(Yicai Global) Sept. 19 -- Mini karaoke booth companies are focused on market expansion and attracting investment, while the industry's operators and agents are trying to deal with popularity adulterated by poor profitability, TMTpost reported.

China has embraced the shared economy, and mini KTVs have popped up in the country. Youchang M-Bar and Mida miniK, which were among the country's first shared KTV booth groups to capitalize on demand for entertainment in the internet era, have each secured USD1.5 million (CNY10 million) in fundraising.

"Claw machines, mini KTV booths and virtual reality (VR) experiential rooms are three must-have facilities for malls in recent months," a person in charge of a major commercial complex in the central district of a first-tier city said. "If there are no mini KTVs in a commercial complex, it must be very unpopular," he said.

"Mini KTVs are actually not as profitable as imagined and are even less profitable than claw machines," said Mr. Chen, who bought several mini KTVs and put them at malls earlier this year.

Earlier this year when mini KTV booths were starting to gain traction, Chen bought four of them for more than CNY100,000 and put them at two leading commercial complexes in a first-tier city. "Each booth occupies about 1.5 square meters. I needed to pay CNY350 in rent and administrative expenses to the shopping center every day in the beginning."

Chen said that the machines he put in a mall in the city's central district generate CNY200 to CNY300 in revenue every day, while those he placed in a complex in the city's new area generate just dozens of yuan per day.

Though seemingly popular, few mini KTVs make money. A machine's location, which is not completely up to the operator as it is subject to 'hidden rules,' could affect its profitability. Vandalism is also an issue.

Manager Wu, who is an agent for a brand of mini KTVs, tacitly acknowledged these issues. Less than 10 percent of his mini KTVs are making money and a small portion are generating revenues that can barely offset rent and management costs, he said.

In the beginning, many people would try mini KTVs, but quite a few will not visit them any more after using them once or twice because they get bored singing alone, Wu said. They do not foster socializing, sharing or the merry atmosphere usually found in traditional discount KTVs, said Wu.

Mini KTVs occupy a niche between traditional discount KTVs and karaoke apps. As more players secure funding to enter the space, it may get crowded.