The rapid growth of short-video start-ups has prompted China’s biggest technology groups to plough funds into the sector, as Baidu, Alibaba and Tencent look to tap into an area increasingly popular with the country’s mobile internet users.
The move illustrates the extent to which the three founding fathers of China’s internet are starting to feel the heat from challengers in an area of relative weakness.
Short-video apps have proved a big hit in China, featuring user-generated clips on everything from cooking to dog-grooming. The top four short-video platforms had 417m users at the end of 2017, according to data research firm QuestMobile, a number that rose to 582m by March — more than three-quarters of the country’s mobile internet users
The industry is also increasingly lucrative, generating Rmb5.73bn ($901m) in revenues last year, almost triple the previous year, according to iResearch, a market research firm.
Alibaba on Friday unveiled Aliwood, a video-making tool powered by artificial intelligence, that takes a minute to produce a 20-second video complete with music, pictures and text, for merchants using its Taobao ecommerce site. The company did not disclose how much it was investing in the new service.
That announcement came a month after Tencent earmarked a reported Rmb3bn to beef up its video service Weishi.
Number of short-video users in China at the end of 2017
“User numbers exploded in the last three months,” said Matthew Brennan of China Channel, a consultancy. In response, “Tencent is throwing billions of renminbi at Weishi, subsidising content. They’ve declared war.”
Baidu’s iQiyi, a Netflix-style streaming service, raised $2.3bn in an initial public offering in New York last month. The platform uses AI-powered algorithms to trim its dramas into short videos designed for smartphone viewers.
User-generated short-video platforms are not new but the rapid rise of Douyin, a video app and one of the fastest-growing companies in the sector, has grabbed the attention of the big groups.
The app was created by Bytedance, which also owns news aggregator Toutiao and music synching app Musical.ly. Douyin has captured 124m monthly users in the 18 months since it was launched, according to QuestMobile.
Douyin is omnipresent in large cities such as Beijing. Subway carriages at rush hour are filled with commuters flicking through the infinite scroll of videos that appeal to teenagers and urban professionals alike.
“Douyin really brought all these people to the table to compete,” said Ken Xu, managing partner at venture capital firm Gobi.
Another sector leader is Tencent-backed Kuaishou, which provides a range of editing and beautifying filters and other tools to ensure users can make polished videos. Its monthly active users are almost twice Douyin’s — at 230m in March, according to QuestMobile. However, they are concentrated in China’s smaller cities.
Douyin this week became the latest casualty of Beijing’s efforts to cleanse the internet of “subversive” content when regulators banned the depiction of UK children’s cartoon Peppa Pig.
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