Is the era of the app factory over? Why are there fewer and fewer new apps?

In the past few years, if you were to ask what track everyone was most concerned about, it would undoubtedly be the Internet. In the era of Internet development, it seems that new apps appear every month and new products become popular in the market. But in recent times, how long have you not used a new app? It seems that in just over a year, the speed of the Internet has suddenly slowed down? What is going on?

1. Is the era of APP factories over?

In recent days, an article from Tech Planet has been all over the Internet. In this article titled "App factories are collectively shut down, and there is no more product myth on the Internet?", Tech Planet wrote: How long have you not downloaded a new app?

Many product managers miss the spring of early 2019, when Luo Yonghao, who continued to start his own business, Wang Xin, who regained his freedom, and Zhang Nan, who was full of vigor, simultaneously launched their own social products, with Zidan SMS, Matou MT, and Duoshan "three horses" fighting against WeChat. Although Tencent already has two major instant social tools, QQ and WeChat, it still launched 7 social products in 2020.

As time enters the second half of 2021, there are fewer and fewer eye-catching new products. Tech Planet statistics show that Tencent has launched only three new apps from June last year to date, which is a big gap compared to the previous grand occasion of launching seven social apps in one go. Although ByteDance, known as the App Factory, has launched eight apps, the number is also decreasing compared to the past. Even in December, when new apps were launched most frequently in previous years, no new products were launched by major manufacturers last year.

Tech Planet even takes ByteDance as an example. From 2018 to 2020, the number of products released by ByteDance to the public showed an upward trend year-on-year, with 5, 6, and 9 new products launched respectively. In the second half of 2021, the number of ByteDance's online products began to decline. From July 2020 to June 2022, ByteDance launched a total of 19 products in two years. Among them, from July 2020 to June 2021, ByteDance launched 11 new products, accounting for 58%, and the number of new products from July 2021 to June 2022 accounted for 42%, a total of 8 new products.

In fact, this seems to be no longer a current phenomenon. If we study it carefully, we will find that since 2021, many people have noticed that the previous big companies seem to have slowed down the pace of their new APPs, and it seems to be indicating the decline of the Internet dividend. According to a report in the Economic Observer in May 2021, the epidemic has further boosted the growth of large companies at a time when the Internet traffic dividend is exhausted. Big companies are bigger, which means that it is more difficult for small and medium-sized companies to stand out, and VCs are less interested in giving them money. Investment institutions are not short of money, and even have more money. A leading FA company was unprecedentedly busy in the first quarter of this year, and the number of projects it promoted increased by multiples year-on-year, but they did not see good Internet projects. Yu Yue, head of consumer investment at Huachuang Capital, has been an early-stage venture capital investor from angel to round B. He has experienced the golden age of mobile Internet from 2013 to 2017, and now this track is no longer popular. His previous main track was consumer Internet. From 2020 to 2021, he did not invest in any traditional Internet companies.

It seems that all this proves one thing: the era of APP factories is over!

2. Why did the APP factory fail? How should we view the Internet?

In fact, many people are surprised and sometimes even confused to see that the current APP factories seem to be getting less and less successful. In the happiest time, new APPs appeared every month. ByteDance, as the originator of APP factories, seemed to separate each sector into an APP as soon as it had some success. That era was so prosperous and flourishing. Why have today's APPs become so dull?

First of all, the life cycle of the Internet industry has entered a new era. Since the 1990s, China's Internet industry has experienced two major historical periods, the Internet era and the mobile Internet era, and has gone through two magnificent decades. When the era entered the third decade, changes in the Internet industry have actually appeared. One of the most significant features is that super giant APPs have appeared on almost all major tracks you can think of. For example, when it comes to short videos, there are Douyin and Kuaishou, when it comes to social networking, there are WeChat and QQ, when it comes to office work, there are DingTalk and Feishu, when it comes to music, there are Tencent Music and NetEase Cloud Music, etc.

According to the guidance issued by the State Administration for Market Regulation, a super platform refers to an app with at least 500 million active users in China in the previous year, with core businesses involving at least two types of platform businesses, a market value (valuation) of at least RMB 1 trillion at the end of the previous year, and a strong ability to restrict merchants from contacting consumers (users). According to this standard, apps such as WeChat, Taobao, Alipay, and Douyin will be managed as super platforms.

When seeing the definition of super platform, many people will actually find that super APPs have appeared in almost every track, and even multiple super platform APPs have been generated. Under such circumstances, the life cycle of the Internet industry has gradually entered the mature era of oligopolistic competition from the previous era of rapid growth under free competition. According to the theory of industrial life cycle in economics, the concentration of industrial markets that have entered the mature cycle continues to increase, the number of companies in the market gradually decreases, and the competition in the market has turned into competition among large companies. The current Internet is actually in the process of transformation in this era.

For most Internet companies, instead of spending a lot of effort to create a new APP, it is better to refine their current APP and gain profits from the market in depth. This is the core logic of the current Internet.

Secondly, every APP wants to become a super ecosystem. Not long ago, the famous Silicon Valley Iron Man Musk said that Twitter should learn from our Tencent. Many people were surprised by this statement, but when we carefully read the reasons given by Musk, we will find that Musk has seen the characteristics of the current APP development, which is full ecology. On the APP, you can cover almost every aspect of your life, including food, clothing, housing and transportation.

For example, take Douyin. Originally, people only watched short videos on Douyin, but now they can watch live broadcasts, buy things, make payments, order takeout, use Dianping.com, etc. It can be said that Douyin's ecosystem has become increasingly complete to include all aspects of our lives. So in this context, major Internet companies have begun to further develop the whole family bucket, rather than dividing their strength to create a single APP to fight alone. This is the biggest logic of current Internet companies, to conquer the market with the whole ecosystem, rather than fighting alone.

What's more, the development cost of mini programs is much lower than that of APPs. Instead of making a thankless APP, it is better to completely enter the mini program and make a light application. It not only saves users' download costs, but is also easier for users to know and produce viral fission spread.

Third, the big companies are no longer young and are gradually seeking stability. If the industry life cycle is only a characteristic of industrial development, today's major Internet companies are actually no longer young. Many of them have gradually become stable. Companies with only a few thousand people were full of enthusiasm, but now companies with tens of thousands or even hundreds of thousands of employees are more concerned with processes, rules, and OKRs, and there are not many innovative points. This is actually the change of Internet companies.

For the current Internet giants, the original purpose of APP independence was to obtain more venture capital, use the capital to expand their business, and then continuously use capital leverage to obtain more funds from the market to achieve exponential growth of the business. However, venture capital is now less and less interested in pure Internet projects, and independent APP does not seem to have much value at this time.

Therefore, under such circumstances, some projects that do not make any money are no longer independent or test the waters. This is actually a sign of the maturity of Internet companies.

Therefore, it is not surprising that there are not many APPs given the current state of development of the Internet industry. It still depends on the long-term development potential and future expectations.