<Editor's Pick>Aims for 300 million users, Kuaishou tries to win back the youth market from opponents

Kuaishou used to take the traffic sinking dividend period to rose rapidly in the past, but for a long time after that, the company seemed to be “stagnant” in the comfort zone and has been slowly developing for nearly eight years.

“Behind the seemingly good numbers, we saw a deep hidden danger: as we grew up, our muscles began to become weak, the response slowed, and our connection to the user became weak.”

In June of this year, Kuaishou founder Su Hua and Cheng Yixiao wrote this in their internal letters to employees. The concerns revealed in the letter are more or less from external competitive pressures—

In the middle of 2018, TikTok's daily active users(DAU) surpassed Kuaishou for the first time. As of December 2018, the number of daily active users of TikTok exceeded 250 million. After nearly half a year, Kuaishou confirmed in May this year that the number of daily active users reached 200 million. In July, TikTok announced that the number of daily active users exceeded 320 million.

It is somewhat unilateral to take DAU to measure the current situation of the market, but the gap of more than 100 million DAUs is projected. Kuaishou is too persistent in the market to sink, ignoring the young user groups in the first and second tier cities.

On this issue, Kuaishou was acutely aware that – the ability to self-recognize and treat market changes was not enough and lagging behind, deepening the perception that “the connection with the user is weakening”. This directly led to the fact that when Kuaishou was still deepening the implementation of “using the rural areas to encircle the cities”, many post-1995s had spent a lot of time watching the cat videos on TikTok.

A 2018 report by iResearch shows that TikTok has formed a stable control for post-90, post-95, and even post-2000s in first- and second-tier cities. Among TikTok users, users aged 24 and under account for more than 50%; TikTok accounts for approximately 45% of users in first- and second-tier cities. The users in the third- and fourth-tier cities prefer Kuaishou, which also makes Kuaishou farther and farther away from the young people in the first- and second-tier cities, so that the word "not fashionable" has been tied to it for eight years.

For the time being, the pattern of the short video market has basically taken shape, and various companies have entered the contest of the stock market period.

Why do you say that?

According to the proportion and frequency of people with short video demand, user space should be one-third of social software, and DAU is about 300 million. In other words, if Kuaishou does not take the initiative to seize the young people market in the first and second tier cities, other platforms are likely to radically divide the market in third- and fourth-tier cities that Kuaishou has already got.

This means that Kuaishou has to run fast.

This article will analyze how Kuaishou wins back the young people market in first- and second-tier cities from competitors through two-dimensional content and game videos. How did Kuaishou save the video site AcFun and let it go from dying to rebirth? What is Kuaishou relying on in the game live field to compete with Douyu and Huya? Can Kuaishou reach the goal of 300 million DAU?

Why is AcFun and game video?

"Achieve 300 million DAU before the Spring Festival in 2020."

This is the "command" set by Su Hua and Cheng Yixiao on June 18.

But how to achieve it?

After the reorganization, Kuaishou developed a clear growth plan - "K3 campaign", which let Kuaishou, Kuaiying, AcFun, commercialization, MCN and other business lines have clear objectives. Among them, AcFun and game videos (including live broadcast) have become the "trump card" to grab young users. Why?

In short words, the market for these two businesses is huge and mainly concerns young people –

In 2017, China's domestic two-dimentional users exceeded 300 million, with core users accounting for 1/3 and pan-two-dimensional users accounting for 2/3. It is estimated that by 2018, the total user size will exceed 400 million people. Among them, post-90s and post-2000s is the main consumer group, and the proportion of paying users is very high. For example, the student group spends one-fifth of its own pocket money each month to consume two-dimensional content.

The market prospect of two-dimensional is huge. For Kuaishou, AcFun is the best person to cut into this market segment, not only because AcFun can help Kuaishou to refresh the intrinsic impression, but also because as the “starter” in two-dimensional market, AcFun already has a certain brand value and young User base. Through AcFun, Kuaishou is able to quickly fill the gaps in young content and reach young people in first- and second-tier cities.

Let's talk about the game video market.

As games move toward lighter and more popular, PC gamers are moving to mobile screens on a large scale. It is estimated that by 2023, China’s mobile game revenue will exceed $22 billion. What is growing is the user’s demand for game video.

According to PwC's "2019-2023 Entertainment and Media Industry Outlook", China's video games and e-sports are currently the world's largest video game market. In 2018, the number of Chinese domestic video game users reached 626 million, and these people created $24.8 billion in revenue. It is estimated that by 2023, this figure will reach $35.2 billion. Who is the consumer of video game? Similar to the two-dimensional market, the main consumer of the game video is also post-90s and post-2000s.

These huge numbers have become the best evidence of Kuaishou's focus on the layout of AcFun and the game video business. If you can win the core users of these two segments, Kuaishou will be closer to 300 million DAU.

The next question is what should Kuaishou do after setting the general direction.

How to lay a breakout battle?

It may be hard to imagine that a brand like Kuaishou will appear at the China Joy (2019 China Digital Entertainment Expo & Conference) conference that brings together companies such as Qualcomm and Google.

On August 2, 2019, Kuaishou led AcFun, Kuaishou games, Kuaishou, and Kuaishou's black technology collectively to ChinaJoy, and showed their layout of the ACG industry to the industry and mass consumers with the theme of “seeing every kind of dimension”.

And this is not an impulsive move. Beyond that, Kuaishou is ready –

In June 2018, Kuaishou announced the acquisition of AcFun. At the time, the latter was still on the verge of collapse—negative news such as wage arrears, internal contradictions, video creators’ leaving, and users’ leaving.

At that time, the outside world was not optimistic about the deal, and it is hard to imagine what will happen in the future. More difficult is still behind, Kuaishou is facing a "destroyed" AcFun, both product features and the underlying architecture, AcFun needs to be trimmed from the face to the inside.

After the acquisition of AcFun, the first thing Kuaishou did is to “fix” the infrastructure. The current person in charge of AcFun has told the media that "AcFun's bullet screen technology is still in 2008, it is not applicable to the present, so it must be refactored." Kuaishou adjusted and repaired one by one according to the severity of AcFun's different problems, and this process took nearly a year.

After the infrastructure repair is completed, how to let the lost users return is a problem that AcFun needs to solve. A breakout method is to“buy”.

Backed by Kuaishou, AcFun had the funds to buy the exclusive rights of five dramas in 2018. Among them, "Zombie Land Saga" got a good rating - the total number of broadcasts reached 24.92 million, which is close to the sum of other AcFun dramas. The continuous broadcast of the new drama has effectively attracted traffic and increased user retention.

In a year, AcFun experienced a reversal from death to rebirth. By July 2019, the number of AcFun video creators increased by 45%, users' rewards increased by 88%, and the number of daily bullet screen increased by 55%. The number of followers of video creators has increased by an average of 128%.

Intuitively, the acquisition of AcFun has undoubtedly increased the influence of Kuaishou in the two-dimensional field. The data confirms this. On August 2, Ma Hongbin, senior vice president of Kuaishou, revealed several figures:

Kuaishou's core two-dimensional active users exceeds 40 million people;

Nearly 400 animation IPs have been stationed;

The maximum viewing volume of a single animation work exceeds 20 million.

If “buying drama” is the most direct way to recover, then the support for original content can be understood as an “investment behavior” with the purpose of “long-term return”.

Kuaishou has announced that it will support 100,000 high-quality creators in the next year by using traffic with a value of 10 billion yuan. Among them, the pan-two-dimensional field and games are all key projects.

Just two days after the opening of China Joy (August 4th), AcFun held a video creator meeting in Shanghai. The lead of AcFun announced the four content directions of AcFun in the future: copyright content, OGC (Occupationally-generated Content), PGC (Professionally-generated Content) and UGC(User-generated Content). Among them, UGC is the focus of AcFun.

UGC has always been a weakness of AcFun. In the past, AcFun had insufficient communication and support with video creators.

With the support of Kuaishou, AcFun has developed a new plan - "Super Video Creator Support Program": will spend 5.7-billion-yuan-valued resources in the coming year to promote the ecological improvement of the entire video creator.The video creator's rewards on the website are all owned by him after deducting the operating costs. Traffic sharing can be enjoyed by video that meets the original video standard and achieves an effective playback volume greater than 500.

For game video services, the approach is similar. The essence lies in the preemption of the original contenter resources, that is, the game anchor.

Why do we say that? In 2018, Douyu's 48 head anchors with a professional esports background attracted more than 120 million users. The traffic created revenue for Douyu - more than 50% of Douyu's revenue was brought by the head anchors.

This is also the reason why Kuaishou has increased its support for game anchors.

In July, Kuaishou announced a management and support program for game creators, hoping to give creators more on-site traffic and exposure. In addition, Kuaishou also wants to attract outstanding creators from outside. All Kuaishou games broadcasters take part in the event to recruit Wangzhe Rongyao's new season anchor.

From the perspective of the effect, Kuaishou did the right thing

As of June 30, in the top 50 of the Wangzhe Rongyao game anchors, Kuaishou game anchors accounted for 10 seats; among the top 100, Kuaishou game anchors accounted for 24. In the top 50 of the PUBG Mobile anchors, there are 10 Kuaishou game anchors; among the top 100, there are 31 Kuaishou game anchors.

The control of the anchor resources can be directly reflected in the data of DAU-

At present, the total user DAU of Kuaishou game video has reached 56 million. In terms of game live broadcasting, Kuaishou also surpassed other practitioners. In July, Kuaishou's live broadcast data showed that its mobile DAU was 35 million. Although it only accounted for a small portion of Kuaishou's more than 200 million DAU, it is already a considerable figure, even surpassing the sum of Douyu (15 million) and Huya (11 million).

The data proves that AcFun and the game video business have achieved good results, which makes Kuaishou a step closer to 300 million DAU.

At the creator's conference on July 23, Kuaishou announced that it has more than 400 million monthly active users and the daily exposure has reached 100 billion. Kuaishuo also specifically announced the daily active user data of the first and second tier cities - more than 60 million, of which more than 80 million daily active users in the southern region.

From reflection, strategy development, to practice, Kuaishou has gradually caught up with the rhythm of market changes. Now Kuaishou has been able to prove that after the dividend, it has maintained healthy growth on its own operations. And then, Kuaishou will continue to grow in constant reflection and practice. Perhaps more worthy of attention is, when the 300 million DAU is realized, what will be the next target of the Kuaishou?

Photo from: vcg.com

This is an article from Huxiu, translated by Xu Yin