Analysis of short video platforms such as Kuaishou and Douyin!

In recent years, the short video track has been quite hot. Both the user side and the revenue side have proved the popularity and value of short video platforms. So, after a few years, what is the current situation of short video platforms? Where will it go?

In 2020, due to the ravages of the new coronavirus pneumonia, all Spring Festival movies were withdrawn. "Lost in Russia" was suddenly announced to premiere on the "Toutiao" short video platforms ( Tik Tok /Xigua/Huoshan), sparking heated discussions among all the onlookers. It is said that Toutiao purchased the online premiere rights of Lost in Russia with a guaranteed minimum price of 630 million yuan.

Regardless of whether such behavior can be regarded as industry subversion, at least in terms of the discussion of the topic or the reputation of the onlookers, Toutiao's short video platform has undoubtedly made a lot of money. This decision made me interested in products in the video field, so I wrote down some ideas and welcome discussions.

1. Current status of short video platforms

1. PEST analysis of video platforms

Political Factors:

At present, multiple regulatory policies are in place to form a system, and the formulation of industry standards and norms is conducive to the long-term sustainable development of the long video and short video industries; but as people are paying more and more attention to copyright, it may also have a short-term curbing effect on the wild growth trend.

Economic Factors

As many traditional advertisers (such as automobiles, beverages, etc.) are affected by the sluggish macro-economy, the demand for advertising is relatively weak, which will inevitably affect the industry's advertising revenue; coupled with the decline in the growth rate of residents' disposable income, the industry's monetization potential may decline. But for now, the gaming industry has been less affected, and we can try to shift advertisers to the gaming or leisure entertainment industries.

Social and cultural Factors:

The addition of new user groups (those born after 2000 and the elderly) and the development of new markets (downstream markets and overseas markets) have led to various changes in user demand, which will inevitably be reflected in content production. At the same time, the personalized needs of a single product are difficult to meet for all users. You can try to find a vertical field and delve into the personalized needs of that field.

Technological Factors:

Whether it is the development of communication technologies such as 5G and the Internet of Things or the upgrade of smart device hardware, the decline in network charges has made users more and more fond of videos and has begun to gradually replace some text information. These will have different impacts on the development of the industry.

2. SWOT analysis of short video platforms

Short videos have the advantages shown in the figure above because they have more flexible viewing scenarios, higher information density, stronger dissemination and social attributes, and lower viewing thresholds; but they also bring corresponding problems due to the large amount of UGC and the high reliance of content distribution on algorithm recommendations.

There are still a lot of opportunities in the short video field:

First of all, the Internet of Things and 5G technologies have huge development and application potential, which means that in the future, short videos may be played on car control screens, smart watches and glasses, and even on furniture and in stores... anywhere where smart screens are equipped. The significance of this trend is almost beyond our imagination: Tik Tok and Xigua Video may subvert the entire advertising industry in the future.

Secondly, short videos are also more easily accepted by overseas users. The success of Tiktok, the overseas version of Douyin, in the United States proves that UGC is the right way for the video industry to go overseas.

Finally, in the short video industry, there are more and more self-media people, they are becoming more and more professional, and a new type of entity has emerged: MCN agencies.

MCN is an organization that brings together a number of short video content creators, which is very similar to the agency of artists in the entertainment industry. The significance of MCN to the development of the short video industry lies in its ability to cultivate professional content producers and improve the operational efficiency and user experience of short video platforms through copyright management, direct promotion, and user expansion.

2. Income structure of short video platforms

For product developers, if they want their products to survive, they must know the revenue structure of the products, find the right profit points, and gradually commercialize them. The following is a brief introduction to the revenue structure of video platforms:

1. Advertising Revenue

These include splash screen ads, promotions in video content, income as a channel partner, etc. The boundary between short video ads and content is more blurred, and short video has advertising advantages that long videos do not have; MCN brings precise marketing, stimulates advertisers' investment, and brings in more advertising revenue.

According to news reports, the current short video advertising market size is about 35 billion yuan.

As shown in the case shown in the picture, in the opening screen, information video, and short video, user portraits can be built based on the user's browsing habits, and targeted advertisements can be recommended, which is more targeted and accurate.

2. E-commerce promotion + live streaming

According to NetEase News, Kuaishou's e- commerce sales revenue exceeded 25 billion yuan; there is no detailed data for Douyin. Assuming that Douyin's market share is similar to its, and the two giants occupy 70% of the market share, then the current market size is estimated to be about 70 billion yuan, which still accounts for the bulk of the platform's revenue. At the same time, although the current momentum of live streaming is not as hot as in previous years, it is still a source of income that cannot be ignored;

I believe everyone knows Li Jiaqi, the lipstick king, who sold 15,000 lipsticks in 5 minutes, with sales reaching 5.35 million yuan. The success of internet celebrities like Li Jiaqi is largely accidental, but as there are more and more internet celebrities online, we are slowly beginning to grasp the preferences of users. This is a very valuable experience for many companies that create internet celebrities. If a short video platform can have or even create such an internet celebrity, it will definitely be a considerable income for the platform.

3. Knowledge payment and short video rewards

This part of revenue is far lower than that of the long video platform, which is also determined by the product form and characteristics. This means that the threshold for creating content is low, and users cannot communicate and interact with authors in the video content. In the short term, if the quality of short video content has not been fundamentally improved, this part of the income will still be relatively low.

Compared with the revenue from long videos (membership fees + advertising + copyright, IP derivatives, etc.), the revenue from short videos still has a lot of room for improvement. According to data, the user reach rate of long videos (such as iQiyi, Youku, and Tencent Video) is over 70%, while the current user reach rate of short videos is still around 50%, so there is still a lot of room for improvement.

3. Some suggestions

If you still want to create a short video platform, how should you plan and design the product? Here are a few suggestions:

1. Find the right position

The current Internet is constantly segmenting and sinking the market. Blindly competing with the giants is a dead end, so you need to find the positioning of your own products, such as:

• Kuaishou: For sharing earthy short videos from 4th and 5th tier cities;
• Xiaohongshu: Sharing exquisite life;
• Xigua Video: a video information platform for variety shows, movies, and news;
• Changdou short video: short video + make money;

So what kind of product positioning should you give your platform and what its user group is? This needs to be considered clearly. If you can firmly grasp a certain type of user in your target segment, then you will have a foothold and the capital to expand into other businesses.

2. User Profile

There are many ways to create user portraits online, so I won’t go into details here. What I want to emphasize here is more targeted product design. Last year and this year, some money-making products suddenly became popular, such as making money by walking (Bai Bu Zhuan), making money by typing (Qu Keyboard), making money by reading news (Qu Toutiao), etc.

This type of product is aimed at users who have a lot of free time and can gain a sense of accomplishment with a meager income. They can even be described as middle-aged mothers.

These products precisely hit the preferences and weaknesses of this group, so they can easily spread in their circle and then start to be commercialized. Whether it is distributed through e-commerce or small game channels, they can generate income. Existence is reasonable. Since this part of the market exists, it must have its rationality and necessity, and there may be more room to be explored.

3. It’s a short video, but it’s more than just a short video

Now the pure short video platform has basically reached a bottleneck period, and various short video + cases continue to emerge, including short video + social network, short video + comprehensive information, short video + vertical media, short video + e-commerce, short video + games, etc. A few examples

Tik Tok:

Originally, the video length was only 15 seconds, and only users with over a thousand followers could post a 1-minute video. Recently, the permission for 1-minute videos has been fully liberalized to encourage users to make vlogs to share their daily lives.

In addition, in March of this year, Douyin launched the "DOUzhi Plan", opening up 5-minute long video permissions to some popular science content creators. Some industry insiders predict that Douyin will sooner or later become a full-video media platform like YouTube. Douyin will not give up Vlog, and will not give up long videos in the future either.

quick worker:

The duration of live broadcasts on Kuaishou has accounted for an increasingly larger proportion, and the income from live broadcasts has also been increasing. For Kuaishou, live streaming is both a user product and a commercial product. It is very important to both the user side and the monetization side of Kuaishou. From the perspective of revenue flow, Kuaishou has become the largest live streaming platform in China and even the world. According to NetEase News, Kuaishou broke even in 2018, with live streaming revenue reaching around 20 billion yuan. The 2019 figures have not yet been announced, but I believe they have already achieved profitability.

Watermelon Video:

Xigua Video was originally just a video section in the headlines. After it became an independent operation, it still operates in the form of short videos + information. However, this year it also began to experiment with copyrighted variety shows, movies, and TV series, and began to lay out a long video platform. In the future, it may also start a membership payment model. These are also some of the attempts and transformations made by Xigua Video.

Therefore, you can start with short videos, but you can first think about how to plan and commercialize in the future after attracting users.

4. Technology and Algorithms

The short video platform is a product that extremely requires algorithms, and the content distribution and recommendation mechanisms all require the support of algorithms. How to build an algorithm model to recommend content to users and how to recommend content that users like are crucial parts of retaining users.

For example, when Douyin evaluates your performance in the traffic pool, it will refer to four criteria: ① number of likes ② number of comments ③ number of reposts ④ completion rate.

And we summarize and categorize the people who like each video. When users like or are not interested in a video, we need to make targeted recommendations or block videos of the same type in the traffic pool. The amount of work behind this is far more complicated than it seems. If there is a chance, I can share the algorithms behind short video products next time.

There is still a lot of room for improvement in short videos, and more people are needed to explore them together.

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Author: endlishted

Source: endlishted