Short videos go long on value

Douyin announced a partnership with Netflix-like streaming platform iQiyi in July. The deal has authorized Douyin to create short clips based on iQiyi's long-form video content, including some of the latter's original TV series.

Gong Yu, founder and CEO of iQiyi, said such agreements are an important step for both parties to respect and protect intellectual property rights, explore mutual benefits and unlock new opportunities that will enrich the online video ecosystem.

Both Douyin and short-video platform Kuaishou are increasing investment in fast-growing livestreaming e-commerce, in which products are promoted in real-time broadcast sessions and mini-dramas. This is being done in order to explore new sources of revenue, diversify monetization methods and offer wide-ranging content to enhance user stickiness. Mini-dramas differ from traditional TV series in length, creativity, script design and filming style. Stickiness measures how likely customers are to keep purchasing a product.

The revenue from Kuaishou's livestreaming business increased 14.2 percent year-on-year to 35.4 billion yuan in 2022 from 31 billion yuan in 2021, mainly fueled by the 19.4 percent growth in average monthly paid users, according to the company's latest financial results.

The average daily active users of Kuaishou stood at 355.7 million last year, representing an increase of 15.4 percent from 308.2 million in 2021, while its average monthly active users rose 12.6 percent year-on-year to 612.7 million.

Kuaishou said it has continued to strengthen ties with top talent agencies while attracting top-notch livestreamers to provide users with high-quality livestreaming content.

Despite supply and fulfillment disruptions caused by the COVID-19 pandemic, the company's gross merchandise volume in e-commerce business surged by 30 percent on a yearly basis in the fourth quarter of 2022, with full-year e-commerce GMV reaching 901.2 billion yuan, up 32.5 percent year-on-year. GMV is the total monetary value of all goods and services sold by a business in a given time span.

Douyin is also eyeing lucrative livestreaming e-commerce. It has signed a partnership with Chinese retail giant Suning to carry out in-depth cooperation in multiple fields, such as supply chain services and livestreamed branding.

Dong Yuhui, a 30-year-old livestreamer who became popular when he worked for education training company New Oriental, has become a big hit by selling agricultural products in both Chinese and English through a livestreaming channel of Douyin. He garnered over 20 million followers within just 20 days in June, and raked in over 300 million yuan during last year's June 18 shopping carnival.

"Chinese consumers have become more rational and are paying more attention to the value of the things they buy," said Mo Daiqing, a senior analyst at domestic consultancy Internet Economy Institute. Competition in livestreaming e-commerce has also intensified as video-sharing platforms including Douyin and Kuaishou are diverting online traffic from traditional e-commerce platforms such as Taobao and JD, and attracting a new breed of users to their livestreaming rooms, Mo said. Competition among major short-video platforms will focus on improving the production quality of content and better monetizing long-term content operations.

The report from the China Internet Audio and Video Convention said more than half of short-video users had watched mini-dramas or variety shows that last less than three minutes in the past six months, while users aged below 19 represented 57.9 percent of total short-video users.

Mini-drama series have gained popularity among young people, as more internet users have turned to online options for entertainment amid the pandemic. Short-video platforms have accelerated their drive to expand in the mini-drama sector, with each episode lasting no more than three minutes and involving tight-knit plots.

Chen Yiyi, vice-president of Kuaishou and head of the company's entertainment business, said the daily active users who watched mini-dramas on Kuaishou had surpassed 620 million, and more than 100 mini-dramas had registered over 100 million views each by the end of 2022.

The company plans to offer cash incentives and more data flow support for content creators, strengthen copyright protection and work with content production organizations in an attempt to accelerate monetization.

Yu Ke, who is in charge of Kuaishou's mini-drama business, said in an earlier interview that the post-1990s generation represented more than 70 percent of all viewers of mini-drama series. Female viewers accounted for 68 percent, and the proportion of viewers living in first- and second-tier cities hit over 25 percent.

Douyin has rolled out paid mini-dramas, and users can choose to purchase each episode or the entire drama. Once purchased, the videos can be watched repeatedly without time limits.

"As users spend more time watching short videos, the short-video production model will continue to innovate, thus driving the development of the digital entertainment industry," said Zhang Yi, CEO and principal analyst of iiMedia Research, adding that competition in the short-video industry will be more intense.

Young people, whose free time tends to be fragmented and sporadic, are showing great enthusiasm for mini-drama series. The emergence of mini-dramas is conducive to enriching the content ecosystem of short-video platforms, enhancing user stickiness and enticing new users, said Ma Shicong, an analyst with Beijing-based internet consultancy Analysys.

"However, mini-drama series may not make money over the short term as the initial investment and production costs are high," Ma said, calling for more efforts to improve the production quality of content and explore diversified monetization models, including advertisements and paid content.