Video number, a little tangled

With the launch of the Douyin chat software, Douyin has taken another step forward in the social field and is running further and further in the video field. At the same time, although the video account has developed well in recent years, it also has its embarrassing situation, and its end-game thinking has yet to be broken through. This article analyzes Douyin's entry into the social field and the situation of the video account. Let's take a look.

In December last year, Douyin officially announced the launch of the "Screening Room" function and promoted "Watch a large number of blockbusters for free". Now, the official website has added this function; this small action makes people wonder, why does Douyin do this?

• Make up for shortcomings and consolidate the main position of video
• In the future, share a piece of the long video cake
• Diluting content costs to support Xigua Video

When it comes to videos, think about how long it has been since you finished reading a whole book or watched a TV series in its entirety?

Except for some young people, I believe that middle-aged people simply don't have the time. Although there are always people who post photos on WeChat Moments showing how many books they read in a year to show off their achievements, from the perspective of the overall market, most people just collect popular books and rarely read them.

Where is the root of the problem?

In fact, it is a microcosm of the current fast-paced life. Mobile phones are changing the thinking patterns of social groups. In the past, people would read public accounts and Toutiao. Now, with the emergence of Kuaishou and Douyin, people rarely read books, and even movies are dispensable.

There is only so much time in a day, and every giant wants to grab a piece of it. Short videos make us happily become "toilet thinkers", but also make us anxious from time to time.

1. It’s not just users who are anxious

Are users the only ones anxious? No. Even more anxious are the players of medium and long videos (iQiyi, Youku) that provide videos to users; this was the case a while ago when public opinion was stirred up again online.

Domestic actor Li Jiaming released a video publicly criticizing the chaos of TV charging, which attracted widespread attention and received praise from netizens. He said bluntly:

"Before I turned on the TV, it was just a TV. Now, everything I turn on is charged, like monthly VIP. I spent thousands of dollars on a TV, but I can't even watch it after I finish watching it. I feel really disgusted. It's just a large monitor."

After the video was released, many netizens expressed their agreement and complained one after another. Not only is there a monthly subscription, but there is also a per-episode charge. Not to mention the ads in the middle, the 4K ultra-clear video has to be watched at the end.

It is understood that the official website memberships of major video sites have been slightly adjusted. The annual fee for iQiyi Platinum VIP is 388 yuan (298 yuan for a consecutive annual package), the annual fee for Tencent Video Super Movie VIP is 488 yuan (348 yuan for a consecutive annual package), and the annual fee for Youku KuMao membership is 488 yuan (348 yuan for a consecutive annual package).

If we use four reasons to summarize the reasons behind the continued price increases, it would be "profit model."

iQiyi relies on advertising and membership fees and is an independent company; Youku and Tencent Video also rely on advertising and memberships, but unlike the former, the latter two are backed by Alibaba and Tencent.

This means that the latter two are the traffic entrances for large companies, and conversely, large companies will also bring their "brothers" along from time to time.

Looking back at the development history of medium and long videos, we can see that at that time, Youku, Ku6, and Tudou all relied on traffic for their livelihood, and they all survived on advertising. The business model was extremely simple.

However, the up-and-coming bilibili is different.

In the early years, the small broken station started out mainly by relying on uncopyrighted two-dimensional videos. Naturally, it was impossible to make money by adding advertisements in front of uncopyrighted videos. After all, making money in this way was not glorious.

In fact, Bilibili has also made some attempts. In 2016, it added opening advertisements to five new series including "Re: Life in a Different World from Zero", but the community exploded all of a sudden.

Finally, in order to prevent the website from deteriorating, the official took the initiative to remove several animation series. The good thing is that it has gained the support of users, but the bad thing is that the official has to explore new profit models.

Through several years of continuous exploration, the composition of Bilibili's revenue has gradually developed from website recommendation positions, mobile splash screen ads, self-made content, offline event sponsorship, and UP master advertising marketing to mobile games, value-added services, advertising, and e-commerce. This has also further consolidated the dilemma of the single monetization of the "main battlefield" for the small broken station.

By comparison, we can see why it is difficult for mid- to long-term players to make money.

First: Advertising is fragmented

First of all, when you open Tik Tok or Kuaishou today, advertisements can be pushed to you using various interactive methods. Creators can also accept advertisement implantation based on the star map. Basically, you can see a commercialized advertisement every 3-5 videos.

The change in the form of short videos is also directly reflected in the proportion of revenue, so the advertising money of websites like Youku and iQiyi is taken away by short videos in disguise.

Secondly, creators are not satisfied with the style of embedded advertising in medium and long videos. This is not a problem of consumer habits, but is determined by the business form. Think about it, movies and TV series are often connected to the plot, and advertisements suddenly pop up in the process. This feeling of jumping out will drive people crazy.

Second: Lower business barriers

In accordance with previous strategies, major domestic long-form video websites are trying to maintain their main position through "content copyright", which is specifically reflected in self-produced variety shows and IP dramas. Sometimes, a popular IP drama or a movie directly affects the quarterly financial report.

However, obtaining the copyright of self-made content is not an easy task. On the one hand, the cycle is long and it is difficult to make a bet. Websites need to find cost-effective dramas, and netizens "vote with their feet". Once they bet on the wrong thing, all their money will be wasted.

On the other hand, this road is crowded now and will remain crowded in the future, which means that the giants you want also want it, and they have more money.

In any industry, the underlying logic of the Internet's changing laws seems to be the same; during my 7 years of working in the e-commerce industry, I found that everyone wanted to build a platform in the past, but after JD.com, Taobao, and Pinduoduo emerged, other platforms had no choice but to transform.

Where to go?

Some players have transformed themselves into vertical categories, such as luxury goods trading platforms and fashion platforms such as Dewu, while other players have begun to take root in the supply chain, become brand owners themselves, and do some buyer selection by the way.

for example:

MiYa has developed from its original predecessor "MiYa Baby", a PC mall for imported maternal and child products, to an APP with a full range of products, and then switched to social e-commerce in 2018. In the end, its market share decreased and it was eventually closed down. Liu Nan became a KOL and re-selected products to bring, returning to the initial focus.

All of this is quite similar when applied to the field of "medium and long videos".

Ten years ago, Youku started out by relying on videos of unknown origin. At the beginning, it also tried to expand its ecosystem through other activities and plans, such as the Talent Plan, which is similar to the Tik Tok celebrity plan and encourages the public to upload their own videos.

However, "the timing was not right". After several years of fierce competition in medium and long videos, although they found their own territory, they were eventually overtaken by short videos. Now they are forced to downsize and build barriers again.

2. Douyin makes money through fractal innovation

If we only look at the changes in business models, there is a world of difference between Bilibili, Douyin, Youku and iQiyi. The former two are completely "user-centric" in making fractal innovations and generating interactive actions, while the latter two seem to have been "serving users" all the time, but are getting further and further away.

1. What is fractal innovation?

This theoretical model was proposed by American mathematician BB Mandelbrot and published in the American magazine Science in 1967. It specifically studied the explanation of "how long is the coastline of Britain".

He believes that the coastline is a curve with extremely irregular and rough characteristics, and we cannot distinguish the essential difference between this part of the coast and that part of the coast based on a single "shape or structure".

This almost identical degree of irregularity and complexity indicates that the coastlines are relatively similar in overall morphology.

In other words, the local form is similar to the overall form, just like if you travel frequently, when the plane lands, if the altitude is 100 kilometers, the landing photos taken in "Beijing" and "Hangzhou" will be similar.

In the Internet field, fractal is an innovative method that develops from a certain element of the original first curve (product, project) and is called the new second curve.

2. Where is the TikTok fractal?

ByteDance launched its first product, Toutiao, in 2012. Its competitors at the time included Sina, NetEase, Sohu, and Baidu. It used its technological advantages and intelligent mining methods to provide users with valuable and novel news information, and successfully captured a large number of users.

In 2015, ByteDance began to realize that the power of pictures and texts could not match the emergence of short videos. At that time, there were already Kuaishou, Meipai, Miaopai and other companies, and various categories were subdivided into live broadcasts, movie theaters, etc.

Therefore, according to fractal logic, three video products (Huoshan Video, Toutiao Video, and Douyin) were launched that year to target different groups of people in a layered manner.

Huoshan is positioned in third- and fourth-tier cities, Douyin is focusing on music trends, and Toutiao Video was later renamed Xigua Video, focusing on long videos and live broadcasts. All three have fully utilized Toutiao’s traffic support and development.

I believe that this clear and efficient functional operation approach is ByteDance’s growth engine.

Regardless of the layout, the technology is the same. There is systematic experience on growth and retention. There are specialized departments for analysis on content creation and commercialization. The three core points are like an assembly line, with continuous and efficient output.

In three years, Tik Tok has grown rapidly, and its content has been segmented from the original entertainment to skills, education, food, travel, science, finance and other aspects.

Looking at commercialization at this time, although advertising is the bulk of revenue, Douyin is not limited to this, and has begun to increase barriers through content forms and other fractal aspects, leading to the emergence of live streaming, e-commerce, and local life.

All of this revolves around the "boundless needs" of users, and ByteDance and Douyin have been trying to solve the relationship between supply and supply-demand output matching.

In other words, let more people produce content, recommend it to people in need, attract attention, and then the platform supports and stimulates the production of more content. These contents are matched with e-commerce items to form consumption habits, and users will stay here forever.

This is also the GROW flywheel growth model proposed by John Whitmer in 1992. The basic decision-making cycle has four stages, namely Goal, Reality, Options, and Will.

3. What is the core of growth?

I think the four attributes mentioned by Amazon founder Jeff Bezos in his 2014 shareholder letter are very sharp, namely:

• There is customer demand
• There is a large scale
• High return on capital
• Can fight against time

Many people wonder, don’t all companies do this? In fact, it’s not true. For example, barber shops, although there is customer demand and a high return on capital, are difficult to scale.

As for real estate, it has customers, scale, and returns, but it cannot fight against time. Once people’s housing needs are met, demand decreases.

However, the graphic, text and video tracks are different. People are naturally fond of obtaining information. Videos can easily generate scale by producing a large amount of light information. Advertising also requires economies of scale, and the return rate is undoubtedly high. Setting an output feedback mechanism for the content to form a flywheel is enough to counteract the time cycle.

When fragmented information is annoying, Douyin's medium and long videos can just fill the gap and undoubtedly defend the territorial status of video once again. This is also one of the reasons why Douyin PC quietly added screening rooms to make up for the shortcomings of Xigua Video.

4. How do other video websites do it?

QuestMobile data shows that Youku APP had a peak user base of over 600 million in 2014, with an average daily VV (number of views) of 650 million. When iQiyi reached a peak of 538 million monthly active users in 2019, it did not shift from a unilateral trading market to a bilateral market, leaving opportunities for other players.

A one-sided market refers to the one-sided scale effect on the production or consumption side. If the supply and demand relationship are not well controlled, there will be diseconomies of scale, user loss or industry fragmentation.

A two-sided market is a market with two different types of users who interact or conduct transactions through an intermediary structure/platform, and the decisions of users on one side will affect the results on the other side.

In a two-sided market, cross-side network effects emerge.

That is, an increase in quantity on one side can increase the utility/benefit on the other side. In most business models consisting of production and consumption, an increase in producers (categories/quantity) can increase the richness of consumer choices, thereby promoting more transactions.

An increase in consumers can increase producers’ sales and improve production profits (for example, when production costs decrease with quantity, the more the demand side consumes, the greater the profit).

In other words, when medium and long video platforms have hundreds of millions of users, they cannot provide more content services to consumers, and users can easily be divided up by other interest substitutes.

If the transfer becomes bilateral, finding KOLs and content copyright producers among hundreds of millions of users and matching the content they produce to users can greatly improve the "existing market turnover rate."

To put it simply, when you go to a market, there are only a few merchants at each time, and slowly you will stop going; if there are some extra activities at the market, and you participate in them and can sell goods, perhaps you will be able to stay.

From this we can see that Youku and iQiyi only started to address the content supply problem when they discovered that their users were declining, but the problem had already been occupied by the fragmented Douyin and Kuaishou.

It just so happens that the two companies are good at creating two-sided markets, which has forced the current medium and long-form videos to retreat to "content copyright" in order to maintain their position. This is also the most essential difference between the relationship between "user-centric" and "user-serving".

3. The ultimate thinking breakthrough of video account

Thanks to the strong national penetration of WeChat, Video Account has been standing on the shoulders of giants since its inception. In just three years, although it has become the leader in domestic short videos and live broadcasts, it also has some embarrassing aspects.

First: Tencent has learned its lesson. Weishi was very popular when it first appeared a few years ago. At its peak in 2021, it offered 500 million red envelopes to support the Spring Festival prime time, and gave it the highest button position of "posting to Moments". But now it has been quietly forgotten.

Second: Kuaishou, Douyin, and Bilibili have made short videos and live broadcasts their main business lines and fully assumed commercial functions; although the video account slowly gained a foothold that year, just like Douyin’s launch of free PC movie viewing, it was to consolidate its main business and align with the average.

In other words, WeChat has a place for video accounts in order to make up for its shortcomings.

Now that Douyin is suddenly making its foray into e-commerce and social networking, it is really difficult to cope with directly using Video Account to compete with other giants.

However, if it wants to get back on its feet, it cannot be like Weishi in the past, "operating as fiercely as a tiger but with a zero-five record", so where is the key point in the Video Account's do-or-die battle?

You can look at it from the perspective of end-game thinking.

According to the industry pyramid model (John E. Prescott), Video Account has two major functions: maintaining "Tencent Video's ecological position" and "consolidating existing revenue."

The former has a cumulative effect, and the latter has three forms: search advertising, social advertising, and short video advertising.

According to the "In-depth Research on the Internet Advertising Industry and Future Development Trend Forecast from 2022 to 2027" released by the China Research and Development Institute, the status of search advertising is around 50%, and social advertising and video advertising are high-growth sectors with a compound growth rate of around 20%.

Tencent’s search advertising does not have a clear advantage. The only way it can catch up with the others is to focus on “video and social”, and these two can fill in many gaps.

for example:

It can fill the gap in content aggregation of WeChat search, use videos to help brands improve customer acquisition efficiency, and stimulate the inherent graphic and text creators within the WeChat ecosystem.

So, who will pay for the advertising?

As of November 1, 2022, Douyin's e-commerce experience data shows that 5.68 million merchants have settled in Douyin in the past year. This indirectly means that merchants have "set up camp" here, taking care of everything from customer acquisition to after-sales service. These merchants are the important creators of financial report advertisements.

If it is lost, it means that a large piece of cake will be given up. Therefore, the basic purpose of the video account should first be to "serve merchants."

Keeping merchants and improving their customer acquisition efficiency will be more beneficial to the long-term development of creators, brands and users.

If we follow the product logic of previous years and introduce celebrities to Video Accounts, first handle the KOL content production, and open up all product categories; I think it will not only increase the difficulty of content management, but also make merchants more exclusive. Eventually, Video Accounts will become an entertainment base, no different from Weishi.

4. Merchants’ buying efficiency is more important

At this year's WeChat Open Class, Video Account repeatedly emphasized a key word, namely "public domain purchase rate", and disclosed that the unit price of some industries has doubled compared to last year, exceeding 200 yuan.

What does this mean?

The volume-to-output ratio of brands on major platforms is the focus of advertising conversion.

According to information from WeMall, a leading service provider in the WeChat ecosystem, well-known retail brands including Anner, Mercury Home Textiles, and Balabala have already deployed video accounts through WeMall.

Compared with them, although some small and medium-sized brands are also trying to sell products through video accounts, it seems that they are unable to calculate the accurate ROI, which makes it difficult for people to get involved.

How can we improve conversion?

If a live broadcast wants to be posted on WeChat Moments and become a public domain advertisement, it relies on three aspects: “content, brand, and benefits”.

Therefore, for video accounts, should they directly participate in the e-commerce monetization link like Douyin, or should they add videos and run the MVP of buying traffic in various sub-industries like the original advertisements? This needs to be re-evaluated.

The former means more intervention.

On the explicit level, how to cleverly let brands use "small stores" or "third-party software (WeMall, Youzan)" to connect with the video ecosystem, how to directly purchase within the ecosystem when launching promotional activities, how to match user-generated videos with incentives and advertisements, and how to control content quality, etc.

A few days ago, when Richie Jen's 2023 Happy Journey online concert, a blockbuster special event at the beginning of the year presented by TME live and Yang Yuanqing, came to a perfect end, many netizens found that when purchasing products, they were still redirected to the Taobao store. I believe this is a scene that the video account team does not want to see, and it is also a helpless move.

On an invisible level, from the outside, it seems that Video Accounts have a natural advantage in private domain traffic. External public accounts, mini-programs, and corporate WeChat are seamlessly connected, and consumption is possible during chatting and browsing Moments. This does not mean that the internal organization is collaborative.

In other words, Tencent’s internal business management model cannot be as smooth as Douyin’s “collaboration”. Advertising, mini-programs, and official accounts are all in charge of their own business, and it takes a lot of effort to align them.

It is worth mentioning that Video Account cannot make drastic changes like Tik Tok and Kuaishou. It can be seen from the existence of enterprise WeChat in front and native advertising in the back that they do not want to make social networking more commercialized. It is a love-hate relationship between them.

The latter means that benchmark cases are important.

The case of “Public Domain Purchasing Efficiency of Brand Video Accounts” is not only reflected in the single level of “advertising placement and creativity”.

It also includes what delivery combinations the brand uses, what delivery forms are adopted, how to guide user participation in the middle links, and how to effectively connect the public and private domains.

It is not as simple as adding corporate WeChat and guiding people to follow the official account.

A person in charge of the marketing department of fast-moving consumer goods told me that they may also need to consider how brands can find KOLs that match their own style from the video account ecosystem, how to retain them, what sustainable content activities can be carried out through the video account, and how to maintain the frequency of interaction.

From the creator's perspective, although various actions were accelerated in the second half of last year.

Add a "mutual selection advertising platform" for authors with 10,000 points, give "tasks to open video accounts for authors with 100 fans", and join popular activities such as "creative weathervane, creative tasks", etc.

However, this does not mean that it can quickly support many authors in vertical industries and accelerate the efficiency of public domain buying in various industries; due to the natural TOC advantage of WeChat, the slow development method is not the most effective way to support KOLs.

Perhaps we should think from the perspective of the payer (Party A): how can brands co-create long-term content with KOLs, and how can KOL content be smoothly matched to consumers so that consumers can make purchases, creating a circular relationship among the three.

In general: Tik Tok is running further and further in the video field, and only the desire for "socialization" remains; players of medium and long-form videos return to "content creation" itself and take on the role of brand promotion.

Video accounts are half happy and half sad. Sometimes, too many advantages hinder one from moving forward. ‍

Author: Wang Zhiyuan, public account: Wang Zhiyuan