Take a
subway ride in China and expect to see a lot of commuters’ eyes glued to TikTok
videos on their phones.
Video clips
like TikTok’s are now consuming nearly nine percent of Chinese people’s time
online, a 5.2 percent jump from 2017, according to app analytics firm
QuestMobile.
Apps such as
TikTok — which is operated by ByteDance, the world’s highest valued startup at
$75 billion — have become popular among previously camera-shy users. Those who
lack editing experience can now easily add beautifying filters and music to
spice up their work.
It also
helps that smartphone data became cheaper and internet penetration kept growing
in recent years — China now has 800 million smartphone users, according to
government data. In 2013, just under 40 percent of China’s online population
streamed videos on their phones, according to database CBNData. In 2017, that
ratio surged to 80 percent.
Initially
geared towards Chinese youth, short-video apps have increased in popularity
across all age groups – including the elderly. Over a third of the country’s 1.4
billion people are active on these apps every month. People above the age of 50
now spend as much as 50 minutes on them every day, compared to only 17 minutes
a year ago.
And TikTok,
called Douyin in China, is spearheading the short-video game.
In recent
years, few mobile apps in China have captured as many stares as WeChat,
Tencent’s messaging app that’s evolved into a one-stop platform allowing people
to shop, order cabs, book hotels, and complete other daily tasks.
Then short
video apps came along, eating people’s eyeball time away. Apps like TikTok do
not compete directly with WeChat as they serve different purposes, but data
suggests that use of instant messaging services has waned amid the fledgling
video scene.
This year
WeChat and its peers occupied 30.5 percent of people’s online time, a 3.6
percent drop year-over-year per the QuestMobile report.
It comes as
no surprise that Tencent is fretting over the clip craze and in particular,
ByteDance’s rise. In May, Tencent’s usually low-profile boss Pony Ma got in a
rare online spat with ByteDance founder and CEO Zhang Yiming over plagiarism
and WeChat blocking TikTok content.
Elsewhere,
Tencent took action. Since April, the tech giant has rolled out a number of
TikTok rivals but so far none has gotten close to the latter’s lion’s share:
500 million monthly active users worldwide. That’s excluding the 100 million
total users on Musical.ly, which ByteDance acquired in late 2017 and merged
into TikTok this August.
Tencent’s
got other backup plans, though. It owns shares in TikTok’s China archrival
Kuaishou, which had a 22.7 percent penetration rate in September according to
data service provider Jiguang. That’s however, dwarfed by TikTok’s 33.8
percent, which means the app was installed on over a third of all mobile
devices monitored by Jiguang. Plus, ByteDance’s other short-video apps for
different niches, Huoshan and Xigua, are also faring well, commanding 13.1
percent and 12.6 percent, respectively.
Until
recently, ByteDance appeared to be making nice with China’s other internet
giant — Alibaba. The companies kicked off a partnership in March that saw
TikTok using Alibaba’s online marketplace Taobao to process ecommerce
transactions on its app. Authorized TikTok users, usually those with a big
following, can link videos to their Taobao shops. This money-making setup
allows TikTok to lure more quality content creators. Alibaba, on the other
hand, gets traffic from the fledgling social media app that could absorb some
of the loss from WeChat blocking its ecommerce apps.
Things can
go south anytime, however, as ByteDance makes forays into Alibaba’s
territories. The startup recently introduced an ecommerce platform and entered
the business of long-form video streaming, an area where Alibaba, Tencent, and
Baidu’s iQIYI dominate.
ByteDance
seems set to grow independently. Unlike many of China’s promising startups,
six-year-old ByteDance hasn’t accepted financing from any of the tech trio of
Baidu, Alibaba, and Tencent — known as the BAT such is their dominance in
China’s consumer technology.
ByteDance’s
moves into new space may also signal the firm’s urge to explore additional
monetization channels besides advertising on feeds. It lifted its revenue
target to $7.2 billion for 2018, well above the $2.5 billion it earned last
year, according to Bloomberg.
At home and
afar
Despite the
boom, China’s short-video market faces increasing regulatory headwinds. In
recent months, authorities have been clamping down on Kuaishou, ByteDance’s
video apps, and smaller players on account of eradicating content that’s deemed
illegal or inappropriate.
Violation
could result in app store bans and those that underwent such severe punishment
like Miaopai, which is backed by China’s Twitter equivalent Weibo, suffered
from a tumble in app installs.
ByteDance
didn’t get a ban – yet, but it came under fire for its AI-driven recommendation
algorithms. It’s something the startup prides itself on but has irritated media
watchdogs who reprimanded TikTok for showing users “unacceptable” content, such
as videos depicting adolescent pregnancies. ByteDance’s popular news aggregator
Jinri Toutiao, or “today’s headlines,” received similar criticisms for giving
its 120 million daily users “fluff”.
In response,
ByteDance added thousands of censors to screen content on top of AI-driven
recommendation across its apps.
Comments