Sales reps at an Alibaba InTime store display products that are available for sale during a live stream.
InTime | Alibaba
BEIJING – The capricious Chinese consumer has settled on a number of new preferences for watching video, a trend that investors and media giants are taking advantage of.
Late Thursday, the short video and live streaming app Kuaishou announced an IPO on the Hong Kong Stock Exchange. The offer is According to reports, $ 5 billion will be raised.
Morgan Stanley, Bank of America Securities and China Renaissance are the underwriters according to the filing.
Kuaishou claims it had an average of 302 million daily active users for the first six months of this year. The company said revenue for that period was 25.3 billion yuan ($ 3.8 billion), up from 17.1 billion yuan a year earlier.
Aside from streaming video games, analysts say the video apps are front-line favorites with Chinese consumers: Douyin by ByteDance, the Chinese version of the popular TikTok short video sharing app, as well as Kuaishou and Bilibili – both supported by Tencent.
Stay-home policy and acceleration of the digital economy in the wake of the Coronavirus pandemic helped the trend. Specifically, Live streaming has started in China as a way to maintain – and sell – products.
“We believe that short video games that Douyin and Kuaishou have played since entering the live field have changed China’s live landscape, causing increasing pressure on the existing plays,” said Jialong Shi, head of China’s Internet and Internet New media research at Nomura, most recently in an email week, related to the live streaming sector.
According to CNBC analysis of data from App Developer Services Services firm Aurora Mobile, the average daily active user of Bilibili increased 55% in the twelve months to October. This is the fastest value among eleven major app and social media platforms.
Douyin grew 38% while Kuaishou shrank 6.7%. However, at the previous three leading video app providers: Tencent Video, iQiyi and Youku, the average number of users fell by around 30%, 22% and 23%, respectively.
In the sign of the times, the BBC Studios announced on October 19th a multi-year strategic collaboration with Bilibili for the distribution of shows and films for the British media company and for the co-production of future content.
“Everyone knows that Bilibili is an important video and gaming platform in China. In recent years it has become a very important documentation platform in China,” said Ding Ke, general manager of BBC Studios in Greater China, in a telephone interview two days after the announcement.
She found that the users of the app are primarily “Generation Z” or were born around the mid to late 1990s to early 2000s. “We see this group as one of the driving forces behind content consumption in China,” she said.
BBC Studios also has partnerships with other video platforms in China, including one this year to renew the license for the TV series “Sherlock” Alibaba-supported Youku.
Consumers are already used to shortening videos today, said Tony Zhao, co-founder and CEO of business-oriented video communications platform Agora.io and former chief technology officer of live streaming platform YY.
Among the long-form players, Bilibili was able to make the most significant switch to shorter videos and other popular content, a change that may not be reproducible, he said. Zhao added that the main long-form video platforms Youku, iQiyi and Tencent may not necessarily be able to transform in the same way.
Nasdaq-listed Bilibili shares are up more than 140% so far this year. BaQu’s own iQiyi has increased by around 20%. While iQiyi has maintained a strong line in content production and introduced a new drama format for miniseries, the company is struggling to make money faster – total subscribers as of June 30th increased 4% year over year. Both companies are still at a loss.
Jerry Liu, Head of China Internet at UBS Investment Research, described the Chinese video app landscape as cyclical.
“Sometimes new platforms come out. They are very successful, they get a huge following, a lot of momentum, and then the industry gets very concentrated for a while, dominated by two or three platforms. … Then you have a cycle of disruptions” Liu said in a phone interview last week.
However, he anticipates that the current group of disruptors will keep few competitors in the industry in the near future.
Politics is another risk that video sharing platforms face in China.
Iqiyi’s hit drama of the summer of 2018 “Story of Yanxi Palace” was supposed to criticized by state media in the following months. The last drama is said to have been in late September removed from streaming sites without explanation. Iqiyi declined to comment on the show’s disappearance from its platform.
According to BBC’s Ding, the company is still working with regulators to distribute Doctor Who on Bilibili in China.
To be fair, Bilibili’s growth is far smaller than many of its larger competitors. The company reported an average of 50.5 million daily active users, 171.6 million monthly active users, and 12.9 million monthly paying users in the second quarter.
IQiyi reported 104.9 million subscribing members as of June 30, the vast majority of whom were paying customers.
Analysts also said that many people in China are getting used to paying for content and subscription-based video content will keep a stake in China.
The bigger competitor for consumer attention in China is ByteDance’s Douyin, which has grown in popularity in just a few years claim more than 600 million daily active users via its platforms in September. The short video and live streaming app is not only an entertainment and information portal, but also an e-commerce channel.
“Douyin has essentially become television,” said Edith Yeung, partner at Investor 500 early stage startups. “(Anecdotal, people use the app) 8, 9 hours a day because they literally fall asleep with Douyin.”