You may have heard of the popular short-video app TikTok, or even of Kwai, but what about Likee, Vmate or Hago? These are the players competing at a global level in the trendy short-video sector, and they all share something in common: Chinese roots.
ByteDance’s TikTok (known in China as Douyin) has been downloaded more than 1.5 billion times outside of its domestic market after a two-year global push. It has topped app stores’ most downloaded charts several times in different countries including Japan, the US, Thailand, Indonesia, India, Germany, France, and Russia.
Other Chinese competitors in the short-video sector are also quickly expanding to selected overseas markets. Kwai, which is owned by Kuaishou, has repeatedly been the most downloaded app in Brazil. Chinese e-commerce heavyweight Alibaba’s short-video experiment VMate has entrenched its position in the Indian market with 50 million monthly active users (MAUs), while YY Inc’s Likee also has a strong presence in Russia and Southeast Asia.
In their global push, which of these apps has actually a better chance of standing out?
Set to soar
Seeking expansion overseas has become an ongoing trend for Chinese tech firms, this is because compared with the increasingly saturated home market, abroad markets represent fresh opportunities.
According to the latest stats from data consultancy Analysys, as of November 2019, ByteDance’s flagship Douyin leads the scene, claiming 530 million MAUs, out of a total market of over 878 million users. Kuaishou is the runner up with 425 million MAUs, while Xigua and Huoshan—both developed by ByteDance— are sharing the third spot with 114 million MAUs each.
However, data also shows that the growth of MAUs in China has been sluggish, in part because of the already enormous base, which peaked at 1.138 billion, or 81% of the nation’s total population, in February. Looking abroad, these companies leading the fierce short-video race in China know that timing matters, and that the early bird catches the worm.
In the global expansion, the pioneer was Musical.ly, a lip-syncing short-video app founded in July 2014 in Shanghai by Alex Zhu (now chief of TikTok), which targetted the North American market and quickly won American teens’ hearts, promptly claiming 100 million users only two years after its debut.
Musical.ly’s rise drew attention from social media juggernaut Facebook, which reportedly held serious talks in 2016 to determine whether to buy the firm, but finally dropped the idea out of “concerns about the app’s young user base and Chinese background,” Fortune reported, citing a person familiar with the matter.
In 2017, TikTok’s parent company ByteDance acquired Musical.ly for nearly USD 1 billion and merged the two apps later in 2018, seeking to grow TikTok’s international presence on the shoulder of Musical.ly.
The global move proved to be startling, as TikTok crossed the one billion mark for worldwide installs on the App Store and Google Play (the figure excludes Android installs in China) in February 2019. With over 663 million of these installs in 2018, TikTok surpassed Instagram’s 444 million new downloads, according to mobile intelligence company Sensor Tower. The app also experienced a rapid rise in Japan, South Korea, and Southeast Asia.
YY Inc, another Chinese entertainment and live streaming company, also began to look overseas in 2016, starting with Southeast Asia and later expanding its footprint to the Middle East, North Africa, Europe, and North America. It currently houses live-streaming apps including Bigo Live, Nimo TV, Yome Live, Cube TV, and short-video sharing platform Likee, which enjoys high popularity in Russia.
“During the third quarter of 2019, we enlarged our global user base to 470.1 million on Likee, Imo, Bigo Live, and Hago altogether,” Li Xuelin, chairman and CEO of YY, said of the entertainment platforms owned by YY. Nearly 80% of YY’s users were from markets outside China in Q3.
To win the race, localization is the first step.
ByteDance’s global strategy is to “go abroad technically, and operate locally,” as its founder Zhang Yiming explained it. It means that the company deploys the same algorithms on apps in various regions but adopts different content management and marketing methods on a case-by-case basis.
Lately, the upstart has sped up its global exploration—it combined its India-facing app Vigo with TikTok in September, and its video-based social-networking app Duoshan, which is under Musical.ly’s founder Alex Zhu’s purview, intending to go overseas, Chinese media LatePost reported.
ByteDance’s main hit, TikTok, had been downloaded over 614 million times worldwide by November, with its service covering more than 150 countries and regions. The fast-growing app has topped more than 40 countries’ app stores, including India, the US, Canada, and the UK.
India is considered as a promising market by these Chinese short-video app operators, thanks to the country’s 1.3 billion population and fast adoption of mobile Internet. TikTok is the top dog (Indians have downloaded the app 277.6 million times, accounting for 45% of its total global installations this year as of November), followed by YY’s Likee, Helo, and Alibaba’s VMate.
The rapid ascendance of TikTok is money-bleeding. Since July 2018, when TikTok and Musical.ly were officially merged, its parent ByteDance has shelled out big bucks on marketing. At its peak, the company spent USD 500,000 on ads every day, Chinese media outlet Jiemian reported, citing local sources familiar with the situation.
TikTok placed ads on different channels, and for every install generated from ads, it paid an average of USD 0.3 for it, which tripled the average market price. In the Philippines alone, TikTok spent nearly USD 10 million on promotions, while its overall net loss hit USD 1.2 billion, according to a local industry insider.
Earlier in March, YY fully acquired Singaporean social company Bigo, whose business covers more than 150 countries and regions. Subsequently, Bigo’s homegrown short-video app LIKE (later was renamed “Likee”) has been marketed in India on a large scale. Bigo said it would invest USD 100 million in the Indian market in the next three years.
Alibaba ventured into the arena in India with a quite different approach—in a much quieter and smoother manner. Through its subsidiary UCWeb, it launched in 2017 its short-video app VMate, which amassed 50 million MAUs in India by October. Cheng Daofang, CEO of VMate, revealed to 36kr in May his intentions to develop India’s short-video community, although he admitted that it would require a more complicated business strategy than simply enlarging market share through hefty spending.
Except for India, Chinese short-video apps are also eyeing South America, in particular, Brazil, the biggest economy in the region, with a population of over 146 million internet mobile users, who have spent a total of 9 hours and 29 minutes per day on the internet on average, ranking second in the world after the Philippines, according to investment research firm Equal Ocean.
Kuaishou’s pivoted to Brazil with its overseas version Kwai, which quickly garnered over seven million daily active users (DAU) in November, after opening its offices in Sao Paolo. Kwai has also been among the four most downloaded platforms in the Brazilian Android store since July 31, according to Sensor Tower ranking. Kuaishou also runs another popular video-sharing app called Vstatus in Brazil, which is ranked among the top 10 apps in the country’s Google Play store, although it is not yet available to iOS users.
Coveting this fast-growing market, ByteDance’s TikTok and YY’s Bigo are also taking action. The former increased the strategical importance of Brazil in its plan, while the latter included the Brazilian business segment directly into CTO Lu Pengjun’s management.
It’s a bumpy voyage
Some say the hyper-popularity of Chinese short-video apps could help China to shed its “copycat” label. Nevertheless, the road for Chinese tech companies to go abroad does not lack hurdles.
One main challenge is how to differentiate and localize.
Based on different user habits, culture, languages, and internet development in different countries, short-video operators have to layout selected promotions and monetization strategies accordingly. In the meantime, they also need to be wary of sharing too many similarities with other applications, to prevent being very easily replaced.
For example, earlier this year, TikTok launched an indie artists discovery program, dubbed “Spotlight,” in partnership with 21 record companies, specifically in Japan and South Korea. The program is a contest with an open call for budding local musicians to upload their works onto TikTok, and winners will be selected based on the popularity of songs, KrASIA reported. With the move, TikTok wants to suit locals’ tastes and also boost the enrichment level of its content.
However, foreign tech giants are not stepping aside. Last month, Facebook-owned Instagram launched a TikTok-alike application called “Reels” in Brazil, a video-music remix tool that allows Instagrammers to make 15-second video clips with music to share them as Stories. Powered by Facebook’s enormous music collection and plenty of exposure, Reels has the potential to lure youngsters away from TikTok and be rolled out in other regions.
Reels came after Lasso, a short-video app built by Facebook and launched in 2018. The effort failed to have a major impact, as its monthly downloads had averaged less than 1% of TikTok’s, the Wall Street Journal wrote in June.
“China’s Internet users only account for 20% of the overall users in the world, therefore, it’s a must (for Chinese companies) to go overseas. Otherwise, this 20% could not compete with the rest,” said Zhang Yiming, the man behind ByteDance, at the 2016 World Internet Conference, which was held in Wuzhen, in the north of Zhejiang Province in China.
Three years later, TikTok has become a rare global hit.
Yet, as almost every major Chinese tech company has been trying to strengthen its presence on the international stage, TikTok’s dominance is under threat, and we will have to wait to see which of these firms could become the next big thing in the short-video field.