Kuaishou: Could This Be A Challenge For TikTok
TikTok, an online short-form video platform that has been downloaded over 2.6 billion times more than Youtube, Instagram and Facebook. Currently, TikTok has close to 800 million active users anywhere from 13–40 years old, most of which are between the age of 16–24, spending an average of 52 mins per day on the app. The revenue for TikTok comes from ads and from gift coins, however, another platform is rising from China which has the potential to be the biggest thread for TikTok, Kuaishou. Why are financial services such as BlackRock Inc., the Abu Dhabi Investment Authority, Capital Group, the Canada Pension Plan Investment Board committed to buying stock in Kuaishou?
Kuaishou which means fast hand was launched by Su Hua, a former Google engineer who reportedly did not have access to electricity in his youth. His partner Cheng Yixiao served as a software engineer at HP and at Renren Inc. They launched the service in 2011, where users could create and share GIF pictures. Within a year Kuaishou became a platform where users could record and share videos. By 2013, Kuaishou had 100 million active daily users.
Kuaishou became popular in the countryside where farmers would show their harvesting techniques, it is not clear whether or not it was meant for farmers but once it caught on, they started to sharing. It has since become a platform, where people show their dance moves, users play video games, lip-sync, perform magic tricks. Currently, they have 818 million users with 302 million daily active users, who spent more than 85 minutes on the app per day.
Kuaishou looked promising; however 2020 has been hard on everyone including Kuaishou, it reported a net loss of $1 billion. And this is where the story starts, in hopes of getting back on track, they are preparing themselves to go public. With investors looking to buy stock, Kuaishou plans to raise $6 billion in the coming days. It is said that this could be one of the world’s biggest internet IPO’s. Reportedly, Kuaishou has also hired Bank of America, China Renaissance and Morgan Stanley to work on the IPO.
So why exactly are financial services looking to buy Kuaishou stock? Well, Kuaishou became popular in Asia very quickly. When a Taiwanese magician/ businessman Jay Chou did his first live stream, 68 million people saw him perform and he ended up making $2.85 million in 30 minutes. Kuaishou is generating revenue not just by sharing short videos, live streams or marketing but also, by other means.
Creators can use live stream, on the platform to market and promote products to viewers. This way Kuaishou is introducing themselves to a market that is already rising day by day, e-commerce. With their gaming feature, they provide options for mobile games on their platform. Users can access games within the app or download them separately via app. And then there is the live and recorded knowledge sharing, where if the creator wishes they can charge the viewer for their content.
As of now, 68% of revenue comes from live streaming but that may soon change. In a statement, the Kuaishou said “We are actively developing additional monetization opportunities to diversify our revenue streams through online games, online knowledge-sharing, and other products and services”.
You see, there are about 896 million users in China who have access to phone internet but because of restrictions on what they can or cannot see, it makes it hard for companies outside of China to make a decision on whether they should promote their products in China or not. But is that really important? Well for one, Kuaishou will go global and the rules around it will change. But most importantly, China’s export exceeds $2 trillion annually, and Kuaishou is committed to strengthening untapped resources in China, many of which reside in rural areas, and that is where Kuaishou is more popular than TikTok. A farmer ended up sharing his trucks that were getting ready to load up crops; a trader sitting thousands of miles away closely inspected the situation of the farmer’s field for clues on supply, demand and predicted the future of grain prices.
In the short amount of time Kuaishou has existed, 19 million people have earned income from Kuaishou. What the future holds for the company is yet to be seen, but with their footprint, in e-commerce, online knowledge and gaming they have many more streams of revenue compared to their counterparts. And with investors from all over the world joining in, Kuaishou’s future is worth looking forward to.