Short video competitor analysis report: Douyin vs Kuaishou

In recent years, with the continuous improvement of 4G and 5G infrastructure, the short video industry has continued to be popular. Currently, the main users and time of the short video industry are occupied by the two major platforms of Douyin and Kuaishou. The platforms are also constantly exploring more business scenarios and commercial monetization models, such as live streaming, e-commerce, online education, etc.

Report writing time: 2020.12.16-2020.12.22

Report written by : Rosie

Product experience environment: mobile IOS 14.1

Product Version:

I. Reporting Framework

This report is mainly divided into the following five parts:

• The first part briefly summarizes the research framework and main contents of this report;
• The second part analyzes the market size and industrial structure of the short video industry, and compares the market size of Douyin and Kuaishou;
• The third part is the focus of this report, which is a comparative analysis of the two products from multiple dimensions. The report analyzes the core differences between the two products and the results they bring from the aspects of user portrait, product values, product function structure, performance and interaction, content distribution algorithm, etc.
• The fourth part compares the content operation strategies and business models of Douyin and Kuaishou;
• The fifth part summarizes the report and draws research conclusions.
• At the end of the report, there are relevant reference materials and some product optimization suggestions for Kuaishou in the appendix.

2. Overview of the short video industry

2.1 Market size

According to the 46th "Statistical Report on the Development of China's Internet" released by the China Internet Network Information Center, as of June 20, the number of mobile Internet users in China reached 932 million, accounting for 99.2% of the total number of Internet users. With the popularity of mobile phones, the maturity of 5G communication networks, lower production and understanding thresholds, and the combination of entertainment and sociality, short videos are deeply in line with the current fragmented usage scenarios of users and have become one of the most commonly used applications in people's daily lives.

According to QuestMobile data, as of June 20, among China's mobile Internet monthly active users, short video users reached 852 million, and the top two products, Douyin and Kuaishou, accounted for 78%/60% of the short video user scale respectively, with DAU reaching 600 million/300 million respectively, and the average daily usage time per person was approximately 93/86 minutes respectively.

Source: QuestMobile, Essence Securities Research Center

Figure 1: China’s short video industry monthly active user scale (100 million) and penetration rate (20/06)

Source: Jiguang Data, Essence Securities Research Center

Figure 2: Top 8 types of apps with the longest daily usage time among Chinese mobile netizens (20/06)

Source: QuestMobile, Orient Securities Research Institute

Figure 3: DAU and average daily usage time of top content platforms (20/06)

Table 1: Comparison of short video platform operation data (20/06)

Source: QuestMobile, Orient Securities Research Institute

2.2 Industrial Structure

The short video industry has formed a relatively mature and stable industrial chain system, which is mainly composed of content producers, content consumers, short video platforms, advertisers and agents, other e-commerce platforms and regulatory authorities. Content producers include UGC (user-generated content), PGC (professional produced content), PUGC (professional user-generated content) and MCN organizations that are responsible for managing influencers behind the scenes.

With the popularity of the short video industry, users and related institutions of other content distribution platforms are also shifting to short video platforms. For example, major news media have opened short video platform accounts to push news information. MCN agencies are also developing rapidly, and are realizing commercial monetization through deepening cooperation with short video platforms and influencers, such as live streaming by influencers selling goods and promoting content.

For short video platforms, their commercial monetization models are becoming increasingly mature and diversified. Currently, they mainly generate revenue through live broadcast rewards, advertising, and e-commerce. Among them, with the popularity of live streaming e-commerce in the past two years, the proportion of live streaming and platform e-commerce revenue has continued to increase. As short video platforms continue to explore in-depth and extend scenarios in other vertical fields, I believe that more commercial monetization models will emerge in the future.

Figure 4: Short video industry chain structure

3. Analysis of Kuaishou VS Douyin Competitive Products

This report selects the leading products in the short video industry, Kuaishou and Douyin, for competitive analysis. This chapter will compare the two products from the dimensions of product values, product functions, content distribution algorithms, etc., and consider how Kuaishou can maintain its competitive advantage and achieve sustained growth under the high-pressure competition from Douyin.

3.1 User portraits of Tik Tok and Kuaishou

As the demographic dividend gradually disappears and the market coverage of the two products continues to increase, the user base of Kuaishou and Douyin is increasingly overlapping. But overall, Kuaishou users are more down-to-earth, younger, and have relatively lower spending power than Douyin users. Kuaishou has relatively more male users, with users under the age of 30 accounting for more than 70%, and users under the age of 18 accounting for a higher proportion than Douyin; Kuaishou has a higher coverage rate in lower-tier markets, especially in the Northeast and Northwest, with fifth-tier cities accounting for 18.3%, 5.3% higher than Douyin; consistent with its regional differences, Kuaishou users' online consumption is also significantly lower than that of Douyin users.

The differences in user portraits between Kuaishou and Douyin also explain to a certain extent the different content ecosystems, product tones and commercial monetization models of the two products, which will be analyzed in detail later. In fact, Douyin and Kuaishou are constantly approaching each other in terms of product iteration and operation, and will inevitably face more intense competition in the future. How to continuously iterate, optimize and refine operations to meet the diverse needs of users is the core of sustained product growth.

Source: QuestMobile, Guosen Securities

Figure 5: Gender differences between Kuaishou and Douyin users (20/10)

Source: QuestMobile, Guosen Securities

Figure 6: Age difference between Kuaishou and Douyin users (20/10)

Source: QuestMobile, Guosen Securities

Figure 7: Geographical differences between Kuaishou and Douyin users (20/10)

Source: QuestMobile, Guosen Securities

Figure 8: Differences in online consumption between Kuaishou and Douyin users (20/10)

3.2 Product Values: Reality vs. Beauty

The user demands served by Douyin and Kuaishou are similar. Both are products that meet users' content production and consumption needs such as leisure and entertainment, social interaction, information sharing and acquisition, and resource monetization. Moreover, the two products are becoming increasingly similar in terms of product form, commercialization, user market, etc., but they are essentially different.

The core difference comes from the different underlying values. Douyin focuses on beauty while Kuaishou emphasizes real inclusiveness. The difference in underlying values ​​has led to differences in product content distribution algorithm logic, product form, community operation, etc., thus creating different community content ecology, creator ecology, user relationships, user growth rates and monetization paths on the two platforms.

Douyin pays more attention to the "quality" of content and emphasizes "recording a better life". It screens out high-quality content through a centralized distribution algorithm to optimize the user's content consumption experience, which naturally leads to a high growth in users and time consumption, and keeps most of the traffic in the controllable public domain. Tik Tok places more emphasis on the experience of content consumers. It provides users with a more immersive content consumption experience through a full-screen information flow combined with its powerful content distribution algorithm, resulting in explosive growth after its launch. The large amount of traffic will in turn feed back to content producers to produce more high-quality content, thus forming a virtuous circle and sustainable growth.

Kuaishou, on the other hand, is "people-centric". As its founder Su Hua said, "it allows everyone to record their own lives and everyone has the opportunity to be seen by the world, thereby alleviating everyone's sense of loneliness and enhancing everyone's sense of happiness." Kuaishou pays more attention to user relationships and real benefits, emphasizes "embracing every kind of life", and allows more mid-level and long-tail users to have the opportunity to be seen through a more balanced distribution algorithm. It also encourages interactive social interaction among users, creating a platform with private domain traffic as its core.

Therefore, from the perspective of product presentation, Douyin is more like a social media, while Kuaishou is more like a community. Of course, in the process of continuous iteration, both products have a tendency to get closer to each other. For example, Douyin has launched the "Friends" section with social functions for acquaintances/semi-acquaintances, paying more attention to the social attributes of the platform; while Kuaishou has added a full-screen waterfall flow "Featured" module to the bottom bar, focusing on private domain traffic and gradually increasing the proportion of public domain traffic.

As the two products gradually spread toward each other's differences, the increasingly overlapping users and product forms also mean more intense competition.

The most important issue for Kuaishou and Douyin is how to meet the diverse needs of users through scene extension, tool optimization, etc. on the basis of adhering to their respective underlying values, thereby bringing about sustained growth of the products.

3.3 Product Function Comparison Analysis

This chapter will compare and analyze the functions of the two products from the perspective of product function structure diagram, core functions (differentiated functions in the bottom bar, shooting, live broadcast) and special functions (e-commerce, personal homepage content display, video category navigation, other sidebar functions), and draw relevant conclusions.

3.3.1 Product Function Structure Diagram

1) Douyin’s product function structure diagram

Tik Tok's product functions are divided into five modules according to the tabs in the bottom bar: Home Page (Same City/Follow/Recommendation/Live Broadcast), Friends, Shooting (Photo/Text/Segmented Shooting/Quick Shoot/Album/Live Broadcast), Messages (Fans/Interactive Messages/System Notifications, etc.), Me (Personal Information/Works/Dynamics/Likes/More Functions in the Sidebar).

Figure 9: Douyin product function structure diagram

2) Kuaishou’s product function structure diagram

Kuaishou's product functions are also divided into five modules according to the bottom bar tab: Home (Follow/Discover/Same City/More functions in the sidebar), Selections, Shooting (Mood/Photo/Video/Flash/Live Broadcast/Karaoke), Messages (Dynamics/Messages/Private Messages), Me (Profile/Works/Dynamics/Likes/More functions in the sidebar).

Figure 10: Kuaishou product function structure diagram

In general, the overall functional architecture of the two products is basically similar. Both are centered around their positioning as short video content community platforms, focusing on meeting the needs of content creators and producers, providing a variety of shooting tools and high-quality video content, and extending to more scenarios such as online education, live streaming e-commerce, etc. In the latest versions, the two products have been adjusted according to their current weaknesses. Kuaishou has launched a "Featured" section with a full-screen information flow, while Douyin has launched a "Friends" section that focuses on two-way social relationships within the platform.

3.3.2 Core Function Comparison

1) Kuaishou’s “Featured” and Douyin’s “Friends”

In general, the functional structures of the two products are roughly similar. The most core difference is that Kuaishou places the "Featured" module of the full-screen information flow on the bottom bar, while Douyin places the newly launched "Friends" section on the bottom bar (still in grayscale testing).

Before the launch of version 8.0, all of Kuaishou's video content was in the form of a double-column card stream. In comparison, Douyin's full-screen information flow mode gives users a more immersive content consumption experience. At the same time, this passive reception method is also more conducive to its commercial realization through the placement of information flow advertisements. Therefore, Kuaishou’s “Featured” section makes up for this shortcoming, optimizing the user experience through a single column + double column format, while also giving users more choices.

The newly launched “Friends” section of Tik Tok is also a bold attempt based on its shortcomings in social relationships. The "Friends" section is used to display relevant updates of friends who follow each other, similar to the updates in Weibo's friend circle. Most of the relationships in the follow list are one-way relationships, such as a creator of interest, while the "Friends" section emphasizes two-way relationships within the platform, which is conducive to promoting the construction and deepening of users' social relationships within the platform, thereby increasing user stickiness and sunk costs.

The different focus points of the two products on the core functions of the bottom bar are a good compensation for their weaknesses compared to their competitors, and are more conducive to the maintenance and growth of the content ecology and community ecology of the two platforms. The next step is to operate it more finely so that it can truly bring continuous value output to the platform's ecology.

Figure 11: Comparison of bottom bar function layout between Kuaishou and Douyin (Kuaishou on the left and Douyin on the right)

2) Shooting function

For content community platforms, content is undoubtedly the core. From the product iteration process of Kuaishou and Douyin, it can be seen that both parties are actively developing and optimizing shooting types, tools, special effects, etc. to meet the diverse needs of users and lower their creative threshold.

The two products are generally similar in terms of shooting function types, and the biggest differences lie in the video shooting time, quick shot and karaoke functions. The video shooting time of Kuaishou is 11 seconds/57 seconds/5 minutes, while that of Douyin is 15 seconds and 60 seconds. In comparison, Kuaishou users have more choices, which is more conducive to the expansion of its content ecology.

In addition, Kuaishou has an additional karaoke function compared to Douyin, which is a function that fits the needs of users in the sinking market well. For users in third- and fourth-tier cities, especially middle-aged people, karaoke is an indispensable form of entertainment in their daily lives. Douyin has an additional quick-shot function compared to Kuaishou, which is similar to Instagram story and Snapchat. The video updates are only displayed for one day, which also lowers the user's psychological threshold for creation and encourages users to use Douyin to record their life updates anytime and anywhere.

In addition, Douyin provides users with a large amount of topic challenge content, and customizes special stickers for advertisers to invite everyone to participate, in order to meet advertisers' needs for brand exposure and product promotion. This has become an important part of Douyin's information flow advertising.

In general, the shooting functions of the two products are basically similar, but they have their own characteristics based on the platform positioning and user groups. As the user base of the two products continues to generalize and the overlap becomes higher and higher, more similar functions will surely be developed in the future, including the development of upstream and downstream tools for the entire ecological industry chain. Based on product positioning and target user groups, meeting the ever-changing needs of users requires continuous exploration and continuous product optimization and iteration.

3) Live streaming function

Kuaishou and Douyin have both launched live streaming functions a long time ago, and the popularity of live streaming e-commerce in the past two years has brought a huge amount of traffic growth and commercial monetization to the two platforms. Compared with Douyin, Kuaishou's live broadcast ecosystem is more mature, and live broadcast rewards have always been Kuaishou's most important source of commercial monetization. It can also be seen from the same-city recommendations of the two platforms that there are a large number of live broadcast rooms in Kuaishou’s same-city recommendations, while there are relatively few on Douyin.

Kuaishou’s fair and inclusive content distribution algorithm has promoted the prosperity of its “old iron economy”, making the relationship between users more sticky and more conducive to the monetization of anchors through live streaming. The live broadcast functions of the two platforms are also generally similar, such as rewards, PK, joining fan groups, etc. But compared to Douyin, Kuaishou's live broadcast formats are richer, providing five types of live broadcast formats at the shooting entrance: video live broadcast, online broadcast, chat room, game and voice, which better meet the diverse needs of users.

Compared with Douyin, the entrance to Kuaishou’s live broadcast plaza is placed in a more hidden sidebar secondary interface, and the user’s usage link is longer; while Douyin is directly placed in the upper left corner of the homepage. Personally, I think this has a lot to do with the community ecology and company strategy of the two products.

Kuaishou's live broadcast ecosystem is already very mature, and users have developed the habit of watching live broadcasts on Kuaishou. It is also very convenient to enter the live broadcast room from the follow and same city pages. Therefore, placing the entrance to the live broadcast square on the secondary page of the sidebar will not have much impact on the entire product ecosystem and user experience. Douyin entered the live broadcast market relatively late, and its community ecosystem and user relationship stickiness are not as good as Kuaishou. Live broadcast rewards and e-commerce live broadcast sales are now very important means for platforms, content producers and advertisers to achieve commercial monetization. Therefore, placing the live broadcast room in a more conspicuous position and reducing the user's behavioral chain will undoubtedly be beneficial to the cultivation and growth of the live broadcast ecosystem of the entire platform.

3.3.3 Comparison of Features

1) Douyin Store vs Kuaishou Store

As live streaming continues to be popular, Douyin and Kuaishou are exploring more possibilities in the field of e-commerce. They have launched small store functions and directly displayed them on the personal homepage of users or official brand accounts. At present, Douyin Store has achieved an ecological closed loop, completely prohibiting traffic from other e-commerce platforms, and all transactions can only be completed within the platform. At present, Kuaishou still supports traffic diversion from other platforms, such as Youzan, Taobao, etc.

Personally, I believe that as the e-commerce ecosystem within the platform continues to mature and improve, Kuaishou will soon shut down traffic from other platforms and keep more traffic and commercial value on its own platform. Of course, this depends on the characteristics of the entire e-commerce industry, the construction of the upstream supply chain, and the ecological balance of multiple parties such as live-streaming anchors and brands.

2) Personal homepage display

The content displayed on the personal homepages of Kuaishou and Douyin is roughly similar, both including basic functions such as basic information, adding friends, and displaying works, as well as special functions such as shop windows. But compared to Douyin, Kuaishou’s personal homepage displays richer content. Kuaishou sets the sharing button in the upper right corner of the homepage to facilitate users to quickly share their Kuaishou accounts to other platforms.

Since Douyin places the live broadcast in a key position in the upper left corner of the homepage, the sidebar is set in the upper right corner of the homepage, and the user's business card sharing entrance is placed on the secondary page of "My QR Code" in the sidebar. For users, the sharing link is longer and the threshold is higher.

In addition, Kuaishou users can add group chats for display below their personal profiles, such as personal fan groups, interest groups, etc. These features are conducive to attracting new users to the platform and promoting the establishment of social relationships among users, thereby enhancing user stickiness and improving retention rates.

Another core difference between the homepages lies in the content display. The content display of Douyin’s homepage is mainly divided into three parts: works, dynamics and likes, while Kuaishou includes five modules: works, private, likes, collections and comments. Douyin places private works and collections on the secondary page of the sidebar. Relatively speaking, the user's behavior link is longer, and the threshold for using this function is relatively high. Especially for users who often need to view collections (such as a collection of a cooking tutorial video, local food stores, etc.), the experience is not as good as Kuaishou.

The advantage of setting the collection on a separate page in the sidebar is that the collection content can be classified more flexibly. At present, the collection section of Kuaishou’s personal homepage has been navigated and classified according to works, music, topics, magic and places. The structure is relatively reasonable, but it is difficult to expand the navigation function. Of course, I personally feel that the current classification has basically met the needs of users, and more refined classification management of collections is not a pain point for platform users.

Figure 12: Comparison of the collection functions of Kuaishou and Douyin (Kuaishou on the left and Douyin on the right)

3) Video category navigation

Since Tik Tok displays information in a full-screen stream format and users passively receive content, the product does not have a category navigation function under main modules such as “Follow” and “Recommendation”. Even the "Same City" section of the double-column card flow does not have any related functions in the city's drop-down interface. The "Follow", "Discover" and "Same City" sections on the Kuaishou homepage are all in the form of double-column card flows. Users have the right to actively choose, which makes it easy to set up category navigation functions.

Kuaishou has set up 30 category channels at the top of the "Discover" page, including food, comedy, 2D, etc., and users can adjust the display order of channels according to their own interests and hobbies, so that users can directly select the channels they are interested in from the first-level page of the homepage. The top of Kuaishou's "Same City" section displays the city and weather as well as video content filtering conditions. Users can pull down to select a city. Kuaishou provides two modes: selecting by city name and selecting a point on the map. Users can filter content based on distance (within 10km/within 30km/same city/same province) and release time (within 1 day/within 7 days/within 1 month), making it easier for users to choose video content based on their social or other content consumption needs and preferences.

Overall, Kuaishou's double-column card flow product format provides more possibilities for its functional expansion. Users can choose more matching content based on their interests and preferences, which not only improves the user experience, but also makes it easier for the platform to build and improve user portraits and personality tags, thereby continuously improving the matching degree of content, further optimizing the user experience, and forming a virtuous circle. Personally, I think that compared to Douyin’s relatively simple single-column waterfall flow format, the single-column + double-column display format is more conducive to the cultivation of user stickiness and platform ecology.

4) Other functions of the sidebar

Overall, the sidebar functions of Douyin are relatively simple, while those of Kuaishou are much richer. In addition to common functions such as wallets and tools for protecting minors, Douyin has set "My Order" on the first-level page of the sidebar. By clicking on the second-level page of "My Order", you can see information such as browsing history, order category management, shopping cart and product recommendations. The link between users viewing and managing orders and platform recommended products/live broadcast room exposure is shorter, which is more conducive to the construction of the entire platform's e-commerce ecosystem.

In addition, Douyin provides a "Creator Service Center", which is mainly divided into four modules: Creator Academy (learning account management skills), Task Center (submitting content to receive rewards), monetization capabilities (product showcase) and general capabilities training (live streaming, corporate accounts, official certification, Douyin stores, etc.). The Creator Service Center provides content creators with a clear training path and incentives, which can effectively encourage creators to improve their content creation and account operation capabilities and realize commercial monetization, thereby further stimulating the production of high-quality content and forming a virtuous circle for the content ecology and commercial value of the entire platform.

Compared with Douyin, Kuaishou's sidebar provides more special features, such as checking in to get traffic and large-screen mode. Kuaishou’s sidebar has a total of 16 functional channels, and users can choose 5 of them according to their interests and hobbies and set them on the first-level interface of the sidebar, making it convenient for users to quickly click into commonly used channels. These channels include Live Square, Kuaishou Store, Home Study, Local Life, etc. Some functions are still relatively simple and the content ecology is relatively lacking, requiring subsequent product optimization and content operation, but the setting of these functions has undoubtedly played a very important role in promoting the platform's ecology. For example, "Study at Home" (i.e. Kuaishou Classroom) provides users with a platform for learning content, and users can choose course content to study according to their own circumstances and personal interests.

In essence, short videos or live broadcasts are just a form of information dissemination. The most important thing is how to effectively combine them with people’s daily life scenes to bring more value to users. This is a win-win situation for both users and platforms. At present, in addition to the need for further optimization and iteration of the functions and content of these channels, I personally suggest that the platform add more guidance in the core functions and the core usage paths of users. On the one hand, it will let more users who do not frequently use the sidebar know the existence of these functions. On the other hand, it will also help cultivate users' usage habits and the behavioral motivations behind them, and lower the user's psychological threshold.

Figure 13: Comparison of sidebar functions between Kuaishou and Douyin (Kuaishou on the left and Douyin on the right)

3.4 UI and Interaction Design

1) UI design

First of all, from the overall style of the product UI design, Douyin uses mainly black, from the product icon to the background design within the APP, while also matching some brighter colors. The functional layout is also very simple, giving people a cool and trendy feeling as a whole. Kuaishou mainly uses a white background with orange elements, which is consistent with the style of its product icons. In addition, since Kuaishou’s video display is mainly static double-column card flow, users usually add titles of various styles to the video cover to highlight the core content and attract the attention of content consumers. Therefore, Kuaishou's overall UI style does not feel as simple as Douyin, but it is more down-to-earth.

Figure 14: Comparison of UI design between Kuaishou and Douyin (Kuaishou on the left and Douyin on the right)

2) Interaction Design

There are obvious differences in the interactive design of Kuaishou and Douyin, and the most core difference lies in the video playback format. Before the launch of Kuaishou version 8.0, all videos were displayed in a double-column card flow format, while Douyin, except for the "Same City" section where high-quality content accounted for a small proportion, played all videos in a single-column waterfall flow format.

The core difference between single-column and double-column is that one is for users to passively accept, while the other is for users to actively choose, which also leads to different fault tolerance rates and content ecosystem differences between the two products. If users accept content passively, their tolerance rate will be relatively low, and they may leave directly after seeing a few pieces of content they don’t like. If users have the right to choose, the tolerance rate will be higher. The full-screen information flow can provide users with a more immersive content consumption experience, and this passive reception mode is also more conducive to the platform inserting information flow advertisements to achieve commercial monetization, but at the same time it will also have higher requirements for the content quality of the video.

Ultimately, a low-tolerance single-column UI will lead to a pyramid-shaped media-oriented ecosystem, while a high-tolerance double-column UI will lead to an olive-shaped community-oriented ecosystem. Thanks to TikTok's greater focus on product positioning and content distribution algorithms for high-quality content, the full-screen information flow model is obviously more conducive to providing users with high-quality immersive consumption experience and realizing commercial monetization.

But personally, I think that the question that Douyin must think about is how to bring more satisfaction to users. Although the full-screen information flow can provide users with a smoother video viewing experience, this passive reception method also makes users unknowingly watch a lot of information that is worthless to them. When users spend a lot of time on the platform, they do not feel satisfied and may even feel that their time is wasted, which leads to more negative emotions. In comparison, Kuaishou's double-column card flow gives users more choices, and users can also choose more matching content based on their interests. Based on personal values ​​and experience, I prefer Kuaishou's single-column + double-column mode.

Another core difference between Kuaishou and Douyin in interactive design is the swipe-up operation for videos. In addition to the "Featured" section, when users swipe up on Kuaishou's video page, user comments will appear, thus encouraging social interaction between users. This is consistent with Kuaishou's overall product strategy. Compared with the user experience of content consumers, the interaction between producers and consumers, user social relationships and community ecology are given higher priority. In addition, Kuaishou can also insert recommended advertisements on the comment page, which is more conducive to the commercial monetization of its advertisements. When the user swipes up on the video interface of Douyin, the next video will appear, which provides a better content consumption experience for the user.

In addition, in the "Featured" section of Kuaishou, when the user swipes left on the video page, a pop-up window will appear showing other videos of the author, and the user can directly swipe up and down to switch the video content of the author. On the video pages of other sections, swiping left will jump to the author's personal homepage.

Personally, I think the different left-swipe operations between Featured and other sections are mainly based on the different creator categories, content popularity and user experience. The "Featured" section mostly provides popular and high-quality video content, with a high proportion of top creators, and the user's smooth content consumption experience is more important than fan relationships. Based on Kuaishou’s values ​​of fairness and inclusiveness, the platform does not want to concentrate too much traffic on top creators. Therefore, swiping left will reveal more video content rather than the author's personal homepage, which not only improves the user's consumption experience but also benefits the traffic ecology of the entire platform.

3.5 Content Distribution Algorithm

The core elements that distinguish the two applications, Tik Tok and Kuaishou, from other content communities are: first, the media format of short videos; second, the use of algorithms for personalized content recommendations. There is no huge difference between Douyin and Kuaishou in the technology of understanding content and users. Both of them summarize and extract keywords from the content, build user portraits and personality tags, and match the two tags, so as to distribute content that users are more interested in and improve their content consumption experience.

However, based on the differences in the underlying values ​​of the two products, the goals of their recommendation algorithms are also different. In general, Douyin gives higher weight to the "quality" of the content, while Kuaishou gives higher weight to "universal fairness in distribution results" and "social relationships".

Tik Tok’s content distribution is relatively centralized, with top content receiving tens of millions of likes. Content quality is given a higher weight while social relationships are given a relatively lower weight (the probability of fans seeing a new video from an influencer is 10%). The priority of feedback indicators is completion rate > likes > comments > reposts. This content distribution mechanism is more conducive to top-quality content and creators, is more friendly to content consumers, and the platform can also control more public domain traffic, but the platform's content ecology and creator ecology will show the characteristics of "large gap between the rich and the poor."

Kuaishou places more emphasis on connections between people and gives higher weight to social relationships (the probability of fans seeing new videos released by influencers is 30-40%), and the comment rate is more important than forwarding and likes. Kuaishou introduced the concept of "Gini coefficient" to regulate traffic distribution to ensure fairness in traffic distribution. Long-tail content has more exposure opportunities than Douyin, and community traffic distribution is decentralized. Therefore, the overall content ecology appears to be more "down-to-earth", which also lowers the user's psychological threshold for creation and is more friendly to content producers.

According to Kuaishou’s official report, only 30% of Kuaishou’s traffic is allocated to top popular content, and the remaining 70% of traffic is allocated to mid- and long-tail content. Such a content ecosystem is also in line with Kuaishou’s value of “fairness and inclusiveness”. The two different distribution algorithms are also intuitively reflected in the way users interact. According to Kas Data, the like-to-comment ratios of Douyin and Kuaishou are 42 and 13.05 respectively.

In general, the two different content distribution algorithms have led to differences in the content ecology and creator ecology of the two platforms. Douyin's content consumers have a better experience, while Kuaishou's content producers have a better experience; Douyin's top influencers gain followers faster, and fans are concentrated at the top, but the value of each fan is lower; while Kuaishou's traffic distribution is more even, top influencers gain followers more slowly, the fan distribution is more balanced, and the fan value is relatively high.

Source: Orient Securities Research Institute

Figure 15: Differences in traffic distribution between Douyin and Kuaishou

4. Content Operation and Commercialization Model

4.1 Content Operation

For content community platforms, content production and consumption are the core of the product. It can be seen that in the past two years, Douyin and Kuaishou have been continuously deepening their content operations, including top content and vertical content operations, launching multiple creator support plans, and continuously iterating creative tools. The platform's emphasis on content operation can help lower the threshold for content production and maintain the enthusiasm and activity of creators, thereby enabling the platform to have a continuous, high-quality supply of content, improving the user experience of content consumers and achieving high user growth.

Since its inception, Douyin has attached great importance to content operation, such as inviting fashionable young people from major art schools to become seed users, designing various topic challenges, and inviting celebrities to join. Douyin's operations on the content producer side during the cold start process played a crucial role in its overall product tone and subsequent explosive growth.

In addition, Douyin also pays more attention to the growth system of creators. This year, it launched the "Creator Level System", which determines the level of influencers based on four factors: content quality, content influence, fan influence, and commercial influence. The higher the content creation ability of the influencer, the higher the level, and the more traffic resources and support they will obtain. In addition, this year Douyin also launched the "dou growth incubation camp" new author support plan, the "Douyin musicians 100 million yuan subsidy plan", the "Teacher Please Come to the Stage" educational live broadcast IP event, etc. By continuously supporting and motivating high-quality content producers in various vertical categories and outputting more high-quality content, we will continue to form a positive cycle of incentives for the platform ecosystem.

Kuaishou’s content ecosystem for creators has gone through the stages of no operation (2013-2016) -> light operation (2017-2018) -> heavy operation (2019-2020). In the early years, the emphasis was on non-interference in users and downplaying operations; but with the intensification of competition in the short video track, the solidification of the vulgar and earthy brand image, and the phenomenon of top families continuing to form groups, Kuaishou has also begun to strengthen its operations on the creator side.

On the one hand, Kuaishou began to actively contact small and medium-sized creators and MCNs, launched the "Photosynthesis Plan" to support content creators, and launched various targeted creator incentive and support plans for different vertical categories, and gave key support to games, two-dimensional and other fields; Kuaishou launched the "Starfish Plan" this year, and launched support policies such as billions of traffic support, original protection, high-quality creator certification, and exclusive operation guidance for overseas talents; launched the "Cultural and Tourism Photosynthesis Plan" to encourage high-quality cultural and tourism content, promote cultural and tourism resources, etc.

On the other hand, Kuaishou has also increased its efforts to invite celebrities to join, such as inviting Jay Chou to join Kuaishou in June this year, and inviting Chen Kun to join and serve as Kuaishou's spokesperson in September.

In general, both platforms provide strong support to creators, including material incentives, training programs, etc.; and they are constantly exploring various vertical fields to meet users' more extensive and diverse content consumption needs, such as education, travel, ACG, etc. In addition, both Douyin and Kuaishou provide content creators with a variety of commercial monetization methods, including live broadcast rewards, e-commerce, and commercial promotion orders, thereby encouraging them to continue to produce high-quality content and achieve a positive cycle in the content ecosystem.

4.2 Commercialization Model

Unlike the aggressive and rapid development of TikTok, Kuaishou has been relatively restrained in terms of commercial monetization in its early days in order to ensure user experience and maintain the community ecology. But under the high pressure from competitors and the capital market, Kuaishou has to accelerate its commercialization process. In the past two years, Kuaishou has continued to make efforts on the road to monetization, such as information flow advertising, fan headlines, "quick order" platform, corporate accounts, Kuaishou stores, etc., and its marketing methods have also changed from the original conservative and restrained to radical.

In general, the current commercial monetization models of the short video industry are mainly divided into the following types: live broadcast rewards, advertising, e-commerce and other services (such as online education, games, etc.). Douyin and Kuaishou have both dabbled in these monetization methods, but based on their different development paths and platform ecosystems, the focus of their business models is slightly different.

Due to its immersive interactive experience and passive way of receiving information, Douyin is more suitable for advertising traffic monetization (content-based monetization). In 2019, ByteDance's advertising revenue accounted for 70-80%; Douyin's distribution algorithm is more content-oriented, which makes the traffic more concentrated in the public domain, and it has more users with high consumption power in first- and second-tier cities, and the full-screen information flow mode of passive reception has a higher tolerance rate for content, and is therefore more favored by advertisers. Among the advertisements placed, there are relatively more brands that are more mid-to-high-end or have a slightly higher average order value. However, Douyin’s live streaming function was launched relatively late, and the platform’s user relationship stickiness is not as good as Kuaishou’s, so the proportion of live streaming revenue is relatively low.

Kuaishou’s revenue mainly comes from three businesses: live broadcast rewards, advertising, and e-commerce. Kuaishou’s “old iron economy” brings stronger user trust and is more suitable for monetization in live broadcast scenarios (based on monetization of influencers). Kuaishou's IPO prospectus this year shows that from 2017 to the first half of 2020, Kuaishou's live broadcast revenue was 7.9 billion yuan, 18.6 billion yuan, 31.4 billion yuan and 17.3 billion yuan, accounting for 95.3%, 91.7%, 80.4% and 68.5% of the total revenue respectively. Kuaishou’s unique advantages lie in its regional penetration capabilities and strong social attributes: when the mobile Internet traffic dividend is coming to an end, Kuaishou can cover the traffic dividend areas “outside the 5th ring road”. At the same time, the anchor and the fans grow together, and there is trust and loyalty between them. The "old iron relationship" can significantly improve the conversion rate and repurchase rate.

Compared with Douyin, Kuaishou has relatively fewer brand advertisements, and popular products may prefer Kuaishou. It can also be seen from the cases officially released by Kuaishou that Kuaishou advertising has attracted a large number of small and medium-sized merchants based on local products and services. But overall, the proportion of live broadcast revenue is continuing to decrease with the adjustment of business focus, and the proportion of revenue in other businesses such as advertising, e-commerce, and games has gradually increased.

Source: Kuaishou prospectus, Huachuang Securities

Figure 16: Kuaishou's income composition

The current products, algorithms and operations of the two platforms are in rapid change, and the monetization capabilities under different modes are also undergoing major changes. It can be seen that Kuaishou is constantly increasing its commercialization this year, and recently announced that its advertising revenue has exceeded live streaming and has become the largest source of revenue; ByteDance has also established the e-commerce department as a first-level department, and the live streaming rewards and sales GMV has grown rapidly.

As the traffic dividend gradually disappears, Kuaishou and Douyin begin to seek longer-term business models. While digging deep into the sinking market, they continue to expand more vertical fields, continue to support and inspire more high-quality content creators, and achieve user growth and retention through more refined operations. Both major products are growing and iterating rapidly, and more business models will grow in the future.

V. Report summary

Short videos have become mainstream content consumption, and at the same time provide popular pan-entertainment content and low-threshold expression media to meet user content consumption and self-expression demands. Douyin and Kuaishou have undoubtedly become the two giants in the short video industry, and it should be difficult for a third company to surpass it for a long time in the future. In the process of competition, the two companies also learn from each other, promoting the virtuous cycle and sustained growth of both parties.

Personally, I believe that for Kuaishou and Douyin, the most important thing is to maintain their underlying values ​​and product positioning, and to continuously develop and optimize video creation tools, integrate short videos or live broadcasts with more vertical fields, and support more high-quality content creators, so as to meet the diverse needs of users, create more value for users, and promote the virtuous cycle of the entire content ecology and community ecology.

Short videos and live broadcasts are just a medium of information dissemination, and short video APPs should not just position themselves as social entertainment products. Any great product must be a product that truly creates value for users. With the in-depth exploration of Kuaishou and Douyin in more vertical fields and the support of creators, such as online education, knowledge, culture and tourism, sports, etc., I believe that in the future, it will attract more content producers and consumers and continue to bring more positive significance to users and society.

Today I happened to see an article on the Kuaishou Education Ecology in the official account of Banfo Xianren. There is a sentence that I like very much: "The significance of technology is sometimes not only about how much money you can make, but also about longer-term things. Making money is just the rewards brought by the right things. "

Author: Cheese Ramen Girl

Source: Cheese Ramen Girl