Based on TikTok's parent company's belief in the recommendation of algorithms to reconstruct the distribution of information, and the domestic practical experience of platforms such as Douyin, TikTok has quickly become a leader in overseas Internet short video tracks. The success of TikTok, on the one hand, verifies that video has become a global trend, and on the other hand, proves the leading ability of Chinese Internet companies in multiple aspects such as user growth, content operation, algorithm technology and commercialization in the wave of mobile Internet. CICC believes that going to sea may become the next blue ocean market for many Internet companies.
TikTok – the rising global leader in short video.
TikTok is a short video platform focusing on overseas markets, launched in May 2017, acquired Musical.ly in November 2017, and integrated the two platforms. TikTok uses artificial intelligence recommendation algorithm to personalize short video content for users, and encourages users to use its rich creator tools for short video creation, forming a rich short video community ecology. While expanding globally with the strategy of product globalization and local language systemization of content, TikTok actively promotes the commercialization process and explores various commercialization possibilities such as advertising, live broadcasting, and e-commerce. So far, TikTok's users are located in more than 150 countries and regions around the world, and the main markets include the United States, Japan, Europe and so on. TikTok has become a global mainstream Internet content platform and a leader in the short video track.
TikTok users are growing rapidly, with MAU expected to reach 1.2 billion by 2021.
In 2017, TikTok first expanded into the market, with a global average of 55 million MAU. Since 2018, TikTok has begun to rapidly promote the process of globalization, with a global average MAU of 271 million, a year-on-year growth rate of nearly 400%, and the global average MAU exceeded 500 million in 2019, an increase of 87.16% year-on-year. From February to June 2020, due to the epidemic stimulating the development of short videos, TikTok's MAU once again returned to a triple-digit year-on-year growth rate. In 2020H2, TikTok growth was affected due to the ban on TikTok in India, and continued to return to the fast upward channel from October. In September 2020, TikTok's global MAU exceeded 1 billion. According to App Annie's forecast, the global average MAU of TikTok may exceed 1.2 billion in 2021, continuing to maintain a rapid growth trend.
TikTok is the fastest overseas super internet platform to reach 1 billion MAU.
In July 2021, TikTok became the first non-Facebook app to exceed 3 billion downloads worldwide. In September 2021, TikTok received 34 million downloads worldwide, far ahead of the short video platform. In September 2020, TikTok's global MAU exceeded 1 billion, and it took only 4 years, and the average MAU in 2020 exceeded 700 million, yoy +44.22%. For reference, in 2012, Facebook's global average MAU exceeded 1 billion, taking 8 years, and in 2020, the global average MAU was 2.797 billion, YoY +12%.
Development history: product globalization, operation of local languages to create a leading position.
One of the underlying logics is that information recommendation brings about changes in the way information is distributed. The rise of TikTok is based on the underlying logic is to reconstruct the way of information distribution, the traditional Internet age information distribution methods - manual screening, search engine, subscription, social network have certain limitations and thresholds, and information recommendation will bring about the mobile Internet era from "people looking for information" to "information looking for people" Information distribution method changes, so that information and people to achieve a wider and more efficient match. Based on this understanding, TikTok's parent company has gradually built the algorithm recommendation system into a core technology middle platform, and efficient and accurate content push is one of the core reasons for TikTok's high retention rate.
Bottom-up matrix innovation model. TikTok has an atmosphere within the company that encourages bottom-up freedom of innovation. Develop and release multiple apps across multiple tracks, evaluate app performance after the freezing period, and allocate resources across apps based on clear metrics. If the application has strong user stickiness and high retention rate, it will get more resource allocation; if the user retention rate is acceptable, it will be further improved; if the user retention rate is poor, it will face closure. New applications can benefit from the mothership's technical stacking, while resources are allocated based on application performance, and companies are constantly releasing and testing new products, constantly improving themselves to achieve compatible top-down efficiency and bottom-up innovation.
Advertising, live streaming and e-commerce commercialization are still in the early stages of development, but there are initial results.
The advertising potential of short video platforms is remarkable, according to the delay data, TikTok platform advertising revenue in 2020 is $1.9 billion, and we estimate that advertising revenue in 2021 is $4 billion, an increase of 111% year-on-year. Relative to the size of the user, TikTok's current ad monetization process is still relatively conservative. In addition, on the basis of the continuous improvement of the talent marketing system, the marketing value of TikTok platform is comparable to that of mature platforms such as YouTube, and we believe that the marketing system of talent is expected to further promote the development of content ecology. Live tip revenue is growing rapidly, and according to SensorTower, Douyin and TikTok topped the global entertainment app revenue charts with $1.26 billion in 2020. In terms of e-commerce, after experiencing early cooperation with third-party platforms, TikTok will focus on opening closed-loop construction in 2021 and opening tests in markets such as the United Kingdom and Indonesia, with a large long-term space.
He is the stone of the mountain: large space, self-confidence, and strategy
Looking back at the development process of TikTok, we believe that there are three major revelations for Chinese Internet companies to go global:
Large space: From the development experience of mature Internet companies in Europe and the United States such as Facebook and Google, the Overseas Market of the Internet has a huge scale of users and revenue, and TikTok quickly exceeded 1 billion MAU to once again verify the market space. In addition, compared with the crowded situation of the domestic Internet track, the overseas Internet market is a relatively blue ocean market, and the competition is more moderate than that in China.
Self-confidence: From the perspective of core capabilities in many aspects such as Internet platform algorithms, operations, and commercialization, as well as the human resource reserves of engineers, mainland Internet companies have certain advantages in basic capabilities and resources. Trends such as video in the domestic market development stage compared to the overseas market is more mature, to a certain extent the domestic market led the global trend, TikTok's success verified that the domestic Internet application market in some track development stages have been the status quo of the world's leading, the experience of the domestic market for related enterprises to enter the overseas market will play a great role in supporting. Therefore, domestic Internet companies must have self-confidence and firm will when they go to sea.
Talk about strategy: Many tracks of the Internet have a "two-eight effect", and the Internet leader uses the network effect to obtain a larger market share. With its unique product positioning and playing style, TikTok quickly established a leading position on the track. Other Internet companies entering overseas also need to find their own unique product positioning and achieve differentiated competition.
Risk factors: policy supervision risks; risks of intensification of industry competition.