China

The Battle of Chinese Short-Video Apps

As the Chinese are celebrating the Spring Festival (also known as Chinese New Year), our Polymath team took the opportunity to deep dive into the short-video trend led by two Chinese apps. Douyin and Kuaishou (Chinese TikTok and Kwai), caught the public’s attention as the exclusive interactive partners of the 2021 and 2020 Spring Festival Gala, respectively. The Spring Festival Gala, with its over 1 billion viewers, has been a battlefield for Chinese major Internet giants and in this post, we will take a look into the competition between these two Chinese leading short-video apps. 

Short video sharing platform Douyin, the Chinese version of TikTok, was the exclusive red envelope interactive partner of the 2021 Spring Festival Gala. 6 years ago, WeChat (China’s most popular messaging app) started Internet Giants’ sponsorship for the Spring Festival Gala: the campaign helped WeChat grow its user base from 8M to over 300M. WeChat used two days to achieve what Alipay had been doing for 8 years. Jack Ma, the co-founder of Alibaba group, called it “the Pearl Harbor attack”.

Red envelope: a monetary gift which is given during holidays or special occasions

Spring Festival Gala: commonly abbreviated in Chinese as “Chunwan”, it is broadcast annually on the eve of Chinese New Year on its flagship CCTV-1 and the Gala has the largest audience of any entertainment show in the world. Last year, 1.23 billion viewers watched the Gala.

Competition Between Two Chinese Short-Video Apps

 The Pearl Harbor attack 2.0

With its massive audience, the Spring Festival Gala is playing host to a contest between Douyin and Kuaishou – two Chinese leading short-video apps.

One year ago, Kuaishou became the exclusive interactive partner of the Gala. During the live broadcast, Kuaishou handed out five rounds of virtual “red envelopes,” totaling 1 billion yuan ($144 million) record. The marketing campaign supposed to be a blockbuster. However, the Covid-19 pandemic disrupted the original plan.

Approaching the Spring Festival, a 2020 Chinese comedy film Lost in Russia canceled its theatrical outing due to the pandemic. ByteDance (owner of Douyin) took the opportunity to buy the film’s copyright for 630 million yuan ($90.72 million). On the first day of the lunar year, the film debuted online for free across ByteDance’s video platforms, including Douyin and Watermelon Video, thanks to this strategic move Douyin became the hot topic on Chinese social media and cooled down Kuaishou’s red envelopes project.

 

 Lost in Russia for Free on Douyin

Users Can Watch the Film Lost in Russia for Free on Douyin

Douyin in the South, Kuaishou in the North

Douyin and Kuaishou have been competing for online traffic for years.

In early 2016, China saw the sudden and meteoric rise of the short-video platform Kuaishou. The app had been quietly accumulating a following base since its launch in 2011, focusing on half-organic, half-algorithm-driven growth and ignoring traditional media and influencer marketing altogether. The strategy worked, and as of 2018, it had a registered user base of over 700 million people, 100 million of whom visit the platform daily. Kuaishou thrived in the sinking market and had no rival in rural areas.

The sinking market: the term refers to small Chinese cities (third-tier and below) and rural areas, comprising a total of about 930 million people, two-thirds of the Chinese population. 

It was when Kuaishou seemed invincible that a new force rose. Douyin, launched in 2016, attracted young people in large cities with trendy content and took southern China by storm. Chinese internet likes to say that it’s “Douyin in the South, Kuaishou in the North” because the south has been more economically developed.

The differences between the two platforms; the underlying values ​​and starting points between the two products (“real” for Kuaishou and “good” for Douyin), the difference in the logic of the content distribution algorithm (emphasizing inclusiveness and fairness vs. emphasizing content quality), and the difference in product form (double row optional vs single row immersive), have created different community content ecology, creator ecology, user mind and sense of belonging, user growth rate, service provider ecology, and monetization path for the two platforms.

 

Douyin achieved a rapid catch-up in 2018. Kuaishou, dragged down by the image of “tuwei” (used negatively, saying that someone is “tuwei” is the equivalent of calling them a redneck). However, reformed in late 2019, Kuaishou made great progress on public relations — positioned itself as a video app giving voice to China’s “silent majority”.

When Kuaishou marked its ninth anniversary in June 2020, its promotional video for the platform didn’t feature well-known celebrities or young influencers. Instead, Kuaishou invited Huang Chunsheng, a 50-year-old user living in a small northern city, to be its face.

 “Don’t pass by ordinary people with indifference,” said Huang Chunsheng, wearing a suit and standing against a backdrop of videos uploaded by Kuaishou users. “There are people dancing in the mountains, and those singing in vegetable plots (…). Technology has offered the opportunity for the silent majority to break up their silence, and help ordinary people become unordinary. This is the power of seeing them,” he said.

 

Kuaishou has even published a book named The Power of Being Seen for its users

 Kuaishou has even published a book named The Power of Being Seen for its users

Short-Video and More 

Fighting to be the “Instagram of China”

Short-video apps mainly replace the three functions: “camera”, “album” and “share”. It corresponds to the underlying demands of “shooting”, “watching” and “connecting”. The logic is the same with “Google it” = “search” and “WhatsApp = address book + phone book”. Under the great active user volume, Douyin and Kuaishou are extending to more basic applications to keep their users.

Douyin introduced Jianying in May 2015, because Kuaishou’s APP, Kuaiying, became the favorite clipping software for Douyin’s users. Actually, whether it’s Jianying or Kuaiying, both of them have replaced the mobile phone’s original editing software. The use of these platforms is evolving so fast that ordinary users will use Douyin/Kuaishou to record and share videos.  Short-video app can not only become a “new way of entertainment”, but also a “new way of connection”.

Kuaiying Vs. Jianying

Kuaiying Vs. Jianying

Has there been such a change in history? Instagram challenging traditional social media platforms can be a lesson. Douyin and Kuaishou are actually competing for the position of “Instagram of China”. In this way, China is bound to create a super connection platform based on smartphones.

Douyin mentioned in an official letter this year: half of the users interact with their friends. What Douyin needs is a tipping point to popularize its video-social style. The Spring Festival Gala, with a top traffic pool and the time node of strong social demand, is obviously the best chance.

Short-video Apps Elevating Their E-commerce Presence 

Popular live streaming and short-video apps became significant marketing channels in 2020, generating billions in sales by connecting viewers to existing e-commerce sites, or their own.

Chinese consumers are shopping more through live streaming and video apps — a new trend that’s grabbing a slice of the massive market traditionally dominated by e-commerce giant Alibaba. Kuaishou, the largest live-broadcasting platform in the world, said GMV in the first 11 months of 2020 increased nearly 8 times year-on-year to 332.68 billion yuan ($51.44 billion). Douyin saw e-commerce transactions tripled compared to last year to 500 billion yuan in GMV, according to a report from Chinese tech news site LatePost.

 

Main Business Model of Short-Video Platform

Main Business Model of Short-Video Platform

The Battle Between Chinese Short-video Apps continues

Recently, this picture was wildly forwarded on Chinese social media platforms with comments ridiculing the fierce battle between Internet giants. Douyin, Kuaishou, Baidu, and Pinduoduo all launched digital “red envelope” activities to invite users to attend the campaigns and share the money. The total amounts include Douyin’s 2 billion yuan, Kuaishou’s 2.1 billion yuan, Baidu’s 2.2 billion yuan, and Pinduoduo’s 2.8 billion yuan, adding up to 9.1 billion yuan ($1.4 billion).

Screenshot of short-videos App icon

A Screenshot of App icon

In this Spring Festival, the keyword of the competition between short video sharing platforms is “money”: money spent in the crazy subsidy war and money raised in the capital market. (Kuaishou was listed a few days ago; Douyin has started a new round of financing.)

The two platforms, Douyin and Kuaishou, play under the “tit-for-tat” rule, competing with each other and eroding the other’s territory. Douyin is breaking through Kuaishou’s barrier by imitating its Live E-commerce business. Kuaishou is also shaking Douyin’s position by providing similar trendy content. Meanwhile, they unveil ambitious targets in social media, e-commerce, and other fields. So, what’s next? 

References:

  • CICC Focus “Short video: Focus on Kuaishou’s Commercialization Speed”
  • AI Media Consulting “Research Report on China’s Short Video Leaders in 2020”
  • New Wi-Fi Connection “Short Video War Season 2”
  • Mantis Finance “Short Video Battle Enters the Second Half, Value Creation Becomes the Match Point”
  • LatePost “When Kwai is Not Only Simba”
  • CNN Business “Kuaishou, TikTok’s rival in China, could be the biggest IPO since the pandemic began”
  • China Marketing Insights “Douyin Has Replaced Pinduoduo as Sponsor of This Year’s Spring Festival Gala”
  • Ub.Triviumchina “The rise of rural influencers: Understanding the popularity of China’s tuwei KOLs”
  • Pandaily “Kuaishou: The Anti-Douyin/TikTok?”
  • domeet webmaster “Is the birth of Douyin Kuaishou the only way for China’s Internet development?”
  • Yahoo Finance “The new monster tech IPO is a video app giving voice to China’s ‘silent majority’”
  • CNBC “Watch out, Alibaba. Chinese video apps are quickly becoming e-commerce players too”

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