Kuaishou, which was comprehensively suppressed by latecomers Douyin and Video, and has also fallen into a growth bottleneck, how can it make a comeback and regain the glory of the pioneer of the short video track?
The answer seems to be ready-made. ByteDance copied Douyin and launched Tiktok overseas, creating greater success, why can't Kuaishou?
In fact, Kuaishou has been at sea for the same time as Tiktok. However, in the early stage, the model of multi-product and wide net, the company repeatedly failed in overseas markets, until the past two years of concentrated resources and attention, slowly found the rhythm.
However, in the current short video market competition pattern and complex political and economic environment, can Kuaishou's Kwai copy Tiktok?
All in to the sea
Kuaishou's biggest attraction in 2022 is the overseas market.
In March last year, Ma Hongbin, Kuaishou's "No. 3 person" and next "successor", shifted from the head of the commercialization business department to the leadership of the internationalization business department, which is enough to reflect the company's emphasis on overseas business.
Kuaishou disclosed in its annual results announcement that due to the optimization of products and algorithms, the average daily usage time of each daily active user in overseas markets has increased to more than 65 minutes.
In the fourth quarter, the growth of the company's user scale, usage time, single-user advertising value and other indicators, out of the darkest moment in Q3 2022, may also be related to the growth trend of overseas markets.
In Q4 2022, Kuaishou Overseas achieved revenue of 285 million yuan, a year-on-year increase of 516.8%, and annual revenue of 625 million yuan, a year-on-year increase of 732.1%, far exceeding the domestic business and the company's broader market.
Before that, Kuaishou went to sea and repeatedly lost. From Kwai, the international version of Kuaishou in Russia and South Korea, SnackVideo in Southeast Asia and South Asia, and Zynn, which targeted the North American market in 2020, Kuaishou has repeatedly launched its overseas strategy, launched a variety of products, and fought hard for several years.
Now, it has finally made a miracle, and the overseas business has initially gained a foothold. Of course, this also comes at the cost of huge losses. In the fourth quarter, the operating profit of the overseas segment was -1.499 billion yuan, and the annual operating loss was 11.995 billion yuan.
It is worth mentioning that Kuaishou as a whole significantly reduced sales and marketing expenses from 44.2 billion yuan in 2021 to 37.1 billion yuan in 2022, and the proportion of this expense in operating income fell from 54.5% to 39.4%, which contributed to the positive operating profit of the domestic business.
In this context, the company has invested most of its existing expenses in overseas markets, All in. As a result, Kuaishou's current losses, with a net profit of -1.547 billion yuan in Q4 2022 and a net loss of 13.689 billion yuan for the whole year, are almost all caused by overseas markets.
Growth is slowing
What is the reason for repeated defeats at sea, still losing battles again and again, and even giving up the overall profit situation? Growth is slowing.
With the total growth rate of China's Internet users bottoming out and the penetration rate of short videos approaching the limit, Kuaishou's user growth has sounded the alarm.
In Q3 2022, the company's average monthly active users were 626 million, a year-on-year increase of 9.3%, and although monthly activity exceeded 600 million for the first time, the growth rate was still a significant decline. The year-on-year growth rate of user scale and usage time both fell below 10%, and the advertising value of a single user even declined. In the fourth quarter, the downward trend in growth has eased, but it is still difficult to get out of the quagmire.
In the context of the slowdown in total traffic growth, the traffic-based advertising business has encountered serious challenges.
For the whole year of 2022, Kuaishou online marketing service business achieved revenue of 49.042 billion yuan, a year-on-year increase of 14.9%, a sharp decline from 95.2% in 2021.
After years of commercialization exploration, Kuaishou has formed a pattern of online marketing services (advertising) as the mainstay, live streaming business as a supplement, and e-commerce representing the company's future direction.
slowing growth in advertising business; The live broadcast business is stunted under supervision and market competition; The e-commerce business is applauded or not. Kuaishou live streaming e-commerce business, the high GMV growth rate is difficult to maintain, monetization rate has been difficult to increase, resulting in this business actually brings the company's revenue and profits, quite limited.
In 2022, the company's e-commerce GMV will be 901.157 billion yuan, a year-on-year increase of 32.5%. In the previous two years, the growth rates were 539.1% and 78.4% respectively.
Last year, Kuaishou's other service segment generated revenue of 9.753 billion yuan, and even if it was all e-commerce revenue, the monetization rate was only 1.1%, far lower than the overall level of the industry.
According to estimates, the monetization rates of mainstream e-commerce platforms are: JD.com 9%, Alibaba 6%, and Pinduoduo 4%. According to a research report by Guohai Securities in October last year, the monetization rate of Douyin's e-commerce reached 11%, the highest in the industry.
The three major businesses have their own problems, which has led to the company's scale growth rate has repeatedly declined. In 2022, the company's total revenue will be 94.183 billion yuan, a year-on-year increase of 16.2%. In the previous three years, they were 92.7%, 50.3% and 37.9% respectively.
The decline in user and scale growth is the current dilemma, and the lack of a stable and sustained profit model is a challenge in the future. Against this backdrop, overseas growth has become a natural choice for Kuaishou.
Fall behind, catch up
From the creation of a tool mobile app for users to create and share GIFs in 2011 to the launch of a short video app in 2013, Kuaishou has become the pioneer of this segment.
Three years later, ByteDance, which is good at building an app factory, entered short videos and launched the Douyin APP. Relying on the traffic pool of Toutiao, Douyin has quickly grown and led everywhere in user scale, advertising revenue, and business model exploration.
At the beginning of 2020, Tencent, which has repeatedly hit a wall on the short video track, directly launched a video account with the help of WeChat, and has now become the largest user in the short video track by converting more than one billion users of WeChat.
Kuaishou got up early and rushed a late set, obviously it was the first to come, but now it can only be fully suppressed by the video number and Douyin.
Therefore, even if Kuaishou landed in the Hong Kong stock market early, its performance in the capital market continued to be sluggish, with the latest market value of HK$257.333 billion, down more than 80% from its peak of HK$1.8 trillion.
Kuaishou is now all in the sea, and it is also following the pace of Douyin. In 2017, ByteDance acquired Musical.ly and launched Tiktok based on it. At the end of that year, Kuaishou's Kwai began to go live in overseas markets.
Today, Tiktok has 1 billion monthly active users worldwide, and its advertising and e-commerce businesses are quite mature, which is equivalent to recreating a Douyin - Tiktok may be more valuable than TikTok in the world.
However, after the global casting of a wide net of multiple products, Kuaishou's overseas business will still be difficult to match Tiktok even if it merges into Kwai.
TikTok can have Tiktok, why can't Kuaishou? With this in mind, Kuaishou finally went to sea in the past two years.
However, in the past few years, the market environment has changed, and after Tiktok put pressure on competitors such as Facebook, the coverage of short videos in overseas markets increased rapidly, and the blue ocean market became a red ocean market. The chances of recreating another Tiktok are slim.
Even if it continues to throw money and can create another Tiktok, will Kuaishou be able to cope with the complex situation that ByteDance is facing overseas today?