Can WeChat Video Account carry the “hope of the entire Tencent Factory”?

WeChat Video Account is integrated with WeChat Open Platform to strengthen e-commerce layout, improve transaction efficiency, and explore new models. It is expected to achieve a counterattack with the help of WeChat's strongest foundation.

On the eve of 618, WeChat secretly launched a big move.

On the afternoon of May 28, WeChat released an internal announcement that the WeChat Video Account live e-commerce team had been adjusted. It is reported that the WeChat Video Account live e-commerce team will be merged into the WeChat Open Platform (Mini Programs, Official Accounts, etc.) team, and the original WeChat Video Account live e-commerce team will be transferred to the person in charge of the WeChat Open Platform to facilitate improving transaction efficiency and exploring new models.

Tencent CEO Ma Huateng has high hopes for WeChat Video Account, calling it "the hope of the entire Tencent" at the Tencent Annual Meeting in January this year. After the commander issued instructions, the video account started a series of actions: introducing top influencers including Xiao Yangge, enriching merchants' inventory, and marketing "festivals".

Everything seems to be written on paper: This time, WeChat Video Account is going to get serious.

When e-commerce has already gone from blue ocean to red ocean and even purple ocean, why is WeChat still so stubborn to engage in e-commerce? Compared with other live broadcasts that are already in full swing, what confidence does WeChat Video Account have to counterattack? In addition to e-commerce, can WeChat, which is used by everyone, develop more possibilities for Video Account with its strongest foundation?

1. The strongest dormant base

You may not like WeChat, but you can’t live without it.

As the app with the strongest presence, WeChat has penetrated into every aspect of everyone's life. It is no exaggeration to call it the strongest base.

The successful development of QQ in the early years gave Ma Huateng great inspiration, and it was on this basis that WeChat was born. With the mutual support of QQ and WeChat, Tencent continues to consolidate its dominant position in social networking for people of all ages, and there is no sign of being overthrown in the short term.

However, there are still significant differences in the attributes of QQ and WeChat.

If QQ represents people’s virtual world, then WeChat represents people’s real world. As chat tools, QQ’s early contacts were from the Internet, while WeChat’s contacts were mostly filled with people around you.

Therefore, people can tolerate advertisements in QQ, but may not tolerate WeChat with the same tolerance. Based on this consideration, and also to maintain this strongest base, the only thing that remains unchanged in WeChat's transformation over the past decade is its extreme emphasis on user experience.

First, there are fewer ads. An average user can only watch 5 ads a day, and the duration of each ad cannot exceed 30 seconds. Second, there are more free apps, such as mini programs and corporate WeChat.

In Ma Huateng's eyes, the core value of WeChat is to achieve instant connection between people. "On this basis, we gradually expanded to people and things, people and services, so we have Moments, mini programs, and video accounts."

Building the strongest foundation is not without cost. The long-term restraint on the commercialization of WeChat has affected Tencent's pace of monetization.

Tencent's chief strategy officer James Mitchell once stated at the company's performance meeting: "Currently, the advertising load of Tencent Video is less than 3%, while the advertising load of domestic peers is more than 10%."

Customers need to be maintained, but “meals also need to be eaten”.

At present, compared with the data of the leading Douyin, WeChat Video Account has a big gap. The number of daily active users (DAU) of WeChat Video Account is about 500 million, and Douyin is about 700 million; the average daily usage time of Video Account is about 58 minutes, while that of Douyin is about 120 minutes.

But the data in the financial report fully proves Ma Huateng's statement.

The most eye-catching thing in Tencent's 2023 financial report is the company's move towards high-quality development. The year-on-year profit growth of the company's core business is the highest in the past five years, and the gross profit margin has increased from 43% in 2022 to 48%.

The company's general direction is to increase high-gross-profit businesses and reduce low-gross-profit businesses. For example, high-gross-profit represents an increase in video account advertising fees and product delivery technology service fees; while low-gross-profit represents a reduction in music live broadcast, game live broadcast and other businesses.

Based on the video account and WeChat search function, Tencent can bring growth in advertising revenue under the internal circulation, which will also be one of the key points in the future. It can be said that the acceleration of the commercialization of Tencent Video Account is already on the verge of being launched.

2. What Tik Tok has taught us

Judging from the current e-commerce competition landscape, almost all major platforms have their own top anchors, and these live broadcast kings are still the strongest engines of platform traffic. However, no matter how wonderful the past cooperation was, no platform is sure that it can retain the anchors.

Zhang Xiaohui developed from Xiaohongshu to Tmall; Xiao Yangge spread from Douyin to WeChat Video Account. Top streamers have absolute say in e-commerce live streaming, and the platform has almost no restraint on them. Tencent certainly has money to poach people, but even if it hires top streamers with high salaries, it cannot guarantee "long-term stability."

The consensus among everyone is: there must be top anchors, but there cannot be only top anchors.

How can we have the traffic of top anchors without being led by them? Douyin has provided a solution for video accounts.

Douyin's e-commerce live broadcast room evaluates traffic comprehensively based on multiple dimensions, mainly including popularity indicators, interaction indicators, product indicators and order indicators.

According to The Paper, the distribution mechanism of Douyin e-commerce is based on dwell time, swipe time, playback volume, number of comments, number of favorites, etc. This is a decentralized system that cannot be interfered with manually. Douyin keeps more traffic resources firmly in the hands of the platform itself. On the one hand, it avoids the situation where the top anchors dominate the market, and on the other hand, it can monetize public domain traffic more effectively.

The most notable example came from the departure of Oriental Selection from Douyin in 2022. A few days after the news spread, many consumers on the Internet suspected that the live broadcast room of Oriental Selection was restricted by the Douyin platform, saying that "I have never seen (the live broadcast room of Oriental Selection), I clicked in by myself." Although both parties denied the rumor, Oriental Selection's popularity on the Douyin platform has declined for a period of time since then.

For Video Account, although it cannot compete with Douyin in terms of platform traffic in the short term, this has obviously provided a backup plan for its long-term development in the future.

However, in the Tencent rainforest, the traffic distribution mechanism of Video Account is still significantly different from that of other platforms.

What Tencent wants is to form a comprehensive closed loop and mutual promotion through the WeChat Moments, WeChat groups, subscription accounts, public accounts, etc. In other words, the video account is more focused on the e-commerce system formed under the social networking of acquaintances, so as to achieve the purpose of precision marketing. For example, if I watch a live broadcast or like a video, the video account will recommend it to my friends around me, and then recommend it to my friends' friends, and so on.

But does this algorithmic model of acquaintance network apply to everyone? Not necessarily.

In fact, not everyone is happy to expose themselves in the circle of acquaintances, just like not everyone is keen on posting in Moments. Some users are even contradictory in their psychology, they want to be an e-person who can speak freely on the Internet, but also want to maintain the attributes of an i-person in real life.

On the one hand, from the perspective of users, WeChat should strengthen the right to choose account privacy settings; but on the other hand, if the characteristics of the acquaintance network are lost, will the video account lose certain advantages? How to balance user experience and algorithm push is also a difficult problem left to Tencent.

In addition, we must mention Douyin’s important move last year – the upgrade and renovation project of the “Pan Mall”.

The pan-mall consists of Douyin Mall, Douyin Search, Expert Showcase/Merchant Store and other scenes, and cooperates with short videos and live broadcasts to achieve the conversion from traffic to sales. This move is also regarded by the industry as a milestone in Douyin's Taobaoization.
Today, Douyin Mall is already on the first-level entrance interface of Douyin’s homepage, just like other e-commerce platforms. In May this year, Wei Wenwen, president of Douyin e-commerce, said at the Douyin e-commerce ecosystem conference that the proportion of pan-mall GMV structure will exceed 50% in the future.

On the other hand, although Tencent has been entrusted with such an important task as "the hope of the entire Tencent", its e-commerce sector has not yet obtained a first-level entrance. In fact, many niche brands have not yet launched live broadcasts. If there is no effective entrance, consumers and goods will be "disconnected". In this way, the conversion of traffic and the convenience of consumer search will be greatly reduced, and the efficiency and enthusiasm of people looking for goods will be self-evident.

If video accounts want to speed up, they have to make some aggressive efforts in infrastructure construction.

3. The possibility of “e-commerce +”

Judging from future development trends, the situation in which top anchors are far ahead is expected to be broken, and the dual-track model of store live broadcast and expert live broadcast may become the mainstream.

When consumers learn about more and more brands through top anchors, and when an emerging brand gradually grows to a certain scale, their dependence on anchors will decrease accordingly.

At present, many brands have begun to adopt the "store broadcast" method to replace "human broadcast". In the store broadcast mode, merchants can even use AI robots to replace manpower, achieving a significant reduction in costs.

Xiaohongshu has already made efforts in this area. Among the Xiaohongshu users who pursue uniqueness and innovation, people are not very sensitive to prices, are willing to accept emerging domestic brands, and like to watch some mid-level anchors or even amateurs who are not so big but have a sense of life. On the first day of 618, the GMV of store broadcasts was 4.2 times that of the same period last year. Store broadcasts have become an important way for merchants to operate steadily on Xiaohongshu.

Similar situations also appear on other platforms. Since discovering the lack of constraints on top anchors, platforms such as Taobao, Douyin and Kuaishou have all introduced various incentives to focus on building a cluster of mid-level anchors. While removing the top anchors, the rise of mid-level anchors can also drive more emerging brands to revitalize and provide consumers with more diverse choices.

Douyin's traffic distribution mechanism is more biased towards top and high-quality content accounts, and the public domain traffic that mid-level merchants can obtain is relatively limited. Compared with the high stickiness of the private domain, public domain traffic emphasizes interactivity and marketing. If merchants want to attract customers, they must rely more on lower prices and more advertising. Overall, the profits that merchants can retain are not high.

In this case, Tencent Video has an opportunity to attract new live broadcasters and store broadcast merchants. How to attract these people? The simplest, crudest, but most direct and effective way is to spend money.

The lower the price, the higher the commission for the anchor, and the more popular the platform will be. This kind of subsidy and incentive is a must in the stage of attracting customers for the platform, and it is not difficult for Tencent, which has a good cash flow and financial situation.

Having said that, in addition to basic e-commerce sales, what WeChat Video Account needs to learn from Douyin is to develop the "e-commerce +" attributes.

Douyin's e-commerce is built on the biggest cornerstone - short video content. If Douyin's pan-mall realizes the function of "people looking for goods", then short video content realizes the function of "goods looking for people". The two complement each other to form a more complete and more effective e-commerce performance.

People love watching Douyin because of its entertainment value. They must enjoy watching first before they can enjoy buying. Only by giving full play to its own advantages can we create an "e-commerce +" model that is different from traditional e-commerce. From another perspective, the threshold for content e-commerce is even higher than that of ordinary e-commerce.

Speaking of this, the biggest advantage of WeChat Video Account is inseparable from the support of Tencent Rainforest System.

At the beginning of 2022, the video account launched the first paid live broadcast room "Tencent NBA", where users can watch the entire game by paying 90 WeChat beans (used to purchase virtual items and services in WeChat, 1 yuan for Android = 10 WeChat beans; 1 yuan for Apple = 7 WeChat beans). Whether it is Tencent Video or Tencent Sports, these paid apps can be embedded in WeChat Video Account to achieve further commercialization and monetization, and also save some users from the trouble of not wanting to download new apps.

There is another benefit of being built into the video account. It can satisfy the mentality of some "joining in the fun" or "fake fans". They are usually only interested in out-of-the-box games or TV series, such as the quadrennial World Cup, European Cup, and Olympics; perhaps the finale of a hit TV series; or an online concert, etc. Pay-per-view is acceptable to them. In addition, fan meetings, lecture forums, Cosplay, new product launches, etc. can all become options for Tencent.

4. Final

The paid content in these video accounts can be linked with official accounts and Moments to achieve a better advertising bonus effect, which is also the killer feature of Tencent Rainforest System.

Unlike other situations where companies lost at the starting line, Video Account’s temporary lag seems to be somewhat calm.

WeChat Video Account can also create the same content ecosystem as Douyin. However, the unique Tencent system of Video Account cannot be learned by others. E-commerce is a difficult path, but WeChat Video Account is much more than e-commerce.

No one doubts Tencent's ability. But in an era where everyone in e-commerce is accelerating, the extent to which the "e-commerce +" model of Video Account can be achieved depends not only on ambition but also on speed.

Author: Koala is a Deer; Editor: Ge Weiwei

Source: New Retail Business Review (ID: 1089053)