Tencent will invest up to USD 1.5 billion in short video app Kuaishou, whose overseas version is called Kwai, according to a local Chinese media outlet called IPO Zaozhidao, which has a track record of breaking financing news ahead of official announcements.
The IPO Zaozhidao report suggests that negotiations are coming close to an end, and the investment may take Kuaishou’s valuation to around USD 26 billion. An unnamed international investor was excluded as an investor as Tencent, which was an existing backer of the video app, reportedly demanded an extremely high stake.
Last Friday, The Beijing News reported that Tencent might take a 30% to 40% stake in Kuaishou, without providing financial details. The newspaper also indicated that talks were nearing a conclusion and the two companies are about to make an announcement.
Kuaishou has not responded to KrASIA‘s request for a comment. Tencent declined to offer a comment on Tuesday.
The purported tie-up may have far-reaching impact on China’s short video market and even the entire internet sector. In the last two months, Tencent and Kuaishou have collaborated on multiple fronts.
Tencent’s social messaging app WeChat, which has 1.1 billion monthly active users, has lifted a ban on links to Kuaishou’s content so that WeChat users can share Kuaishou video links with their friends and on the Moments feed. On top of that, WeChat users are able to share links to the video app’s content on the Kanyikan feed, which utilizes a design feature similar to Facebook’s “Like” button for the web.
For now, WeChat still blocks links to videos on ByteDance’s video platforms Douyin and TikTok.
Short videos have been key to ByteDance’s strategy to challenge Tencent’s dominant status in China’s internet sector, as they are a format that attracts users’ attention, pulling them away from social messaging tools like WeChat as well as Tencent’s mobile games, music streaming platforms, and reader apps.
A recent QuestMobile report released indicates that short video apps had a total of 821 million monthly active users (MAUs) in June in China, exceeded mobile gaming’s 691 million aggregate MAUs, music streaming’s 658 million total MAUs, and reader apps’ 364 million MAUs. The format was second in popularity only to long-form videos, which had 964 million MAUs across various platforms in China.
Kuaishou’s MAUs have reached 341 million, while ByteDance’s MAUs for Douyin, Watermelon, and Volcano short video apps combined have hit 588 million. Tencent’s creation, Weishi, trails behind with 105 million users.