ByteDance Inc. doesn’t want their massive success to go downhill after its blockbuster video app TikTok blew up in the social media space in a huge way. The company has reportedly been looking into expanding and getting into different industries such as e-commerce, games and more. The move of ByteDance is apparently fueled by their ambition to compete against other major global giant tech companies, likes of Apple, Amazon and Google.
The Beijing-based company has already dipped their fingers in several different things in a bid to figure out what works. They have launched a financial-services app, a music streaming service which is currently being tested out in India as well as Indonesia. They have also acquired game developers in China.
Encouraged by the success of their massively popular app Tiktok, ByteDance has been rumoured to introduce a subscription-based service. The subscribers will get access to additional content from preferred creators. However, none of this has been confirmed by the company as of now.
Several analysts believe that building up their services or offerings portfolio will help them get more and more user data which in turn could prove to be very useful in increasing their advertising dollars.
“They are building an ecosystem which has less risk, which does not solely rely on one product,” said Matthew Brennan, a China-based tech consultant.
Though it is quite clear that they are taking big chances and are willing to diversify, there is no guarantee that their efforts will be rendered fruitful. ByteDance’s targeted industries already include a lot of heavy hitters who have built a lot of authority in that particular niche. Some of these areas in which the company is trying to repeatedly get into includes Tencent Holdings Ltd.’s WeChat Pay and Ant Financial Services Group’s Alipay, as well as Spotify Technology SA and other Western companies. A video-based messaging app by the name of Duoshan by ByteDance has already failed against that of WeChat messaging service in China right after its rollout.
ByteDance has also faced their share of U.S. political heat. Regulators are currently determining if TikTok’s having significant roots in China makes it a national-security grade problem. Some analysts say that advertisers are still not comfortable spending a lot of marketing dollars on the app as there have risen significant concerns over harmful content and possible censorship by its Beijing parent. However, the company has refuted such concerns and claims saying that they aren’t under any orders by Beijing to exercise any kind of censorship.
Companies are still not convinced of Tiktok’s advertising potential according to many analysts. The app is yet to have a stockpile of user data and analytics related to advertising which currently platforms such as that of Facebook and Google offer. Therefore, it is being believed that TikTok still can’t offer finely tailored ads to specific user groups.
The U.S. advertisers are being served a chance to reach their audiences with different kind of tools which aren’t yet available on the mainstream social media platforms by TikTok. These tools include popular hashtag challenges wherein brands can create a custom dance or skit linked to a hashtag, which can then be prompted on the app’s discovery page. TikTok has been reported to rope in a former Facebook employee to manage their advertisement business last year named Blake Chandlee.
However, as of right now, brands still seem to be on the fence regarding the marketing use case potential of TikTok. Alessandro Bogliari, Chief Executive of the Influencer Marketing Factory remarked that the app seems to be confusing to navigate around some of the times.
A more promising route for TikTok in the U.S. according to advertising executives, might be a video-subscription service. Models such as that of Amazon.com Inc.’s live-streaming platform Twitch, which charges viewers to virtually peer over the shoulders of videogamers in action can work in favour of ByteDance as well.
ByteDance: The Fleet Of Offerings
As of now, advertising is the major source of revenue for the ByteDance. However, the company has not restricted itself only to TikTok.
Another major fast-growing source of ByteDance’s revenue from China comes from a live-streaming online service for influencers wherein they act as hosts of their own channels on Douyin – the Chinese version of TikTok. Fans offer gift payments to their favourite influencers from which ByteDance takes their own cut.
According to Blue Lotus, last year, spending on Douyin for such digital gifts hit nearly $3 billion, from virtually zero the year before and could nearly double this year. But that kind of business has never really taken off in the U.S., except in niche areas such as games.
In the e-commerce domain in China, Douyin users with a sufficient number of followers can also tag videos and direct people to their own digital storefronts within the app, or send their viewers to retailers such as Alibaba’s Taobao Marketplace, with ByteDance earning commissions.
ByteDance has set their eyes on the gaming market as well. The company has already bought two game developers over the past year. They’ve also introduced their first i-app game on Douyin called “Music Ball” as of February 2019. This will allow third-party developers can introduce games in exchange for a portion of ad and in-app-spending revenue.
Apart from games, Manfen , a financial-services app that was rolled out by the company in October, offers instant users loans of as much as roughly $28,000.
They also came out with their own music app called Resso which is being tested as of now in emerging markets.
Bytedance has also got a corporate messaging productivity app called Lark which was first started as an internal tool within ByteDance but now is made available in markets such as that of Singapore and Japan.
Lastly, but not least, ByteDance is working on its own smartphone. In July last year, the company revealed its plan to launch its own smartphone and formed a partnership with device maker Smartisan Technology. It’s, however, not immediately clear what is the company up to with the device business.
What does the future hold for ByteDance?
In 2019, ByteDance’s revenue climbed to $11.5 billion or more from that of $7.4 billion in 2018 and that’s mainly because of advertising in China according to Shawn Yang, managing director of Blue Lotus Capital Advisors. However, ByteDance isn’t consistently profitable according to the many analysts. Many observers have raised questions against the humongous $75 billion valuation of ByteDance in the private market as most of TikTok users are teenagers with limited spending capacity.
The new products ByteDance is testing in China and elsewhere will make their way to the U.S. eventually after testing as analysts believe that e-commerce and games are two major potential growth areas for the company if done right.