Short video APP product analysis report!

The structural framework of this article is shown in the figure below:

Introduction

Technology continues to advance the way humans record information. During the Shang Dynasty, there were oracle bones, which recorded information with words; in the 19th century, Edison of the United States invented the tape recorder, which recorded information with sound; later, Daguerre of France invented the camera and Jules Jean-Claude invented the camcorder, which recorded information with images.

Today, almost everyone has a mobile phone with a camera, and can record every detail of their life through video, and put it on the Internet, establishing a more real connection between each other, which is more vivid than the text and sound in the past.

Short videos are a way of disseminating Internet content, ranging from a few seconds to a few minutes. The content integrates themes such as skill sharing, humor, fashion trends, social hot spots, street interviews, public welfare education, advertising creativity, and commercial customization. Because the content is short, it can be a stand-alone film or a series of columns.

With the popularization of mobile terminals and the acceleration of the Internet, short, flat and fast high-traffic content has gradually gained the favor of major platforms, fans and capital.

1. Development Trends

1.1 Overall

November 2011 was the year when the mobile Internet was booming. Thousands of apps were launched that year, including GIF Kuaishou. In November 2012, Kuaishou transformed from a pure tool application to a short video community.

Since 2013, short video APPs have been launched on a large scale in the market. In January, Vine, a short video sharing app owned by Twitter, was launched on the Apple Store, supporting the shooting of short videos of 6 seconds; in February, iQiyi launched the video editing and beautification app Papaqi; in April, Youtube launched Wanpai, which supports the shooting of short videos of 6 seconds; in August, it launched MixBit, which supports the shooting of short videos of 16 seconds; in June, Instagram added the 16-second short video function; in July, Yahoo acquired the short video app Qwiki; in August, Sina Weibo launched Miaopai; in September, LINE launched Weipian and Tencent launched Weishi; in December, Quwei Technology launched Xiaoying.

In May 2014, Meitu launched the short video community Meipai; in 2016, Douyin was launched; in 2017, Toutiao purchased the North American music short video social platform Musica.ly for US$1 billion and merged it with Douyin, which led to an explosive growth in the number of Douyin users. As short videos become more popular, more and more users, professional content producers and platform-level media have joined the short video competition, and 2018 has ushered in the first year of the short video explosion.

With the increase in the penetration rate of short-form videos, apps such as WeChat, Bilibili, and Huya Live have enriched the content ecosystem of short-form videos, and short-form videos have gradually become an important part of Internet content consumption.

Figure 1 Short video APP

1.2 Going Global

In 2017, the short-form frequency industry in the country experienced explosive growth, with capital frenzy and giants entering the market. With the increasingly fierce competition in the domestic market and the decreasing traffic dividend, domestic short-form video platforms have begun to expand overseas to seek breakthroughs, and a new era of navigation for content creation has arrived.

China's short-form video platforms are going overseas by acquisition or self-construction, supplemented by cooperation with local content partners. They have identified Japan, South Korea, Southeast Asia, Russian-speaking countries and North America as key market areas, and have made breakthrough progress in overseas markets. This has become a new model for Chinese mobile product exports after hardware manufacturers such as Huawei. However, if the market wants to develop further, it still needs to improve in many aspects such as content, technology, and profitability.

Figure 2 Short video APP overseas expansion

2. Market Analysis

2.1 Market size

On August 15, 2018, Analysys released a research report titled "Special Analysis of the Commercial Development of China's Short Video Market in 2018". Since 2016, China's short video market has entered a period of rapid development and continues to gain momentum with the joint support of capital, technology, platforms, content and users.

As of June 2018, the number of active users on the short video comprehensive platform and short video aggregation platform reached 472 million and 161 million respectively, with a network-wide user penetration rate of over 50%. The value of traffic and users has soared, and the commercial value has become prominent. Compared with the nearly 1 billion users on the entire network, short-form broadcasting undoubtedly has a large room for growth.

2.2 Ecosystem Construction

Around short videos, the industry has gradually formed a relatively complete industrial chain. It mainly includes platform operators, content producers, users, advertisers, and regulatory authorities. Among them, the platform operator is at the core, and each part complements each other.

Figure 3 Short video APP industry chain

Note:

MCN (Multi-Channel Network) is an imported product. The public began to pay attention to it when Disney spent US$500 million to buy Maker Studios (the largest content manufacturer of YouTube) in 2014. In Huaying Capital’s “MCN is the next trend? 》In the article, MCN is explained as an organization that unites PGC content and, with the strong support of capital, ensures the continuous output of content, thereby ultimately achieving stable commercial monetization.

In China, Magic TV, which developed based on the Xinpianchang community, Onion Video, which started with the "Office" series, and Hexiangufu, which transformed from PGC to content matrix, have all entered the MCN field. At the same time, platforms such as NetEase, Weibo, and Meipai have also launched their own MCN strategies. Therefore, each MCN and platform has a different way of playing, and the understanding of the MCN concept is also quite different.

Cai Hua, vice president of content at Meipai, used the organizational model of an internet celebrity economy company to explain the concept of MCN:

"MCN can be seen as an internet celebrity economic company. There are some grassroots short video enthusiasts in this company. When they grow to the point where they need to be professionalized and commercialized one day, MCN will serve as a very professional organization to help them go further."

In short, MCN is an organization that can professionalize the creative power of grassroots society.

2.3 Competition Landscape

According to the ranking data of average monthly traffic consumption per household released by China Unicom Big Data, it can be seen that from January 2017 to June 2018, the average monthly traffic of Kuaishou, which ranked first, increased from 267.07MB to 1671.39MB, and the traffic consumption increased by more than 525%. At the same time, the number of short-term video apps on the list also increased from 2 to 4, including Kuaishou, Douyin, Huoshan Short-Term Video, and Meipai.

Figure 4 Ranking of Average Monthly Traffic Consumption per Household

According to incomplete statistics, as of now, there are hundreds of short video apps on the market, which can be called a "hundred-regiment war." Toutiao and Tencent have the highest market coverage of short videos. Among them, Tencent has a wide layout and a large number of companies. In addition to incubating its own companies, it also chooses to invest in Kuaishou and Pear Video. However, among Tencent’s short video camp, except for Kuaishou, which has 230 million monthly active users, other apps have not exceeded 100 million.

Figure 5: Short video "Hundred Regiments War"

In the tide of video content on the Internet, many content creators in vertical fields have shifted from creating graphic content to creating regular video content. Not only has the number of creators increased rapidly, but the richness of short video content in vertical fields has also increased greatly.

Figure 6 Representatives of some short video vertical content providers

2.4 Business Model

At present, the short video market has completed the early accumulation from traffic to monetization. The issue that short video companies need to think deeply about now is to maximize user value based on short video content and interactive characteristics and find a business model at high costs. Among them, the high costs include content production costs, content dissemination costs, user acquisition costs, etc.

2.4.1 Advertising and Marketing

The length of short videos ranges from a few seconds to several minutes. Unlike long videos, they are not suitable for pre-roll advertising and sponsorship. Therefore, advertising mainly relies on traditional advertising and native advertising.

① Traditional advertising, that is, adding advertisements in the user's necessary usage path, has a high reach rate, but weak interactivity and is difficult to influence the user's mind. Including display advertising and performance advertising.

1. Development prospects: Enhance real-time and interactivity, use algorithms to distribute in appropriate scenarios, achieve accurate push, and improve conversion.
2. Advertising forms: such as open screen ads, full-width ads, pop-up ads, and points ads.

Figure 7 Traditional advertising

② Native advertising, that is, delivering the information that the brand needs to convey to users without affecting the user experience, including native form and native content.

Native in form: The form is similar to the content the user is currently browsing, but the content intuitively displays brand or product information. Such as Tik Tok information flow advertising.

Native content: that is, creating short video content that impresses users based on the tone of the brand, platform, and content producer to achieve the purpose of advertising effectiveness. At this stage, short-form video platforms integrate multiple attributes such as content, media, socialization, and tools, becoming an important platform for brand owners to achieve deeper commercial expression. The platforms also actively attract brand owners to provide them with exclusive pages, institutional certification, content aggregation and other services, and even realize the closed loop of conversion from marketing to sales.

In addition to direct marketing content output, what is more important is that the short video platform provides brand owners with a humane and personalized interactive channel with fans and audiences. Short video has become an important brand operation channel besides social media such as WeChat and Weibo. In addition to industry brand owners, local governments and government agencies are also actively entering the short-form video brand in order to achieve the purpose of publicity and promotion and interaction with the public.

Figure 8: Native advertising

Figure 9: Content-based native advertising

2.4.2 Short Video E-commerce

Short video e-commerce is based on the content characteristics and interactive features of short videos, forming different model paths including "watch and buy", self-built shopping malls, IP derivative monetization, etc. Its development focus is on establishing the business entity and avoiding overdrawing the value of short video traffic.

In short, short video is an entertainment and social platform. The underlying desire of users to enter the platform is entertainment, while e-commerce, as a shopping platform, meets the shopping needs of users. There is an essential conflict between the two. In the development of short video platforms, it is necessary to establish business entities.

① Short video "watch and buy" mode operation

The main target audience is KOLs. KOLs attract users and have formed a strong sense of identification with their attitude towards life. Fans purchasing products has become a way of interacting with KOLs to identify with their values, while also enhancing KOL user stickiness and monetization channels.

Figure 10: The “watch and buy” model of short videos

② Self-built mall model

Using short videos as a traffic diversion tool, establishing e-commerce entities and selling life attitudes, the short video content mainly includes:

1. Short videos with valuable content: By producing short videos with valuable content to attract users, the mall establishes a personalized attitude towards life and becomes a community-like community with people of common values.
2. After-sales service short videos: mainly include product usage tutorials, after-sales services and other content to enhance the mall’s trust and improve brand reputation.
3. Product display short videos: The main content includes unboxing, experience and product description. During the video production process, a sense of immersion and mystery is created to increase users' trust in the product and boost sales.

Figure 11: Self-built short video mall model

③ IP derivative model

The internet celebrity economy has given rise to personal brand IPs, and MCNs have built IP matrices to seek e-commerce monetization paths.

There are three main processes:

1. Vertically segmented personal brand: Create core content with people as the center and enter the content market from vertically segmented fields. Such as Papi Jiang and Chen Xiang Six-thirty.
2. Personal brand IP: With personal brand as the core, short video IP develops in a diversified way.
3. MCN platform IP matrix creation: MCN platform continues to incubate short video IP, build IP matrix or try to create its own brand and turn to e-commerce.

Figure 12 Papitube IP derivative model

Figure 13 Papitube Weibo account

2.4.3 User Payment

In addition to value-added membership unlocking more privileges (such as video effects) and setting up virtual gifts based on live broadcast content to reward the anchor platform, the content area also includes paid viewing of high-quality content. However, in the short-term paid market, some explosive high-quality content is still needed to trigger a breakthrough in the model.

Figure 14 User Payment Model

3. User portrait

According to the research report "Special Analysis on the Commercial Development of China's Short Video Market in 2018" released by iResearch Qianfan, the main users of short videos at this stage are people in first- and second-tier cities and mid- to high-end consumers.

3.1 Gender

Currently, male short-video users account for a higher proportion, at 58.06%. In the future, the short-video content production and operation strategies targeting more female users will continue to increase the overall scale of short-video users.

3.2 Age

Users under the age of 30 account for 70% and are the main audience of short-form video platforms at this stage. This group of people often have higher requirements for the quality of short-form video content and also pursue diversified short-form video content consumption.

3.3 Region

Second-tier and above cities contribute more than 60% of the geographical sources of short-term frequency users. As the platform's user sinking strategy continues to advance, users in third-tier and other towns will release greater potential.

3.4 Consumption

Among short-term frequency users, the proportion of medium and medium-high consumption groups exceeds 50%, indicating that the comprehensive consumption capacity of short-term frequency users is relatively strong, but there is still room for development among high-end consumers.

3.5 Preferences

Judging from the field preferences of short video users, they have a clear preference for social dating and video entertainment-related fields, such as opposite-sex social networking, entertainment live streaming, business social networking, marriage and dating, comprehensive videos, etc. It can be seen that the future upgrade and expansion of short video platforms in social functions and services is a potential means to enhance user stickiness.

In addition, there is a clear preference for O2O online consumption platforms such as beauty services and car transactions. It can be seen that short-term frequency users have a certain consumption capacity and have formed obvious online consumption habits.

Note:

1. TGI: Target Group Index, which reflects the strength or weakness of the target group within a specific research scope (such as geographic area, demographic field, media audience, product consumers).
2. The TGI index represents the differences in the issues that users with different characteristics pay attention to. A TGI index of 100 represents the average level, and a TGI index above 100 means that this type of user pays more attention to a certain type of issue than the overall level.
3. TGI index = [the proportion of the target group with a certain characteristic/the proportion of the population with the same characteristic]*standard number 100.

4. Regulatory regulations

On the afternoon of January 9, 2019, the China Internet Audiovisual Program Service Association announced the "Online Short Video Platform Management Standards" and 100 detailed rules for the online short video content review standards. Among them, overall regulations are made for short video platforms from four aspects: content management, review system, certification system, and technical requirements, and the 100 detailed rules further refine the review standards at the content review level.

It mainly emphasizes the positive energy of content, the review of content (including titles, introductions, barrages, comments, etc.) before broadcasting, the training and quantity requirements of reviewers, copyright protection, guardianship of minors, banning of artists with bad records, restriction of mourning culture, resistance to vulgarity, real-name authentication, and sharing of "blacklists".

5. Competitive product analysis

According to the categories of each short video APP in the app store, the platform's own labels and styles, they can be divided into four types: content type, tool type, community type, and vertical type. The typical representative APP corresponding to each type is shown in the figure below.

In fact, many short video apps are cross-cutting and do not belong to a single category. For example, "Tik Tok" and "Kuaishou" also have a community atmosphere. However, based on the platform’s positioning and emphasis, it is classified as “content-based”.

Figure 15 Short video APP types

① Content type: Several of the most popular short video apps are almost all of this type. Content-based short video apps can be further divided into "PGC", "UGC", "PUGC", "OGC", etc., but most of them tend to be "PUGC".

Figure 16 Content-based short video APP

② Tool type: Although most short video apps currently have basic editing functions and special effects, tool-type apps are simpler and clearer, and they are still very important for those groups with needs.

Figure 17 Tool-based short video APP

③ Community type: This type of short video APP has the function of guiding users to get to know each other and socialize through video content on the platform. For example, "Meipai" unlocked a new gameplay "Meet" in version 8.0.8, guiding users to get to know more interesting people through short videos. The positioning of "Duoshan" is to interact with close friends through short videos to make chatting more interesting.

Figure 18: Community-based short video APP

④ Vertical type: It is a sub-type derived from the “content type”. However, unlike the “content type” which is basically general entertainment content, the “vertical type” has distinct content characteristics, including games, dance, beauty, fitness, education and other fields.

Figure 19: Vertical short video APP

6. Conclusion

At present, the momentum of entrants into the short video market is getting stronger and stronger, and the competition among short video products at home and abroad is also intensifying; the short video industry chain is also relatively complete, mainly including platform operators and MCNs, content producers, users, advertisers, and regulatory authorities; fully based on the content characteristics and interactive characteristics of short videos, maximizing the user value and realizing the commercialization of short videos is an important issue that needs to be deeply considered at present.

Source: Bigworm oO