Image source @ Visual China
The | of the text burns deeply, and the author | Li Qiuhan, Editor, | Wei Jia
Going to sea is one of the keywords of the current Internet manufacturers.
This is not the business that the Internet manufacturers have only started this year, but in the environment of the peak of domestic Internet traffic, going to sea is occupying an increasingly important position.
In early 2022, Ma Xiaoyi, senior vice president of Tencent Group, said in an internal sharing event that the global market of the game business is the growth point, and "now it has begun to significantly strengthen regional capabilities, including the deployment of local teams in multiple regions." In the recent 2021 Q4 earnings conference call, NetEase CEO Ding Lei repeatedly said that foreign countries will be the focus and will accelerate market development. Previously, both game giants had set a target of 50% of the total revenue of the game in overseas markets.
Alibaba, on the other hand, has shown its determination to increase its efforts to expand overseas through organizational restructuring, and in December 2021, it adjusted its corporate structure into two major sectors: "China Digital Commerce" and "Overseas Digital Commerce". ByteDance, which originally occupies an advantageous position in globalization, has accelerated the commercialization of its product TikTok, according to 36Kr, TikTok e-commerce 2022 GMV target is close to 12 billion yuan, nearly doubling the 2021 basis.
In addition, the overseas layout of iQiyi and Station B is also accelerating. One has cooperated with overseas local teams to launch original dramas, and the other has promoted UGC video content, comics, and games to Southeast Asia.
Source @/ APP Annie
Orient Securities concluded in the "2022 Media Internet Strategy Report" that China's Internet has evolved from tool-based and single-content product output to product, technology and business model output, with North America, Southeast Asia, Latin America and the Middle East as the core regions.
How are the achievements of Internet manufacturers going to sea? Shen Yan chatted with industry insiders on this topic.
It should be noted that in a narrow sense, brand going overseas and brand globalization are two concepts, the former is that although the enterprise is established in China, the main development battlefield is overseas, and the latter refers to the expansion of the market to overseas after the enterprise has a certain scale in China. This article focuses on the latter, that is, the discussion of the situation of well-known domestic Internet manufacturers going to sea, and companies focusing on overseas markets such as Huanju, Chizicheng, and Yale Group are not within the scope of discussion.
Since games, e-commerce, and video are the key tracks involved in the overseas development of Internet manufacturers, this article will sort out these three areas one by one.
Game: Tencent, NetEase "make up for the short board", B station is still a bit "ignorant"
Games going overseas is not a new thing, since 2005, Tencent has begun to invest in the layout of overseas game business. Recently, the domestic market has been affected by regulation, which has accelerated the sea of large-scale games to a certain extent.
At present, the main players include Tencent, NetEase, ByteDance, and Station B. According to the "February 2022 Chinese Game Manufacturers Overseas Revenue List" released by APP Annie, Tencent ranked third, NetEase ranked fifth, and ByteDance ranked twenty-eighth (excluding the acquired Mu Hitomi Technology and Youai Interactive Entertainment), and Station B has not yet been listed.
Source @ APP Annie
In the way the game goes to sea, the big manufacturers have obvious differences.
Since going global for 17 years, Tencent's investment has involved the underlying technology, game research and development, operation, channels and auxiliary aspects of global games.
An industry insider who focuses on the game overseas market told Deep Burning that Tencent's game going to sea can be divided into two stages.
Before 2019, on the content side, investment and mergers and acquisitions of upstream game companies, such as the acquisition of the fist game that developed "League of Legends", etc., in terms of distribution, handed over to local agents for distribution, such as the games released in Southeast Asia, including the overseas version of "Glory of Kings", were handed over to Garena, the largest game company in Southeast Asia.
During this period, Tencent solved two problems, in the production of game content, synchronized with the world's top manufacturers, in the agency distribution, into some local distribution platforms, master the local game distribution channels.
After 2019, Tencent Games' overseas strategy adjustment, "self-research + investment + distribution" parallel. That is, continue to invest in mergers and acquisitions, do their own game publishing, and set up companies overseas. At the same time, the domestic experience will be systematically transferred to overseas investment studios to improve the efficiency of research and development and achieve integration. However, in terms of distribution, although Tencent also has some social entertainment APPS overseas and also has investment in distribution platforms, compared with the advantages of holding WeChat and QQ two major social tools in China, its overseas channel capabilities still have room for improvement.
In December 2021, Tencent launched The Global Game Distribution Platform Level Infinite, which is considered by some industry insiders to be making up the map. Currently, Level Infinite has offices in the Netherlands and Singapore, with a global business team of more than 1,000 people. At the same time, Tencent is also strengthening its regional capabilities and is setting up new self-developed studios in many overseas places.
Now, Tencent Games has reached the stage of global branding. Its 2021 Q4 financial report mentioned that in terms of international mobile games, five of the top ten mobile games with daily active accounts were developed and operated by Tencent. In 2021, Tencent's game revenue in the international market was 45.5 billion yuan, an increase of 31% year-on-year, and the growth rate increased, but the international sector accounted for 26% of the total game revenue, and there is still a certain distance from the target of 50%.
Compared with the investment layout, NetEase has focused more on game self-research at the beginning. The path is to take the lead in opening up the Japanese market with self-developed IP, and then use the world-renowned IP authorization and reference japan's overseas experience to carry out globalization.
Wu Xulan, former director of overseas operations of NetEase Games, told Shenzhen Burning that NetEase had previously mainly deployed in Japan, North America and Southeast Asia. Japan is an important position, in 2017 with the "Yin and Yang Division" series into the market, follow-up works successfully consolidated the advantage, North American layout early, and the local head IP holders Disney, Warner Bros. have IP cooperation, southeast Asian market is a must before going to sea springboard.
Since last year, the domestic growth pressure has been great, and NetEase Games has raised its going to sea to a strategic height. According to her observation, NetEase has carried out game studio deployment points around the world, and the number of talent recruitment in North America and Europe is large, while also consolidating its advantages in Japan. At the 2021 Q4 earnings conference, NetEase CEO Ding Lei also repeatedly mentioned that it is necessary to continue to recruit producers and teams around the world.
The strength of NetEase Games is self-research, with many IP, "the content in the next three or five years have been accumulated, the global big IP "Harry Potter" and "Lord of the Rings" are in hand, are all for globalization services", Wu Xulan introduced. However, in terms of distribution channels, NetEase has little advantage. "They have always believed that what will be more scarce in the future is high-quality content, so they have not paid too much attention to the overall infrastructure of going to sea."
In her view, NetEase games go to sea, first of all, need a change of thinking, "before many people's ideas are, in China, a game a month large tens of millions of flowing water easily came, expand overseas markets, do dirty and bitter and tired, or only ten or twenty million flowing water." To be an overseas market requires real determination and courage."
In contrast, ByteDance's advantage is that there are channels and distribution, but the disadvantage is that the content capabilities are relatively insufficient.
According to SensorTower, in February 2022, TikTok became the platform with the largest proportion of ultra-casual game advertising. ByteDance has channel advantages, but also has a strong localization adaptation ability, "this is evident in Tik Tok, in the game, it is also sooner or later", Wu Xulan said.
ByteDance's overseas game is similar to Tencent's early thinking of making games in China, which is to first exert its own traffic and channel advantages, publish games, intervene in the industry, and then acquire R&D teams to do more in-depth expansion.
At present, ByteDance has entered the second stage, and the short board is still content. Previously, its investment and merger of Mu Hitomi Technology, You ai Mutual Entertainment, the main market in Southeast Asia and Japan, has not yet reached the level of globalization, Wu Xulan said, ByteDance to increase efforts to do self-research, but also need to grow time.
According to APP Annie's "February 2022 Chinese Game Manufacturers Overseas Revenue List", ByteDance's acquisition of Mu Hitomi Technology and Youai Interactive Entertainment ranked twelfth and twenty-fifth respectively.
In terms of Station B, it mentioned in its 2021 annual financial report that in overseas markets, 13 games will be released in 2022. However, unlike the domestic two-dimensional channel advantage, bilibili video products have gone to Southeast Asia, the competition is fierce, the data effect is not ideal, and the self-research has not yet proved its ability of the product.
However, it is not completely without advantages, Daguan Capital focuses on mobile Internet to the sea, its Chief Representative of North America Xu Ruicheng told Deep Burning, content going to sea is becoming a popular field, which is the territory that B station is good at, "In the industrial chain, comics and online texts, is the source of the game, holding these content and IP in hand, there is a chance to make a game, but how to do this road, you have to try to explore again."
In general, Tencent Games is overseas, has content and resources and channels, and also strengthens brand influence; NetEase has content and IP, which is weak in channel capabilities; Byte has channels and distribution capabilities, and it also needs to make up for content shortcomings; B station content and distribution still need to be supplemented.
E-commerce: Ali Tencent stormed Southeast Asia, TikTok threw money to dig people
E-commerce going overseas is a market with great potential. Previously, some scholars predicted that "the potential of cross-border e-commerce has not yet been fully released, and by 2035, 35% of the foreign trade volume is expected to be completed through cross-border e-commerce." ”
At present, the major manufacturers of e-commerce to go to sea include Alibaba, JD.com, ByteDance and Tencent.
Alibaba entered the market early, and its overseas business can be divided into three sections, one part is the Alibaba International Station established in 1999, focusing on the B2B model, and the other is the cross-border export platform AliExpress launched in 2010, focusing on the B2C model. Part of it is through the investment layout of the platform, since 2016, Alibaba has expanded the global market in the form of investment, investing in Lazada, the head e-commerce platform in Southeast Asia, Daraz, the leading e-commerce platform in South Asia, Trendyol, the Turkish fashion e-commerce platform, and Tokopedia, the largest e-commerce platform in Indonesia.
An investor who pays attention to e-commerce going overseas told DeepIncen that the early performance of Alibaba International Station and AliExpress in foreign countries was not ideal. "In developed countries, the basic experience of offline itself is good, and users are also picky about online experience, and have experienced a stage of a large number of returns." In emerging markets, fierce competition, Ali as an external platform is difficult to intervene, or remote control mode, business capabilities are difficult to reach, the only advantage is the supply chain, but also encountered the phenomenon of platform bad currency expelling good money, the layout slowly changed into investment acquisition, but also encountered the problem of organizational integration. ”
In terms of investment, Alibaba-invested Lazada has been leading the Southeast Asian market, and was later surpassed by Tencent's e-commerce platform Shopee. According to a report released by App Annie, in the second quarter of 2019, Shopee surpassed Lazada in terms of monthly active users desktop visits, mobile network visits, and total downloads.
Recently, the media reported that Alibaba had negotiated with investors to raise at least $1 billion for Lazada. At the same time, Alibaba also plans to divest Lazada to prepare for its potential initial public offering. However, the trip did not take place. In this regard, according to public reports, Ali related people said, "will not publicly respond to this matter." ”
Alibaba's overseas market continues to adjust. According to Xu Ruicheng's observation, "Now, Ali has begun to gather global talents to Southeast Asia and attack here."
An industry insider close to Alibaba's international station said that Alibaba is improving the transaction system, strengthening international logistics infrastructure, so that the status of shipping and land transportation can be visualized online, and in mid-March, it also proposed to add new overseas warehouses, "every continent will be built, and some countries have no less than two overseas warehouses." AliExpress, on the other hand, is tightening the entrance, raising the threshold, and beginning to clean up "low-quality sellers" and brand it.
According to Alibaba's fiscal third quarter 2022 financial report, in international business, the overall revenue for the quarter increased by 18% year-on-year to 16.449 billion yuan, and for the 12 months ended December 31, 2021, the international commercial retail business AAC (Global Active Consumer of the Year) increased by 16 million to about 301 million in a single quarter. Compared with the number of 811 million annual active consumers in China, there is still a lot of room for improvement.
Jingdong's overseas playing style, similar to that of China, is still pressed on self-construction.
In 2020, Liu Qiangdong released an internal letter to comb through the style of JD.com's international business. "Entered the Indonesian market in 2015, opened up the Thai market in 2017, and actively developed global shopping, global sales, international logistics, international payment and other businesses... We are confident to bring our accumulation of retail infrastructure, from logistics, to supply chain, technology and other capabilities to the world..."
It can be understood that it is to rebuild a JD.com overseas.
So, how effective is it? An industry source close to JD International told Shen Yan that JD.com's development of international sites is relatively late, and the local share is occupied by stronger platforms, and it is difficult to grab large-scale customers. In addition to the early layout of the Indonesian station, the development of other areas of JD International is not smooth, and there is a certain degree of loss every year.
At present, many departments of JD.com have started layoffs. According to the observation of the above-mentioned people, JD International is shrinking significantly, "Before each international site operated independently, now after adjustment, all sites share a research and development team." For this layoff, relevant people on the Jingdong side replied to the media that it is only the normal optimization of the business sector.
Xu Ruicheng said that e-commerce to the sea, some overseas markets have been saturated, into emerging markets is more important, but this requires speed, like JD.com to do the supply chain, do their own brand and platform, in the expansion speed will be relatively difficult. Many local e-commerce models are not the same as domestic ones, such as Bukalapak in Indonesia, the way of playing "is more like a platform to supply a commissary, which is a small B supply, which is different from the Familiar ToC logic." In his view, there are mature local giants emerging, and it takes a lot of effort for Chinese giants to promote their own e-commerce system.
Some other investors also have reservations about JD.com's international play.
In the field of e-commerce going to sea, Tencent is also worth mentioning. As in China, although Tencent has not significantly laid out its e-commerce business, it has invested in a number of e-commerce platforms, and in overseas markets, Tencent is the majority shareholder of Southeast Asian giant SEA. SEA is the parent company of Shopee, and its model is similar to Tencent's, based on the game cash cow business to promote the development of e-commerce. Since 2018, it has grown rapidly for many years, and in the first three quarters of 2021, its e-commerce GMV has increased by 105%, 87% and 81% year-on-year, respectively.
However, in January 2022, Tencent significantly reduced its HOLDINGs and cashed out about $3.1 billion.
At present, in the field of e-commerce, the same attention is TikTok.
According to Late Post, in 2021, TikTok will massively expand its advertising, overseas e-commerce and live broadcast teams, and the total number of employees will increase from less than 4,000 in early 2020 to nearly 20,000.
In 2021, there are many actions in TikTok e-commerce, successively launching e-commerce live broadcasts in Indonesia, testing "commodity windows" in Europe, and opening the Uk TikTok small shop to Chinese sellers. In June 2021, there were media reports that TikTok was discussing cooperation with JD.com. At the end of 2021, ByteDance also launched an independent e-commerce app Fanno.
Overall, the development path of TikTok e-commerce is similar to that of Douyin e-commerce. Launch product functions to test the water, cooperate with e-commerce platforms, obtain supply chain resources, cultivate user consumption habits, attract merchants to settle in, and then realize the closed loop of transactions.
The above-mentioned industry insiders close to JD International said that JD International does cooperate with TikTok, "in Indonesia has been cooperating for more than half a year, and Thailand is in communication."
For TikTok's future e-commerce potential, many people in the industry have high expectations.
However, according to 36Kr, TikTok e-commerce will have a maximum GMV of about 6 billion yuan in 2021, of which more than 70% of GMV comes from Indonesia, and the remaining less than 30% comes from the United Kingdom. Compared with Douyin e-commerce, which has achieved GMV500 billion in 2020, TikTok has not yet exerted its potential. A Chinese seller who launched broadcasts on TikTok for the UK told Shen Yan that it is difficult to find a host with a good spoken word, international broadband is difficult to connect, and the cost is also very high, and he has given up trying.
Whether TikTok can overtake in curves overseas will take time to prove, "There are many people in the industry who hold different views. TikTok e-commerce has been recruiting in several important markets in Southeast Asia and North America, and has dug up a lot of executives from major Internet manufacturers in the United States and Singapore, and the momentum is very strong," Xu Ruicheng said.
Long and short videos: TikTok, Kuaishou overseas commercialization, B station involved in the video war
Let's start with short videos.
The penetration rate of short video products is still increasing rapidly. At present, TikTok's MAU has exceeded 1 billion, and Kuaishou's MAU has exceeded 180 million. Orient Securities calculated the potential user space of these two major APPS in the "Special Topic on the Overseas Development of Chinese Entertainment Social Enterprises": under neutral conditions, the number of global users of TikTok in 2025 will reach 1.4 billion, and the total overseas users of Kuaishou will be about 580 million.
In the world, TikTok occupies an absolute leading edge, but in the Latin American market, represented by Brazil, the current pattern is fast and leading, and TikTok is chasing.
Such growth, both sides are exchanged for a lot of costs. According to the late Latepost report, Kuaishou invested more than $850 million overseas in the first half of 2021 alone; TikTok has spent a total of $15 billion overseas since 2018. According to The Calculation of Orient Securities, Kuaishou's single-user customer acquisition cost in the first half of 2021 in overseas regions is about 15.86 US dollars; TikTok's average customer acquisition cost since 2018 is about 23.49 US dollars.
TikTok, Kuaishou overseas commercialization process Source @ Orient Securities Report
Now, both sides have started commercializing. From January to February 2019, Tiktok began to test its in-feed advertising business in the United States and other markets, fully opened the automatic advertising tool in mid-2020, and opened the live e-commerce business in Indonesia and the United Kingdom in the first half of 2021. Guohai Securities calculated in the report that TikTok's single-user advertising ARPU is currently about Facebook's level in early 2013, about one-tenth of Facebook's current level, but it is expected that the future growth rate will be higher than that of Facebook in the same period.
Kuaishou Overseas will start commercialization in the second half of 2021. 2021Q3 launched the advertising system "Kwai for business" in overseas markets, including Brazil, Southeast Asia, the Middle East and other places, to support information flow performance advertising and brand advertising.
In terms of future monetization ability, Tiktok is also expected to be highly expected. Kuaishou, after the merger of Kwai Middle East, Kwai Latin America and Snap Video began in August 2021, the overseas strategy is relatively clearer, but the commercialization ability remains to be seen.
B station out of the sea products, including the main station out of the sea and comics and the game three blocks. At the end of 2020, the bilibili mobile terminal application was launched in Thailand and Malaysia, and Sensor Tower data showed that after more than a year of going to sea, the bilibili application was launched in Thailand, Indonesia, the Philippines, Singapore, Vietnam, and Malaysia, with more than 10 million downloads, and the cumulative number of downloads in January 2022 exceeded 4 million. This is still a certain distance compared with the results of other major manufacturers on the same track.
A person close to the B station going to sea business told Deep Burn that with reference to the domestic development path, the B station still uses ACG content as the support point, which is its unique advantage, but the problem is how to achieve localization. "Expand overseas, you can do it based on domestic data, you can also refer to the data obtained from the survey, but this is based on theory, so localized operations are needed, how to find local people to assist business development in this process is difficult, under the impact of the epidemic, the epidemic situation there is not very optimistic, inconvenient to pass, resulting in doing localized things, there are some obstacles."
In terms of long-term video, iQiyi and Tencent Video have gone to sea earlier and have achieved certain results.
In 2017, iQiyi laid out overseas and opened the market through "The Strange Affair of Makino of Ghost Blowing Lights". Over the past few years, domestic popular works such as "Yanxi Raiders", "Undocumented Crimes" and "The Hidden Corner" have been exported overseas, and iQIYI's overseas distribution content has accumulated more than 100 projects. Now, iQIYI has also cooperated with local teams in Southeast Asia to create a number of original dramas.
Tencent Video's style of play is similar, but also aimed at the Southeast Asian market, its WeTV has reached cooperation with Thailand's CH3 TV channel operator BEC World, Malaysia's premier media group Media Prima and others.
According to SensorTower's "Top 10 Global Top 10 Mobile App Revenues in February 2022", tencent Video ranks third in the APP Store list, iQiyi ranks fifth, and Station B is not yet on the list.
For iQiyi, Tencent Video, and Station B, the challenge is that international video giants such as Youtube, Netflix, HBO, disney+, etc. are also fighting in the Southeast Asian market, plus there are also mature video platform products in the local area, and if they want to broaden the market, they face many fierce enemies.
In terms of social products, the domestic Internet manufacturers performed mediocrely.
Tencent, which is good at socializing acquaintances, WeChat has not yet become the most mainstream social app overseas. In Sensor Tower's "Top 10 Global Mobile App Downloads in February 2022", WeChat ranked 7th in the app Store downloads, with WhatsApp, Facebook, and Instagram at the top.
Surrounded by them, "it is almost impossible to copy and expand overseas markets," Xu Ruicheng said.
On stranger social networking, Chinese companies focusing on going to sea have gathered, and already have products such as live broadcast application Bigo Live, short video platform Likee, game social platform Hago and other products overseas, and Yala, which focuses on the Middle East market, has occupied a leading position abroad. Momo, the head company in the social field of domestic strangers, has a long road to the sea.
brief summary
At present, most of the internet manufacturers are deployed in many places around the world, and they are becoming more and more "heavy".
In general, when Internet manufacturers go to sea, the first thing is that the products must be excellent, and the second is to achieve localization and differentiate.
Comprehensive exchanges with a number of industry insiders who pay attention to overseas markets, to judge how effective the Internet manufacturers are in going to sea, we must pay attention to two aspects. First, we must see whether the model of this business in China is running. "If it is already a state of loss in China, the model of going overseas has not changed, but the cake is spread larger, the input-output ratio is not improved, and the benefits will not be high," said an investor who pays attention to the secondary market.
Secondly, we must also pay attention to a prerequisite, that is, the cognition and determination of the big manufacturers to go to sea.
"Since you want to make the sea, the organizational structure must be adjusted accordingly", Wu Xulan recalled that when the sea business was made in 2014, the business was done for several years before traveling to the local area, and now the situation is very different, the large and small factories that can achieve results in the sea, such as ByteDance, Huanju, etc., "The proportion of overseas employees is very high, many of them are registered companies locally, if you only rely on the domestic line to go to sea remotely, this is quite difficult."
Xu Ruicheng said, "One is to only do a mature and saturated product in China overseas, which is passive to go to sea, and the other is to do it in accordance with the idea of creating a product suitable for the world at the beginning, which is a completely different logic, which will affect the allocation of resources and the problem of personnel support", which will determine whether the Internet manufacturer can run farer overseas.
This is also why in the overseas market, many Internet manufacturers have less than some small and medium-sized enterprises. "Overseas, like on the battlefield, the commander of a large force and the commander of a small force are completely different in determination," one investor said.
The way out of the sea of internet manufacturers still has a long way to go.