Getting (and keeping) attention on Chinese social media is becoming more of a challenge. ‘Short video’ giants like Douyin and Kuaishou should get some of the blame for the splintering of concentration spans around the country. But they are also masters of their craft at bringing millions of people back to their platforms on daily basis.
Some of the numbers on the short video marketplace are staggering, according to a study out last week from Charlene Liu, head of internet and gaming research, Asia Pacific, for HSBC.
Nearly a billion people now watch short videos on their phones in China. Unlike in the West, where most of the audience is younger people, viewers span the generations. And most of them are watching for about two hours every day, or a third of the time typically spent on the internet, which is more than any other app or online channel.
Douyin (owner of the TikTok brand internationally) is the most-watched platform, with 600 million daily users (a figure reported from June 2021, HSBC notes). Kuaishou is second with 347 million average daily users this year, while Tencent, a relative newcomer to the discipline, has as many as 500 million viewers of Video Accounts, many of them spilling over from its messaging app WeChat.
The beauty of short video is that the content is easy to make and consume. Algorithms then match the material to users’ interests in a process that brings together hundreds of millions of creators and viewers. The platform owners then try to monetise this vast community.
When short video, or duanshipin, first arrived the term was used to describe the difference between briefer, snackable content and more established TV-style streamed programming. Today the label is something of a misnomer, however. Sure, some of the content only appears for a few seconds but much of it lasts much longer, including live-streaming sessions that have reshaped the world of e-commerce.
What’s also been happening is that short video has been eating into the advertising revenues of rival options online, like Baidu (search), Weibo (social media) and iQiyi (longer-form video). HSBC expects short video firms to grow their share of the online advertising market further from 10% in 2019 to 27% by 2024. And the pivot into livestreaming has meant that e-commerce giants like Alibaba’s Taobao have also been feeling the impact, with a growing share of online sales switching to Douyin and Kuaishou.
Liu acknowledges that the sheer size of the audience for short video – and the time that it already devotes to browsing content – means the market is close to saturation point in China. “User growth is nearly maxed out, as is time spent,” she says. Yet that doesn’t mean that there isn’t room to increase profits. Tencent and Kuaishou both have scope to lift advertising loads closer to Douyin’s rate, while Tencent’s wealthier customer base in first and second tier cities is going to be more of a draw for advertisers.
She is particularly positive about the prospects for Video Accounts, where monetisation is at an earlier stage. She doesn’t expect advertising sales to make a significant contribution to Tencent’s bottom line for a couple of years, because of the massive revenues in its current business. But the forecast is for more traction after that, reaching as much as Rmb41 billion. That could be helpful as Tencent hits commercial and regulatory ceilings in some of its other businesses, where growth has been slowing.
As ever, the numbers are mind-blowing. For Liu’s base-case scenario of Rmb41 billion in sales, Video Accounts needs 600 million users spending 45 minutes on the platform every day, and watching three videos every minute.
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