Internet watcher Matthew Brennan, author of “Attention Factory: The Story of Tiktok and China’s Bytedance,” discusses at BW Dialogue Tiktok and Bytedance, and looks at how much the Covid-19 crisis has changed the industry.
Matthew Brennan is a speaker at the China Speakers Bureau. Do you need him at your (online) meeting or conference? Do get in touch or fill in our speakers’ request form.
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Arnold Ma: If your target is Chinese Gen Z and millennials, you need to move on to a different platform than WeChat. Only 15 percent of Chinese teens post on WeChat moments, and the reason for this is that, just as Facebook has gained mass adaptation and become the biggest social media platform on the internet in the West, WeChat is now the single biggest social media platform in China. When that happens, when a platform moves from niche to mainstream, they will lose what made them special for the early adopters — in this case youth. So they’re going to try something else, and that something is short-form video. Chinese people spend 600 million hours per day watching short videos. It’s probably one of the fastest growing formats on the planet.
We think Douyin is here to stay, and it’s growing at a ridiculous rate. And now is the time for brands to take advantage of it. Imagine if a brand built a WeChat presence six years ago or a Facebook presence 13 years ago — today the brand would have the most powerful channel for its marketing. This only happens a certain amount of times in our lifetimes, maybe once every five or six years, where there’s a completely different new social media platform that gains massive traction.
CBI: There’s so much talk about TikTok in the U.S. now, and there’s a sense that Douyin is just the same thing with a different name. Is that a misconception?
Ma: The two are actually very different platforms, even though they’re owned by the same company. They have different content, different functions, and different user behavior. Douyin has many more advantages for brands, whereas TikTok is still a very young platform. Douyin has a fairly affluent demographic, and they’re generally very globally aware and sophisticated consumers.
The first main difference is the content, which on TikTok is very silly, fun video, for now. Our prediction is that TikTok content will move in a direction similar to Douyin. The content on Douyin is very grown up. Whether it’s about entertainment, education or lifestyle, it’s always more mature — less silly and more useful. It makes sense because short video is such a rich format, but it’s only in the last few years that technology, specifically 4G and 5G, has made it accessible enough to reach critical mass on demand.More at the China Film Insider.
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| Sara Hsu |
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| Matthew Brennan |
WeChat is coming pretty late to the stories game. For much of 2017-18, we’ve seen them totally focused on building up the mini-programs platform, which might explain some of the lateness. Also worth noting that adding stories into the complex WeChat experience in a meaningful and impactful way without disruption of the existing ecosystem balance is tricky and not without risk.
But the real reason why we haven’t seen WeChat embrace moments to date is likely to be founder Alan Zhang’s insistence on positioning WeChat as a tool for productively and efficiency rather than one that tries to keep users coming back to waste time.
Yet it’s likely that the pressure from Tencent head office to leverage WeChat to fight against Bytedance and their flagship short video platform Douyin (TikTok) is proving too much. With WeChat 7.0 we’ve finally seen WeChat make an indirect but bold move into short video.
Overall I’m pretty positive on how they’ve adapted the stories format to WeChat with this new update. I expect this feature to have a significant impact on WeChat usage habits, increasing stickiness and time spent in the app and negatively impacting consumption of other forms of short video in the China market. There will probably be some degree of cannibalization to traffic on the moments newsfeed also.
Stories have proven to be an immersive and engaging format across many different apps. The ephemeral nature of the format (24 hrs and they disappear) naturally drives users to return. The original innovation came from SnapChat who Tencent previously looked at acquiring and now own 17% of parent company Snap.
The most important entry point for traffic into this new feature might be groups and 1on1 conversations, not the newsfeed (Interestingly Facebook also introduced stories into Facebook groups this month). Messaging is traditionally an inhospitable environment for monetization. From a platform owner’s perspective, it’s not simple to monetize chat conversations, you can’t put adverts in there without seriously disrupting the user experience.
Tencent have done well with cracking this tough nut, firstly using lucky money in chat conversations as a way to kick-start WeChat Pay and secondly with sharing of mini-programs in groups as a way to foster e-commerce (e.g. Pinduoduo). Stories could be a third way to leverage the huge traffic of chat conversations as they can be monetized with ads and full-screen auto-play video ads at that; no wonder Facebook is trying to stuff stories everywhere they can.
Tencent is conservative with ad inventory, so I expect it will be quite some time before we see ads in WeChat Stories (if ever), but certainly the potential is there for them to turn on the taps if need be. In the short to mid-term, the primary benefit will be increased stickiness and engagement mostly at the expense of competitors.
Tencent must know that chat conversations are the real key to both WeChat traffic and monetization. They might be reluctant to place more pressure on the newsfeed where traffic has been falling or official accounts that have also seen declines in page views. Chat conversations have incredibly high value to users and unlike in newsfeeds, Tencent’s position is highly resilient to competition.More at the ChinaChannel.
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| Ashley Dudarenok |
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| Matthew Brennan |
The rivalry between Tencent and Bytedance has been dissected endlessly by Chinese media, surprisingly (to me at least) much less has made it over to English. The rise of Bytedance’s micro-video application Douyin, known internationally as Tik Tok, is surely one of, if not THE major success story of China’s internet industry in the first half of 2018.
Bytedance has proved themselves to be very capable. They are far from a one trick pony and now have a family of apps (a-la Facebook) with two major knock-the-ball-out-of-the-park successes, the original newsfeed aggregation app “Daily Headline” known as Jinritoutiao in China and now the even bigger success of Douyin.
Why is this both an important long-term problem for Tencent?
Tencent’s losing it’s grip on attention a little. Entertainment is a zero-sum battle. A user can’t spend time on Tencent’s properties if they are busy scrolling through micro-videos on Bytedance’s platforms. The situation is by no means critical but it’s concerning. It certainly should be concerning to investors and much more so I believe than a temporary blip in gaming revenue.
This shift in attention is not showing up that strongly in Tencent’s financials currently; the online advertisement segment did okay this quarter. Tencent is still a very conservative organization (famously so in fact) when it comes to ads monetization and there’s plenty of runway still. Yet even if Tencent did lose many eyeballs which they weren’t really doing a great job of monetizing anyway, why as an investor should I care?
Because Bytedance has built an alternative Chinese ecosystem of news and entertainment apps which, while smaller, now rivals Tencent’s ecosystem for where Chinese users will go to kill time on their phones, where advertisers look to spend ad yuan online and where media or influencers look to distribute content. They’ve done the hard work and built up a lot more than just a foothold (see chart above). Whatever direction they choose to take things from here the next steps will be easier than the previous ones, they have momentum.
Tencent has a nimble and dangerous independent competitor of scale in the local market eating up time from their pan-entertainment empire. That’s what investors should be concerned about. The $75 billion* USD problem.More at the China Channel. Matthew Brennan is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.
