Home News China’s cash-burning video sector: how Kuaishou misplaced $1B in 6 months –...

China’s cash-burning video sector: how Kuaishou misplaced $1B in 6 months – TechCrunch


Rumors have been floating for months that ByteDance goes public with TikTok and Douyin individually. Simply final evening, Bloomberg reported that ByteDance is searching for a pre-IPO spherical of $2 billion at a staggering valuation of $180 billion.

Earlier than any of that materializes, ByteDance Chinese language rival Kuaishou has moved forward to file for an preliminary public providing in Hong Kong Thursday evening, and its prospectus is shedding mild on a race the place each progress and prices are astronomical.

Launched by a former Google engineer in 2011 to share GIFs, Kuaishou has advanced right into a nemesis of Douyin, TikTok’s sister in China. 21.5% owned by Tencent, the corporate reported a web lack of 6.8 billion yuan ($1 billion) within the first six months of 2020 whereas working loss stood at 7.57 billion yuan. In distinction, it logged an working revenue of 1.1 billion yuan in the identical interval simply final yr.

The rise was partially a results of the corporate’s aggressive promotion of its lite model Kuaishou Categorical, which tailors to China’s much less tech-savvy demographics. In contrast to ByteDance, Kuaishou has had restricted success abroad and depends on steady home progress.

Its promoting and advertising bills skyrocketed 354.1% from 3 billion yuan in H1 2019 to 13.7 billion yuan in H1 this yr. However the splurge appeared to have paid off: the lite app gained 100 million DAUs inside a yr. It’s a sport of pay-to-play.

The primary app Kuaishou itself, as of June, reached 302 million day by day customers, who spent over 85 minutes on the app per day engrossed in watching clips and reside classes. For comparability, Douyin crossed 400 million DAUs in January.

Although often known as a “short-video app”, Kuaishou earns most of its income — 68.5% in H1 — from reside streaming, throughout which audiences can ship hosts digital objects priced wherever between 1 and a pair of,000 yuan. Different monetization avenues embody promoting, which accounted for 28% of its revenues, in addition to much less vital sources like e-commerce and video games.

Douyin, then again, pulled in about 67% of its revenues from promoting final yr, a supply instructed TechCrunch earlier, whereas live-streaming made up 17%.

The income make-up displays the core use case of the apps. Kuaishou typically prides itself on consumer engagement; certainly, over 1 / 4 of its 776 million month-to-month customers are creators themselves. That makes Kuaishou extra of a social app the place the viewers and creators work together regularly via means like reside streaming and gifting.

Douyin, with algorithms that favor premium content material, acts extra like a type of media as some Chinese language enterprise capitalists observed, making it a vacation spot for exhibiting adverts.

By way of income dimension, Kuaishou generated 39.1 billion yuan final yr, about one-third of what ByteDance made last year. However one ought to needless to say ByteDance has one other money cow: its information and knowledge aggregator, Jinri Toutiao.