Xing has translated his concept into a series of specific product features: the boxes are more diversely decorated and equipped with functions such as sound, light, electricity, and spray. They not only provide karaoke services but also meet the needs of disco dancing, script - killing games, afternoon tea, business meetings, square dancing, etc., covering different age groups and consumption scenarios. Xingjuhui's business hours have been extended from the traditional evening to noon and midnight.

More imaginative improvements are made in the catering section. In addition to regular beverages, consumers can also enjoy "full meals" - authentic Shengzhou steamed buns, crayfish, Liberian ham, etc., which goes beyond the service scope of traditional KTVs.

Brother Xing divides happiness into two concepts: one is to make customers happier, and the other is to make the gatherings more interesting. Centering on "happiness", Xingjuhui has made many changes to the traditional KTV gameplay. Take the upcoming song - ordering system of Xingjuhui as an example. In addition to singing, customers can also have real - time PK with strangers or have online interactions, and incentives such as beer and meals can also be part of it.

"In the future, we can make the PK results scroll, select weekly and monthly champions, and the grand prize might be a car. Through our technology, everyone can be the protagonist of an MTV and share it online for fission. If you are good enough, you might even be packaged as a singer," Brother Xing said.

Seemingly simple category expansion and gameplay updates actually have a completely different underlying logic. Xingjuhui has upgraded the single "temporal space rental income" of traditional KTVs to a composite income of "space + time + content consumption". While paying for the space, customers also pay additional premiums for food, experiences, and emotions, which increases the unit price of each consumption and profit margin, enhances user stickiness, and creates a secondary communication effect.

In addition to product - mode innovation, Xingjuhui has also improved its strategies for attracting new customers and retaining existing ones, such as its unique "4 + 1" rule.

"4" means that the store manager should add the WeChat accounts of merchants within a 1 - 2 - kilometer radius to meet their team - building needs at any time; classify large - scale customers and provide unique services; target business banquet restaurants with an average per - capita consumption of over 200 yuan in the surrounding area and distribute coupons for promotion after meals; provide additional services such as catering after customers have consumed in the box for a certain period. "1" refers to pasting promotional posters in the basement, exterior, first - floor hall, and elevators of shopping malls for all - round exposure. The "4 + 1" combination promotes traffic growth and conversion.

As of now, Xingjuhui has covered over 130 cities across China, with over 900 stores and over 30 million active members, and it is still growing.

All of Xingjuhui's actions point to the same conclusion: it has abandoned the passive business logic of "waiting for customers" in the traditional offline entertainment industry and transplanted the concept of "private - domain traffic" from the Internet field to the offline market, trying to transform a business highly dependent on experience and full of uncertainties into a quantifiable and predictable growth model.

The "Subtraction Rule" of Small - Scale and Light - Labor Operations

Brother Xing realized early on that following the old path of traditional KTVs would lead to a dead end.

The COVID - 19 pandemic accelerated the elimination of traditional KTVs. A once - popular KTV brand across the country is a good example. This business model, which relies on large venues and prime commercial areas, eventually faded out of the market under the pressure of high rents and the impact of the Internet.

After realizing the "black - hole effect" of heavy assets, Brother Xing chose to pursue digital transformation to develop a lightweight small - store model.

The cultural, sports, and entertainment industries, including KTVs, are a "standard configuration" in shopping malls, and their rents are relatively lower, about one - fourth of that of the catering industry. In terms of area, Xingjuhui has abandoned the traditional 2,000 - 3,000 - square - meter KTV stores. Its main store types are 300 - 800 square meters, and it adapts to different types of shopping malls through diversified store types to maximize space - time efficiency.

Boxes in Xingjuhui stores

In terms of labor, through digitalization, systematization, standardization, and process - orientation, Xingjuhui has streamlined the number of employees to about 10, and for a 400 - square - meter store, it can be controlled at about 6.

In this way, Xingjuhui has solved the two core pain points of offline businesses: rent and labor costs.

Brother Xing said that the investment in a single store in the sinking market can be controlled within 2 million yuan in the future, and the pay - back period can be less than one year if it goes fast, or three years if it goes slow. In fact, the investment pay - back period of Xingjuhui's single stores has basically been around two years, and it can achieve stable profits, which is rare in the chain - business system.

This low - cost and high - efficiency operation model of small - scale and light - labor has enabled Xingjuhui to survive the impact of the pandemic. Brother Xing recalled that during the pandemic when the stores could not open, Xingjuhui's employees took up jobs such as food - delivery riders, supermarket porters, and online car - hailing drivers, which were more needed by society. After the pandemic, over 90% of the employees chose to return because Xingjuhui's employee training and promotion system provides greater development space.

As consumers' enthusiasm for going out and spending returned, Xingjuhui's stores across the country were soon full, quickly making up for the losses during the pandemic. After being tested by the pandemic, Xingjuhui's operational resilience has also won the confidence of more franchisees and real - estate developers. In Brother Xing's words, "Now, what we lack is not franchisees, but good locations. More than 100 franchisees are waiting in line to choose locations."

Outdoor advertising spaces of Xingjuhui

Xingjuhui's unique positioning as a "social space" and its lightweight operation model make it stand out in the KTV industry. However, entrepreneurship is never about foreseeing everything from the start but about extracting experience from mistakes and attempts. The experience Brother Xing summarized is that the best attitude for entrepreneurs is to stay firm in the face of difficulties. And the best way to stay firm is to constantly review and learn.

Brother Xing gave an example: A person who cooks twice - cooked pork 10,000 times but never becomes a master of it because he always repeats at a low level without progress. But if he reviews his performance every day to find his shortcomings, the progress will be significant. Therefore, Xingjuhui holds a regular quality - improvement meeting every week, where department heads put forward rectification and optimization suggestions based on user experiences to continuously improve the user experience.

"I always believe that the greatest power of human beings is the power of compound interest. If you make a 1% progress every day, you will be 37.8 times better after a year. But if you regress 1% every day, you will soon be nothing."

Why Do Investors Rush to Invest?

In the eyes of most investors, traditional KTVs are an "outdated" business. On the contrary, Xingjuhui is a highly - watched high - growth target.

Like all enterprises with internal cash - flow generation capabilities, Xingjuhui has no urgent need for simple financial investment. Brother Xing revealed that Xingjuhui has never had a financing need before and is currently considering its first - round financing, and the number of inquiries has increased significantly. "We have received more than a dozen groups of investors this year, all of whom are very interested and eager to invest. But we will still choose carefully and hope that they can bring something other than money."

An investor mainly focusing on the consumer sector commented that the reason why the KTV industry is not favored by the primary market is that it is "too heavy", "too old", and lacks imagination. The uniqueness of Xingjuhui lies in its light - asset and innovative nature, and its pay - back period is better than expected.

He gave an example: The investment pay - back periods of many Xingjuhui stores are basically the same as those of leading tea - beverage and catering brands, and even better than some stores of these leading brands. For traditional KTVs, it is normal to pay back the investment in three years and update the equipment in five years.

Brother Xing said that there are many sources of income for a single Xingjuhui store at present. In addition to regular beverage and food sales and box service fees, it is also creating IP - related retail products with its own characteristics, which will be presented in unique ways, such as employees dancing. For the headquarters, in addition to franchise fees, supply - chain revenues, and retail revenues, Xingjuhui is also considering adding interactive - screen advertisements to the box screens to create more fun and diversify its business model.

Another feature of Xingjuhui that attracts investors is its rapid expansion. According to official data, the second - store opening rate of Xingjuhui is 83%. The second - store opening rate refers to the proportion of franchisees who open a second store after opening the first one. An 83% rate indicates that most franchisees' first stores are profitable, which also proves that Xingjuhui's single - store model is replicable.

Brother Xing is quite optimistic about future expansion. He pointed out that the next step in the domestic market is to improve the layout in first - and second - tier cities and expand to the mass market. Taking Shanghai as an example, there are currently more than 70 stores, and the goal is to double the number.