On a hot summer day last year, ’90s boy band Backstreet Boys climbed onto a Pennsylvania stage and belted out hits as 44 million viewers tuned in from thousands of miles away for the online concert hosted by China’s WeChat channels.
The show is just one of many events WeChat owner Tencent to promote the app’s short video platform, which is described by the founder of tech giant Pony Ma as “the company’s hope.”
Tencent Holdings Ltd has also tapped other entertainers like Taiwan’s Jay Chou and Irish boy band Westlife for livestream concerts and, according to a source, is assembling a team to build a community of content creators to bolster the dominance of ByteDanceThe owner of tick tock and Douyin and Kuaishou in the short video business.
“Tencent hopes it can make Channels the next WeChat Pay. It has a chance. But it will also be difficult,” said Liao Xuhua, senior analyst at research firm Analysys.
WeChat Pay became the second largest provider in the Chinese mobile payments market within a year of its launch in 2013, behind Alipay, which is owned by Jack Ma’s Ant Group.
Two sources familiar with Tencent said the importance of channels has been repeatedly communicated within the company.
The two-year-old platform was a bright spot for Tencent in an otherwise bleak 2022, when revenue for its other products, like games and payment services, was wiped out by tighter and tougher gaming regulations COVID-19 curbs.
The total number of views on channels has more than tripled over the past year, Tencent said this week when it released its latest growth numbers for the platform.
Daily active creators and video uploads more than doubled.
Gross merchandise value (GMV) from live-streamed e-commerce, in which telegenic personalities peddle goods online in real time, rose more than 800 percent across channels, the company said.
She did not give any absolute figures.
According to a LatePost report, channels’ daily transactions from live-streamed sales pitches exceeded 100 million CNY (15 million US dollars or about 1.22 billion rupees) for the first time in September 2022, representing an annual rate of about 36 billion CNY (about 43,000 billion).
But Douyin already aimed to increase its GMV to over 1 trillion yuan (155 billion yuan) in 2021. ByteDance does not publicly disclose official GMV numbers.
integrate products
Tencent has integrated many of its products, from Tencent Meetings to the WeChat mini-program, with channels to help creators live stream content like US band Backstreet Boys.
Tencent Meetings is a Zoom-like conference call service, while mini-programs are like apps apples iOS and Google’s Android operating systems but less data intensive and running inside WeChat.
For example, an integration would allow a podcast host to conduct an interview at meetings and stream it live on channels. If the host recommends a product during the chat, a link may appear on the screen that takes viewers to a mini-program where they can purchase the product using WeChat Pay.
Tencent has also lowered the threshold for monetization on channels, allowing users with as little as 10 followers (up from 1,000 before) to monetize advertising.
TikTok requires content creators to have 10,000+ followers to start monetizing.
Channels has also opened up advertising opportunities “like never before,” said Li Yikai, general manager for Americas and EMEA at ad agency Nativex, compared to WeChat, which puts out a few ads a day.
“If you’re already scrolling and come across an ad, don’t think twice about it. So naturally, you come across many more ads with short videos,” Li said.
In November, Tencent President Martin Lau said that channels’ advertising revenue is on track to hit 1 billion yuan in the fourth quarter of 2022.
For TikTok and Douyin, research firm Insider Intelligence estimated in April last year that combined advertising revenue would reach more than US$30 billion (around Rs.2.4 billion) in 2022.
Channels has also started charging e-commerce merchants a 1 to 5 percent commission fee starting this month.
Douyin has been asking for 1 to 10 percent since 2020.
rivalry
While some analysts see Tencent’s best chance of catching up with ByteDance, others believe it will be difficult to grow as big as Douyin, the Chinese version of TikTok.
“If you start with a social app and then you have to get into the short video space, you have to build a whole e-commerce system to support that…I won’t say they can’t do it, but it’s very difficult.” ” said Liao from Analysys.
But Shawn Yang, chief executive of research group Blue Lotus Capital Advisors, is bullish on channels given the potential of WeChat traffic.
WeChat, China’s most popular chat app, has more than a billion active users.
“For example, in Douyin or Kuaishou, you cannot ask your viewers to add you on WeChat. But on channels, you can quickly add someone on WeChat,” Yang said.
“This is very beneficial for those who already have their own private traffic on WeChat,” he said.
© Thomson Reuters 2023
