TikTok’s relentless growth in India is hitting Facebook
ByteDance, the world’s most valuable startup, is banking on its global product approach and user-generated content to win over the Indian market and take the battle right to Facebook.
The hashtag caught on, with its videos garnering nearly a billion views (967.6 million). But ByteDance wasn’t done.
Keen to consolidate on popular sentiment, it began a 15-day splurge, offering a daily reward of Rs 1 lakh each to three users who created content with the said hashtag and spending nearly half a crore on this campaign.
Unsurprisingly, TikTok ended the first week of May as the most downloaded app from Google Play Store and among the top five in its Apple counterpart.
For TikTok and ByteDance, the download ban ordered by the Madurai bench of the Madras High Court — based on a complaint that it encouraged pornography, especially child pornography — was rather untimely. It checked TikTok’s growth.
A recent report by analytics firm Sensor Tower estimates that TikTok could have added 15 million users, if not for the ban. May, the report adds, could have been TikTok’s best month, surpassing December 2018. ByteDance itself revealed in court documents that the ban caused it daily financial losses of up to $500,000.
“It was clear that someone wanted to check their rapid growth. It (the petition) seemed very motivated,” says a person aware of ByteDance’s plans. “It looked motivated right from the start and curiously, was filed before Madurai bench. It doesn’t matter if it was a Chinese or Indian company. It is a great product and that’s pretty much worrying some of its rivals here.”
Today, ByteDance has around 300 million monthly active users in India across its suite of three products — TikTok, Vigo Video and Helo (also an India-specific social content product). Statista, a German database firm, says TikTok alone has 200 million users, of which 120 million are active on a monthly basis, compared to 300 million Facebook users in India.
A fourth product, which sources tell ET is an “entertainment app,” a music player, is expected to launch in July. “A music player is a natural extension, given that they’ve already purchased rights from leading record labels for TikTok,” says the person quoted above. But it also underscores ByteDance’s ambitions in India — to cater to every need of the largely non-English speaking user, be it short video, social and sharable content or music.
“Short video, user-generated content is an important strategy for us. Mobile penetration is picking up in India. More users are spending more time discovering and consuming content on mobiles in India. Total time spent on smartphones is increasing. Short video has become a lifestyle to express, create and interact for people — not just in India but globally,” Zhen Liu, senior vice-president of corporate development, ByteDance, tells ET.
Liu adds, “The increasing population of smartphone users are not entirely English-speaking. They need a product where they can express themselves freely. UGC lowers the bar for content creation.”
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Startup ByteDance hopes the Indian market will be its second-largest outside China
At the heart of ByteDance’s quest for global domination — and certainly in India — is a quiet belief that its rather addictive products, coupled with a growing ecosystem of content creators and technology, could emerge as the all-important trifecta against its rivals.
Its playbook is largely similar to Uber’s. In India, ByteDance was in a sweet spot, given the post-Jio tailwinds and the user’s growing preference for video consumption. All it had to do was put together a core group of 40,000-50,000 content creators and hope its engineering performed thereafter.
ByteDance’s — and by extension TikTok’s — success has largely come through technology prowess. More specifically, it’s the use of artificial intelligence and a powerful recommendation engine which, unlike Facebook, does not use an invasive ‘social graph,’ where engagements such as ‘likes’ or an understanding of interaction matters.
For instance, if a user is in a train, the TikTok algorithm ensures longer videos. A first-time user, or even an active user firing the app for the first time in India, is likely to see a fair-skinned girl dancing in skimpy clothes as his/her first few videos, after which the other food- or trick-based videos start coming in. Needless to say, the user is hooked for 30-35 minutes, which is also the average time spent on TikTok, according to Liu.
“The global playbook is clear,” says another person aware of ByteDance’s plans. “It will use content and algorithm. Where it also benefits right now is through a lack of competition. The field is clear and empty. Facebook doesn’t have the penetration in India beyond tier III, nor the product to match this.” Keen on tapping into the short-video craze, Facebook launched Lasso, but it hasn’t gained substantial traction, leaving TikTok with an open highway of sorts.
According to sources tracking the social content space, TikTok’s relentless growth in India has come at the expense of Facebook, at least as far as time spent on the platform is concerned. “This is unlimited entertainment. What is the primary need for anyone going to Facebook? Social needs are taken care of by WhatsApp. It may just be to keep in touch or engage with news content, which TikTok doesn’t offer,” the person explains.
TikTok actually overtook Facebook as the most downloaded social networking application globally in the first quarter of 2019, at 188 million, with India accounting for 47% of them, according to Sensor Tower.
Facebook came second at 176 million, with India contributing 21%, the largest chunk. At 2018-end, Facebook had been the most downloaded application globally.
ByteDance is also using Helo and Vigo Video as part of its larger ecosystem model. While Helo competes with Bengaluru-based Indian social content startup ShareChat, Vigo is another short-video app with a content mix similar to that of TikTok — women dancing and ‘comedy.’ Initially, Vigo was used for testing short videos in India, prior to ByteDance’s acquisition of Musical.ly to form TikTok. Today, Vigo is ByteDance’s rural video network, while TikTok caters to the semi-urban and urban user base. Vigo, ByteDance says, has 20 million MAUs in India.
Helo, according to people aware of ByteDance’s plans, is an “experiment” started six to seven months ago to “essentially check ShareChat’s growth.” Today, ByteDance might be rethinking Helo as a product more on the lines of Alibaba’s UC News, where user-generated content sits alongside publisher-generated content (PGC).
To be sure, Helo has already been onboarding some leading language publishers — Dainik Bharat, News24, Times Now Hindi and IndiaTV, among others. Helo has followed suit with publishers in other languages too (Lokmat in Marathi, News18 in Kannada). It also serves as an interesting user acquisition source for its other apps, most notably TikTok. Helo users are fed with TikTok videos to drive installs.
ByteDance has momentum and growth on its side; some estimates say TikTok gains nearly 45% of its users organically. But monetisation is an important consideration, which could perhaps come at a later stage.
The company, in an earlier interview to ET, said it had invested $100 million in India in the last year while pledging another $1 billion in the next two to three years. Most of that investment, Liu says, would be in data centres, infrastructure and a research and development centre (R&D). Besides, ByteDance (through its earlier avatar of Toutiao) is an active investor in DailyHunt, the Bengaluru-based content company.
Liu says, “We have just started experimenting with formats to approach monetisation on TikTok. In the long term, the revenue model is a combination of advertisement as well as other ways of monetisation. Having said that, currently, our focus is not on monetisation. We are prioritising accelerating our user growth.”
However, the company is not as far removed from monetisation as it says. For starters, it had a select group —food-tech company Swiggy, cosmetic brand Clean & Clear and Chinese dating app TanTan, among others — that has tried advertising on its platform. “They have just started earning some revenue. It’s difficult to quantify, but it could be Rs 5-10 crore, and a majority of it is coming through TikTok,” says a New Delhi-based person aware of ByteDance’s strategy.
Brands are equally sceptical of jumping into the advertising bandwagon, especially given TikTok’s journey in India, where it has had a fair share of controversies. As Pallavi Kolhapure Shah, cofounder of Prose Integrated, says, “With TikTok, we have seen higher user growth despite hurdles. There were discussions on other social platforms why it was banned. The case is behind them, but brands will wait and watch before jumping in.”
Some brands are trying to tap into TikTok’s network of influencers. Most notably, Ranbaxy Laboratories ran an influencer campaign featuring popular TikTok users to endorse an anti-fungal powder called Abzorb. It used an election hashtag (#indianelections2019) along with #UngliForVoteNotKhujli. These videos garnered a total reach of around 6.6 million, according to stats visible on the app.
Sanchit Goyal, cofounder, Video Creators of India (VCOI) Digital Media, says, “TikTok is a very good platform and achieved many milestones in a short span. These include large downloads, user acquisition and organic growth of influencers — the likes of Manjul Khattar and Ahsaas Channa. Though TikTok has a large user base, it doesn’t have a large advertiser base. It will take some time before we back influencers on TikTok.”
Also, while people are consuming content continuously, TikTok is not as ubiquitous for creation of content like, say, an Instagram, lacking the real-time updates.
TikTok, industry sources say, pays some influencers a monthly retainership of $1,500-2,000. “They did pay a few influencers around $10,000 for three TikTokrelated activities — like promoting the platform on Instagram,” says a person familiar with influencer marketing in India. “But with their large user base, they are not paying, as even influencer growth is organic on TikTok now. Though when large advertisers come, things will be different.”