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Monday, May 20, 2024

Tencent ramps up bet on short video platform in ByteDance challenge

Tencent ramps up bet on short video platform in ByteDance challenge

Chinese tech giant Tencent Holdings will ramp up its focus on short video platform, Channels, a function embedded in its popular super app WeChat, as the company looks to push back against rival platforms and reverse slowing growth in other businesses.
During WeChat's annual open class on Tuesday, representatives of the ubiquitous super app said Channels posted substantial growth in 2022, with the total number of views expanding over 200% year-on-year, while video views based on AI recommendations increased over 400%. Specific figures were not released.

Daily active creators and video uploads on Channels -- which lets users record, create and share videos -- rose by over 100% on the year, the company said in its yearly update on WeChat's business.

The super app has more than 1 billion active users -- a wide base that Tencent intends to better leverage.

Livestreaming e-commerce on Channels also grew rapidly over the past year, with total gross merchandise value (GMV), a term widely used in the e-commerce sector as an indicator of revenue, rising by more than 800% from 2021, with the average transaction value surpassing 200 yuan ($29.50).

Shenzhen-based Tencent also announced that it will soon introduce incentive programs including one aimed at helping businesses gain more traffic for brands to open shops on Channels, which the company also calls Video Accounts.

Channels didn't reveal its total GMV through livestreaming e-commerce in 2022.

However, media reports suggest that Channels' GMV could be a shadow of that posted by rival Douyin, the version of TikTok designed for mainland China. China's The Late Post reported that Channels' daily transactions from livestreamed sales pitches reached over 100 million yuan in September for the first time.

U.S.-based The Information reported Monday that Chinese consumers spent 1.41 trillion yuan, or about $208 billion, shopping on Douyin in 2022, a year-on-year increase of 76%.

Still, Channels has a large potential of "strategic values" for Tencent, it said, noting that users spend most of their time on short videos, which offers the company ways to expand its advertising revenue and e-commerce opportunities.

Tencent's top executives reiterated during quarterly earnings calls last year that the company would explore new sources of revenue by speeding up Channels' commercialization push as more advertisers turn to short-video platforms.

Douyin, Kuaishou, and video-sharing platform Bilibili all recorded advertising growth last year despite China's economic slowdown. This was because brands advertised on platforms to persuade viewers to watch livestreams and buy products online.

To boost Channels' popularity, Tencent last year organized multiple online concerts featuring popular stars like Taiwanese singer Jay Chou and American band Westlife, each attracting dozens of millions of views.

While exploring more monetization opportunities with Channels, Tencent has axed more than 10 products with what it described as "little strategic value" or those that lost money over the past year. For the first three quarters of 2022, Tencent's total workforce contracted by around 4,000, or 3.5%.

Tencent launched the internal beta testing of Channels three years ago to challenge the dominance of rivals Douyin, Kuaishou, and Bilibili.

Tencent's sales have been slowing since 2021 amid China's worsening economic growth outlook and regulatory uncertainties surrounding the country's leading tech companies.

As the world's largest video game publisher by revenue, Tencent's domestic gaming revenue decreased 7% in the third quarter due to government measures designed to limit minors' screen time and slow regulatory approval of new titles. The company has been accelerating a global expansion amid fears over license delays in its domestic market.

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