Paying for short dramas: an "asymmetric war" between TikTok, Kuaishou and mini programs

Starting from the new phenomena in the short drama industry, this article explores the corresponding changes that have occurred in short video platforms such as Douyin and Kuaishou when facing the challenges and changes in users' payment behavior for short content. It analyzes the complex relationship between users' willingness to pay, the business model of short video platforms and the form of content payment. Let's take a look!

Scale does not bring about "random killing", but the winners are not "grassroots troupes". The short play became popular all of a sudden.

Investors flocked in, crews filled Hengdian, 500-word script solicitations were everywhere, and the myth of getting rich by making short plays spread on social platforms. If we were to find a starting point for the fate of the short play industry, it would probably not be the day the short play was born, but the moment when TikTok and Kuaishou could directly jump to WeChat mini-programs - the moment when many people talk about the Internet tearing down the wall.

In fact, Douyin and Kuaishou have tried paid short dramas, and even more broadly paid short content. However, in the past few years, the revenue from paid short content has been minimal, and the criticism it has attracted is far greater than the money it has earned. Every time a new experiment is launched, it is still unknown whether the revenue can cover the cost, but hot search topics such as "You have to pay to watch Douyin/Kuaishou" are never absent.

After several attempts, Douyin and Kuaishou gradually gave up their "payment dream". Even when producing high-quality short content such as short dramas, they mainly regard it as a supplement to the content ecosystem, focusing on its consumption value and growth value rather than its payment value.

But all this "common sense" about paid short content encountered a sudden attack this year.

1. Reasons for spending money

The troubles encountered by short video platforms in the content payment business cannot be simply attributed to “users don’t like to spend money.”

In fact, users of Douyin and Kuaishou are not stingy when it comes to spending money.

They are willing to spend money to give gifts to their favorite anchors, and live broadcast income was once the most important source of revenue for short video platforms. The first financial report released by Kuaishou after its listing showed that in 2020, the live broadcast business accounted for as much as 56.5% of revenue, and the average monthly number of paying users for live broadcast exceeded 57.6 million. Since 2021, although online marketing service revenue has replaced the live broadcast business and become the main source of Kuaishou's revenue, the revenue of the live broadcast business is still growing.

They are also willing to spend money shopping in e-commerce live broadcast rooms.

According to the latest financial report data, in the third quarter of 2023, Kuaishou's total e-commerce merchandise transaction volume exceeded 290 billion, and the total e-commerce merchandise transaction volume in the first three quarters exceeded 780 billion. By the end of the year, it is almost certain to become the next e-commerce platform with a GMV of over 1 trillion. On the other hand, Douyin completed the milestone of 1 trillion GMV last year and is sprinting towards the goal of 2 trillion this year.

Creators are also willing to spend money to buy traffic to promote their works. The traffic that ordinary creators pay for is called "Fentiao" on Kuaishou and "Dou+" on Douyin. According to the official website of "Dou+", the number of creators who have paid to promote their works has reached 40.92 million.

However, active payment and passive payment are two different business logics. The former is that users actively spend money to express their appreciation or seek dissemination after consuming/producing content, while the latter uses payment as a threshold to cut off the content consumption behavior itself.

The difference of one word overturns the user's position in the behavior of "paying for content". From the exploration process of Douyin and Kuaishou over the years, we can see that this tiny difference has become a barrier to the short video platforms to carry out the content payment business.

As early as 2020, Kuaishou had tried out paid content. Some content that required payment to watch in its entirety was aggregated on a page called "Paid Selected Plaza". The content formats included short videos, live broadcasts, and recorded broadcasts, and the content categories included courses, short dramas, game videos, etc.

The paid content entrance on Kuaishou’s sidebar. Image source: Kuaishou screenshot

Douyin's attempt at paid content began in the summer of 2021. At that time, Douyin's summer concerts, priced from 1 to 30 yuan, were launched, and users could pay to watch live concerts of singers such as Zhang Huimei and Stefanie Sun.

Its attempt at paid short content dates back to the fourth quarter of 2021. A batch of short dramas that require payment to unlock were launched, charged by episode, with a minimum payment of 1 yuan per episode. On November 29, 2021, the topic #抖音测试短剧付# was on the Weibo hot search list, which caused widespread discussion, but the model has not been fully launched since then.

At the beginning of 2022, Douyin launched the high-quality short drama "Twenty-Nine" produced by Lemon Films' subsidiary Haoyounengling. Each episode is about 3 minutes long, with a total of 20 episodes. The first 16 episodes can be watched for free, and the last 4 episodes need to be paid to unlock. Currently, the price of unlocking a single episode is 25 Douyin coins (or 2.5 yuan), and the price of unlocking the last 4 episodes in a package is 60 Douyin coins (or 6 yuan).

Image source: Screenshot from TikTok

According to the statistics displayed on the "Twenty-Nine" page, as of November 27, 2023, the average number of likes for the first 16 free episodes was 609,900, and the average number of likes for the last 4 paid episodes was 12,700. Based on the number of likes, the conversion rate of paid users is only 2.1%.

2. The payment dilemma starts with genes

There are two main forms of content payment that have been successfully implemented in China. The first is to pay for a single piece of content/course/column; the second is to form a paid membership system, which differentiates the content that free/paid users can consume, the available functions, and the usage experience, in order to attract more users to upgrade from free members to paid members.

Among them, the motivation for users to pay for the former is the high value and exclusivity of the single content/author itself. The most representative examples are the paid courses created by many knowledge payment platforms and the single-film payment model after theatrical movies land on streaming platforms. This type of payment behavior strongly depends on the degree of match between the content itself and user needs, and needs to be highly differentiated from the information that users obtain for free.

The latter relies on the continuity and stability of producing high-value content, which is the operating method of many long video platforms.

However, these two payment models have not been well accepted by short video platforms such as Douyin and Kuaishou. It is not because the payment business is not doing well, but because the genes on which short video platforms rely for survival are far from the scenarios in which these two payment models operate.

In other words, the factors that make users unwilling to watch paid content on short video platforms are precisely the weapons that Douyin and Kuaishou initially used to snatch users from traditional content platforms.

Specifically, the underlying conflict between short video platforms and content payment is reflected in the following aspects.

1. Massive content production

Douyin and Kuaishou have a massive video content pool. In 2021, Ma Hongbin, then head of Kuaishou's commercialization, revealed that Kuaishou released 30 million works a day. In Douyin, this data is called the number of submissions, which is higher than Kuaishou.

Based on 30 million videos per day, the annual output of works on a single platform is 10.95 billion. Even if only one thousandth of them have high consumer value, 10.95 million videos are enough to ensure the diversity of the content ecosystem.

The other side of having enough content is that there is no content that you have to watch. Even if you like a creator and put him or her in your follow list, users may not always remember to watch the latest work. One proof is that the follow pages of Douyin and Kuaishou are obviously no longer the main battlefield for content consumption.

2. Short, concise and fast content features

"Short" is the basic feature of short videos, but for users' motivation to pay, "short" is a negative factor.

The shorter the content, the higher the cost users pay for each second of content. Conversely, short content needs to provide a high enough "information value per unit time" so that users can recognize it as a good deal. This is the core space for the knowledge payment business to survive.

In addition, attracting users to pay for short content can only rely on "impulse consumption", but at a time when content supply is sufficient and content recommendations are accurate, "impulse" is obviously not enough to become a reliable and stable sales strategy.

3. Product form of information flow

In addition to massive amounts of content, recommendation algorithms that create "one thousand faces for one thousand people" are also an important contributor to the rise of short videos. After feeding enough user portraits and behavioral characteristics, the information flow becomes "the person who understands you best."

Correspondingly, a complete exchange formula has gradually been established: creators produce works, platforms distribute content, users pay time, brands place advertisements, platforms earn revenue, and the revenue is distributed to top creators.

In this chain, users have become accustomed to paying time instead of money. In fact, because the content itself is attractive, users are indifferent to the time cost, and "time" has become an invisible consumption. As for rewarding anchors or buying goods, it is "money can't buy my happiness".

But if you have to pay for content, the originally stable chain will be broken, and the cost will become particularly intuitive. The user's first reaction is: anyway, the platform can recommend things I like to watch to me. If this one has to be paid for, then I will go to the next one.

These genes, together with the experience inertia formed over the years, make users naturally believe that "watching" videos on short video platforms should be free, and the space and scenes for paid content appear particularly narrow.

Kuaishou's paid featured square page has been retained until now, with the entrance in the Kuaishou sidebar. The main content currently sold is various courses. Hot-selling courses include "Quantification of Commercial Chili Sauce Ratio" for 19 yuan, "Essence Course of Lumbar Disc Herniation Rehabilitation" for 399 yuan, and "Electric Welding, TIG, Gas Shielded Welding Zero-Based Video Course" for 25 yuan. As of now, the most sold course on Kuaishou's paid content page is "Teacher Di Teaches You to Learn Ventriloquism from Zero Base", which is priced at 9 yuan and has sold 74,000 copies.

Some of Kuaishou’s hot-selling videos, source: Kuaishou screenshot

Compared with entertainment content, users are more willing to pay for the knowledge attributes of short content, but most short content with daily entertainment as its main value is difficult to form sufficient motivation to pay.

After several attempts, Douyin and Kuaishou have returned to their most familiar territory, that is, looking at high-quality short content represented by short dramas from the perspective of content supply. At least before this fall, the question facing short video platforms has returned to "Is it a false proposition to let users pay to watch short content?"

However, some intruders that look like "grassroots teams" have broken a certain balance, and paid short content has re-emerged.

3. Scale does not lead to “indiscriminate killing”

In the fall of 2023, when mini-program short dramas began to attract a lot of money, not only people outside the industry were surprised, but people inside the industry were also caught off guard. Liu Yuan, a product manager who has been in the industry for many years, once expressed his confusion to Hedgehog Commune: "Paid short dramas have been made on Douyin and Kuaishou for a long time, why did they suddenly become popular on mini-programs this year?"

On a certain mini-program short drama platform, a short drama requires a recharge of 39.9 yuan. This confusion has strong basis to support it.

In terms of content quality, the short dramas produced/purchased by Douyin and Kuaishou are far superior to those of mini-program short dramas in terms of plot, props, shooting, and post-production. They are almost made with the same standards as long dramas.

In terms of traffic scale...TikTok and Kuaishou are the content platforms with the largest traffic pool in China, there is really nothing much to discuss.

The subject matter has not changed, the content quality is higher, and the traffic pool is rich, but why is it that the first to achieve paid revenue of over 100 million is a little-known platform? Why are the many short drama mini-programs with questionable DAU and unclear retention the ones that allow users to complete the payment action?

For Internet people who are accustomed to the benefits of scale, this is undoubtedly like an ant biting an elephant.

However, no matter how small the power of ants is, when there are many of them, they can still burst out amazing power. After careful experience, Liu Yuan concluded: "They (making mini-program short dramas) are not doing content in the same way as they did in the past, but in the same way as they did in the past, making small games with different skins."

After completing the production in a very short period of time and at a very low cost, the main cost of the mini program short drama is spent on advertising. Reaching users - jumping back to the mini program - continuing to watch - paying, each link is a layer of funnel until the people willing to pay for it are screened out. There is no paid scene on the short video platform, but after jumping back to the mini program of the short drama itself, the scene has shifted - in these seemingly crudely designed mini programs, all short dramas require payment to watch the full episode.

"Some people may never switch to the mini program in their entire lives, and some may only watch the few free episodes in their entire lives, but it doesn't matter. As long as the base is large enough, there will always be a group of people who will pay."

There is no need to calculate the ROI of a particular short drama. When there are enough short dramas, as long as one of them becomes a hit, there is a chance to achieve overall profitability. In other words, the producers of these short dramas do not care whether they have formed a brand or whether the mini-programs they developed using templates have user retention. They only need to keep the daily investment and turnover account books. As long as the accounts can be balanced, the business can continue.

It's very much like those small skin-changing games that only have a lifespan of three months after they go online, but whose revenue is enough to cover the cost.

It is difficult for a platform that sells traffic to do something similar. Because the platform needs to calculate the account between paid income and traffic investment costs. The income from directly selling traffic is stable, but it is risky to use this part of traffic to invest in self-made short dramas in exchange for paid income. It is far from enough to settle this account.

What’s more, the elephant has to consider far more than just the few grains of rice at its feet. As a platform, what needs to be paid attention to is the overall content ecology and consumption time. It is impossible to lose the big picture by doing small things, like the mini-program short drama producers, who mass-produce short dramas and then simply and crudely calculate the revenue by calculating ROI through investment.

As the representative of the platform's high-quality short content, short dramas need to bear not only the volume and duration of playback, but also the efficiency of reaching new and returning users when externally delivered. Kuaishou mentioned in its financial report: "We are increasingly paying attention to the efficiency and quality of user growth, which has led to a continued decline in the cost of acquiring each user in the third quarter of 2023, both year-on-year and month-on-month, and achieved continuous improvement in ROI. Specifically, we have further increased the channel delivery of high-quality native content, including short dramas, and achieved good user retention."

Therefore, whether it is Douyin or Kuaishou, the self-made short dramas currently broadcast are relatively high-quality. In Liu Yuan's words, "at least they are still making content."

4. Crisis is also an opportunity

Users are unwilling to pay for short content on Douyin and Kuaishou, but are willing to spend money on short dramas on various mini-programs. Is this a bad thing for Douyin and Kuaishou?

At least at this stage, the answer is no.

Based on the business model mentioned above, the short drama mini-programs themselves do not have user stickiness, and active users are basically diverted from external sources (especially short video platforms), and they adopt the "one drama, one investment" model. They cannot "survive" independently without the traffic pool.

For Douyin and Kuaishou, these short drama mini-programs will be stable advertisers.

During the third quarter earnings call, Kuaishou CEO Cheng Yixiao revealed that the consumption of paid short dramas increased by more than 300% year-on-year and nearly 50% month-on-month. Although Douyin has not disclosed data, the overall trend should be consistent with Kuaishou.

In the fourth quarter, the short drama industry continued to be hot. Investors pouring into the short drama market, planners "collecting scripts" on Xiaohongshu, crews working day and night in Hengdian, and film and television production companies and MCNs that transformed into short dramas, all produced a large number of short dramas that would eventually reach the information flow of Douyin and Kuaishou.

The more crowded the track is, the more fierce the demand for traffic from Douyin and Kuaishou will be.

It is still unknown whether all short drama companies, large and small, can make money in the fourth quarter, but the short drama spending of Douyin and Kuaishou will surely reach a new high.

In addition to making money from traffic, if they can take advantage of the popularity of short dramas in mini programs to cultivate users' habit of paying for short content, it will be a good opportunity for Douyin and Kuaishou to reap the benefits.

Even in the free + recommended scenario of the main App, it is still difficult for users to take the step from paying time cost to paying real money, but separating the scenarios is not a difficult operation - Douyin and Kuaishou each have the basic capabilities of mini-programs, and if that doesn't work, they can also make independent apps, such as the Kuaishou short drama product Xifan that was recently launched.

Xifan’s login interface, source: Xifan screenshot

It is worth noting that some short dramas that can be watched in full for free on Kuaishou require watching advertisements to unlock the last few episodes on the independent app Xifan.

Image source: Xifan screenshot

The platform has obviously realized the importance of scenarios for payment, but if it wants to find a balance between the duration value and payment value of the content, launching an independent app is just the starting point.

Another reason why random punches can't kill the master is that regulatory measures are on the way, and the short drama industry is almost inevitable from disorder to order. Douyin and Kuaishou have the first-mover advantage of making high-quality short dramas. Whether they can make money other than traffic in the next stage under the new balance depends on their own ability.

The real crisis is not that short dramas "kill" short dramas, but that platforms "kill" platforms. As long as external mini-program short dramas still need to obtain users through the traffic distribution of Douyin and Kuaishou, the platform will always have the initiative.

When short dramas become popular, the relevant business parties of Douyin and Kuaishou should be able to gain more resources and room for trial and error in the exploration of paid short content.

At least, there are successful cases where users are willing to pay for short content, and the absolute bottlenecks in the business story have been rewritten. When new solutions are proposed, it will not be easy to get a verdict of "ROI is not right".

(At the request of the interviewees, all names in this article are pseudonyms)

Author: Chen Meixi, Editor: Director

Source: Hedgehog Commune (ID: ciweigongshe), observation and research on the Internet content industry.