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How could Duoshan become a cool place and attract the young mobile Internet users?
In this article we explore platform-based competition between Bytedance and WeChat. Duoshan (多闪), an outgrowth of successful micro video app Douyin(抖音), represents a horizontal envelopment attack against WeChat with the end goal being to offer post-90’s a desirable alternative to WeChat, or at least its core messaging, wallet and social sharing features. We look at some key integration points between Douyin and Duoshan and illustrate how the redeployment of platforms in adjacent markets can enable new sources of growth.
The dominant messaging app-turned lifestyle services platform WeChat is being challenged by the cool kid on the block, Bytedance, who’s runaway success with micro video app Douyin has turned it into cradle of attention for China’s youth. There is a slight parallel here with Snapchat’s position relative to Facebook and Instagram before the latter copycatted the majority of Snapchat’s killer features. WeChat responded to the threat of Douyin firstly with its own micro video play called Weishi (微视). It later followed-up with the introduction of its own stories feature, though this is viewed more as a way to alleviate the decline in sharing on the moments feed by making content more transient and therefore less consequential, rather than outright turning WeChat into a micro video app. Despite these initiatives Douyin remains a staple app among young Chinese Internet users alongside WeChat, with an active user base that dwarfs that of similar platforms. According to Questmobile, as of December 2018 Douyin monthly active users stood at 426m with runner up Kuaishou (快手) drawing 285m.
While Douyin is the champion of micro video, it has limited social features. Users are able to generate videos, share them to the user base and receive feedback and comments, but the focus on content creation and sharing as opposed to social networking limits the platform’s ability to build out a social graph. This is a significant limitation for the app as social graphs are the secret sauce for social apps, enabling all sorts of service diversification.
A social graph is the network of relations that exists between users of a platform (you could see each user as a node of a network). Each user has a data profile that is stored in a graph database – this database is fundamental for powering such things as recommender systems which tell you who you are likely to know, who you are likely to match with, what you are likely to buy, what you are likely to watch etc.
Given the need to create a social graph of its own, Bytedance effectively had two choices: shoehorn social features into Douyin, or build something new. The company built something new, and that new thing is Duoshan, a messaging app which has been described as a Snapchat clone. On Duoshan you can still create and share micro videos as well as still images - in fact it is complementary to Douyin - however there is a much stronger emphasis on social networking.
Significantly, Bytedance has woven Duoshan into the Douyin experience. The complementarity of the two platforms can be seen across key elements of the app experience, notably the onboarding flow and cross-app content push.
The no-brainer and most significant strategic move is to ensure that Duoshan users take their Douyin connections with them. The transference of an existing network to a new platform is called carryover, and it’s exactly the same strategic lever WeChat employed when launching – QQ users were able to easily migrate their networks to the new platform. The transfer of users from Douyin is within Bytedance’s remit of control: for other platforms, users are able to generate unique cards with QR codes that direct friends to their respective profiles (if you go to the trouble of creating a custom avatar, it is included in the centre of the QR – fun! ). WeChat and QQ can’t block users from sending photos, and this is an approach used in many referral programs.
With Duoshan the focus is on messaging – the user chat screen is familiar to WeChat users: you get your 红包/wallet (indeed another mobile payment contender), content sharing, emojis including auto-generated personal avatar emojis, stickers and GIFs and a heart icon that literally sends a heart to the other user (not great when testing with colleagues). It goes without saying that sharing videos to chats is key. This can be 1:1 or via group chats. Upon creating a video, the user selects where/to whom to send the video – the avatar preview at the bottom of the page is a nice touch.
Users can open group chats much like those found on WeChat. Invite friends using a unique emoji code.
It is important to point out that content created in Duoshan is automatically pushed to Douyin (the user must grant permission), effectively enabling the user to multi-task between the two apps. This answers the question as to whether or not Bytedance risks cannibalizing its own audience.
If you switch over to Douyin you will see Duoshan chat has been integrated, so it works both ways. The apps are complementary experiences.
When talking about competition at the level of platforms, it is hard to avoid drawing from terms found in evolutionary biology. The reason for this is mostly to do with the fact that we are describing the behavious of a complex system, and as humans, we are surrounded by such systems in our environments, whether they be concrete jungles or literal jungles. Regardless, platforms evolve or die, and there are specific strategies that may be employed to assist and further their evolution to maintain an edge over competitors. One of these is called envelopment.
Envelopment is the act of taking a successful platform in one market, and redeploying it to capture a new market. You are enveloping an existing user base, or from another perspective, encroaching on a competitor’s addressable market, simply be repositioning what you have already built. A platform can launch an envelopment attack vertically up/down a value chain, or horizontally. Horizontal envelopment requires user adjacency i.e. there needs to be a meaningful overlap in the needs of the target user base in order for the envelopment to be successful.
Here we have a simple overview of the underlying value propositions being offered by messaging apps and micro video apps:
As readers will be aware, WeChat is a special case as it is adopted by the majority of mobile Internet users [FACT]. It therefore meets the needs of a very diverse group of people, which ironically in this case has translated into a weakness. Here are four user clusters which will be used to illustrate the larger point of the article (more detailed user insights can be found on any number of ‘China social’ reports, these are purely illustrative, but plausible profiles).
May have had assistance from grown-up kids to set up their accounts. Frequent users of voice communication and viewing pictures – a great way to keep in touch with the family.
WeChat is a backbone to their professional and personal lives. It functions more as an operating system, allowing them to keep in touch with friends, coordinate work meetings/project workflows, plus the mobile wallet and lifestyle services offer convenient solutions for payments, ride hailing, last-mile mobility, document transfer, and food delivery among a constantly expanding list of other things.
WeChat is a great convenience and remains a must-have, however there are other communities this user, in his early 20’s, likes to tap into. Specialist communities aren’t well represented in the WeChat environment, mostly being limited to self-created groups, though an increasing number of creators/media are introducing mini programs. He spends a lot of mobile Internet usage time watching live streamed esports on 斗鱼, anime on BilliBilli and micro videos on 抖音.
Teenage girls who want to create and express themselves. They are in a formative part of their lives and enjoy playing with beautifying apps and video apps that allow them to document their outfits, looks, hobbies and the activities they participate in with friends. WeChat is a must-have for basics – keeping in contact with family, peers, study groups and payment in convenience stores. But they want a more private place to engage and express with their friends, as their parents are overbearing and will criticize them on their behaviors if given the chance.
WeChat is undergoing a crisis which is comparable to that faced by Facebook (in isolation of Instagram) which rests on the fact that young users don’t think it’s cool. The interface is bland/old news, your parents and teachers are on there, privacy settings and user tagging is a lot of effort, the moments feed lacks curation, representing an unwieldy mix of mundane daily updates, photo galleries, news, editorial, video moments from people you can’t even remember connecting with. This is the context belying Bytedance’s strategic maneuvers.
In comes Douyin, with a clear focus (micro video) a radically fresh user interface, attitude, and a series of well-executed brand messages. Young users flock to Douyin and Tencent wakes up to a meaningful threat.
You could call the introduction of Weishi a defensive horizontal envelopment attack. Tencent deploys its infrastructure and a bit of paint to create its own micro video play. It contains more or less the same feature set as Douyin but nevertheless, Douyin remains the dominant micro video player. It has successfully generated network effects and professional content generators + brands get involved, driving its popularity.
Bytedance launches a horizontal envelopment attack by providing a viable substitute to WeChat’s core messaging service and payment wallet, plus it integrates seamlessly with its micro video property (looking at Weishi you don’t seem to be able to automatically push content to WeChat moments). This is where we are now, and it will be interesting to see how WeChat prevents an exodus of its younger demographic to Bytedance’s ecosystem.
One of the more interesting points offered up is the fact that WeChat hasn’t done anything wrong. The product team works carefully to ensure the user experience is – above all else – useful. It is a public service that connects China’s entire mobile Internet population. We got a major update and repaint with V7 but despite this, it just isn’t that sexy. And that’s fine.
The competitive threat from Bytedance illustrates that regardless of scale, no platform is safe. Platform-based competition can emerge from all corners – in this case we looked at how Bytedance identified an opportunity space in micro video, successfully grew the service, and followed through with the launch of Duoshan. The introduction of Duoshan offers young mobile Internet users a cool place to connect, create and express. The question now is how does WeChat retaliate to ensure it maintains a meaningful connection to its younger user segments? How does it compete without undermining its place as the ‘backbone’ of connected life in China? Weishi is a starting point.