What is the development prospect of short videos?

Major listed companies in the short video industry: Kuaishou (01024.HK), Tencent (00700.HK), Baidu (09888.HK), bilibili (09626.HK), etc.

This article Core data: short video industry user size; short video industry market size; number of MCN institutions; short video advertising revenue

Industry overview

1. Definition: short video

< p>Short video is a short video, which is a way of disseminating Internet content. It is generally a video within 5 minutes that is disseminated on new Internet media. The short video content combines skills sharing, humor, fashion trends, social hot spots, street interviews, public welfare education, advertising creativity, business customization and other themes. Because the content is short, it can be made into a separate film or a series of columns.

Short video products can be divided into comprehensive short videos, aggregated short videos and tool short videos. Comprehensive short videos generally refer to short video platforms with social attributes, video shooting, shopping and other functions. Representative products include Douyin, Kuaishou, etc. Aggregated short videos focus on short video platforms in specific fields, such as Li Video , Xigua Video, etc.; tool short videos refer to short video platforms that focus on video editing functions, such as FaceU, Jianmeng, etc.

2. Industry chain analysis: clear industry chain

China’s short video industry industry chain mainly includes upstream content producers, midstream content distributors and downstream user terminals. Upstream content producers are mainly divided into three categories: UGC (user-generated content), PGC (professionally produced content) and PUGC (Internet celebrity/star-produced content); midstream content distributors include short video platforms, social platforms, news information platforms, E-commerce platforms, vertical platforms, live broadcast platforms and traditional video platforms, etc. In addition, industry chain participants also include basic support parties (such as server providers, telecom operators, technology operators, etc.), advertisers and regulatory authorities.

At present, the upstream content producers of short videos mainly include Bona Pictures, Noon Sunshine, Wuyuan Culture, Dayu Network, New Studio, Ivy Culture, Weilong Culture, etc. There are many participants in short video content distribution. Mobile short video APPs include Douyin, Kuaishou, Tencent Weishi, Xigua Video, Haokan Video, Li Video, WeChat Video Account, CCTV, etc.; content distribution platforms mainly include social applications such as WeChat, QQ, Sina Weibo, Xiaohongshu, information platforms such as Zhihu and Toutiao. In addition, traditional video platforms also cover short video content distribution, such as Tencent Video, Youku Video, Bilibili, etc. Short video basic support parties mainly include Alibaba Cloud, Tencent Cloud, Huawei Cloud, Baidu Smart Cloud, China Unicom, China Mobile, China Telecom and China Radio and Television.

Industry development history: The "two strong" pattern is formed, and the industry enters a stable period

The short video industry sprouted in 2011, and Kuaishou, Weishi, Meipai, etc. were all early Participants, then driven by the development of smartphones, mobile Internet, and 4G technology, the industry developed rapidly. Douyin was born in 2016. Its powerful algorithm recommendation mechanism accurately provides users with a large amount of high-quality short video content, and the scale of advertising monetization has grown rapidly. In recent years, the short video industry has formed a "two strong" competition pattern of Douyin + Kuaishou. As the trend of video content deepens, social platforms such as WeChat, Weibo, and Xiaohongshu have also added short video functions, further increasing the penetration rate of short videos.

Industry policy background: Focus on industry chaos and strengthen industry supervision

In the context of the gradual growth of short video user groups in my country, short video entry barriers are low and there are few self-censorship mechanisms. Factors such as this have resulted in a large amount of vulgar content, proliferation of false content, and plagiarism, which have gradually been exposed. To this end, my country has stepped up supervision of the short video industry.

In recent years, various government departments have issued a series of policies and regulations to promote the healthy and orderly development of the domestic short video industry and other related video industries. The relevant policies, regulations and main contents are as shown in the table below:

Upstream content producers: three major categories of content producers (UGC, PGC and PUGC)

Currently, content producers in the short video industry include UGC (user-generated content), PGC ( There are three categories: professional production content) and PUGC (Internet celebrity/star production content).

UGC producers are non-professional ordinary users. This type of group has low cost and simple production, so there is basically no threshold and has strong social attributes. Content production by UGC producers mainly focuses on expressing individuality and self. Generally, the production time is less than 15 seconds. Representative platforms include Douyin, Kuaishou and Meipai.

PGC producers are professional organizations. Compared with the other two types of producers, their production costs, professionalism and technical requirements are higher. They have strong media attributes and the duration of short video production is 2-5 minutes. , generally attracting users’ attention and interaction through massive high-quality content. Generally, this group of people are active on short video platforms such as Xigua Video, Pear Video, and Haokan Video.

PUGC producers refer to KOLs who have a fan base or have expertise in a certain field. These producers have low costs, mainly rely on traffic for profit, and have both social and media attributes. Generally, this type of content producers produce videos that are about 1 minute in length, and mainly focus on the storyline as the highlight of the video.

Kuaishou, Douyin, Douyin Volcano Edition, etc. are mostly the preferred short video production platforms for this group of people.

Downstream pan-content platforms: numerous in number and rich in types

To date, my country has formed various types of pan-content platforms, including social platforms, information platforms, e-commerce platforms, Traditional video platforms, live broadcast platforms, vertical platforms, etc. Social platforms include Weibo, WeChat, etc.; representative information platforms include Toutiao, NetEase, Tencent News, etc.; e-commerce platforms include Taobao, JD.com, Xiaohongshu, etc.; traditional video platforms include iQiyi, Tencent Video, Youku, etc.

Current status of industry development

1. User scale: stable scale growth, enhanced user stickiness

Short videos are short in duration, concentrated in content, strong in expressiveness, and suitable for It has eliminated fragmented viewing habits and penetrated deeply into the daily life of the public. At the same time, short videos meet the needs for personalized and video-based expression and sharing, and more and more user groups shoot/upload short videos.

The latest data released by CNNIC shows that from 2018 to 2021, the number of short video users in my country continued to grow. In the first quarter of 2020, the epidemic "stay at home" led to a strong growth in the number of short video users. The number of short video users in the first quarter of 2020 increased by 19.29% compared with the number of short video users in 2019. In 2020, the number of short video users in my country has reached 873 million. As of December 2021, the number of short video users in China reached 934 million, an increase of 60.8 million from the same period in 2020, with an annual growth rate of 6.99%.

The usage rate of short video users continues to increase. The user utilization rate of short videos has increased significantly after 2019 and has remained above 85%; in 2021, the user utilization rate of short videos in China will rise to 90.5%.

Note: Usage rate = number of short video users/number of netizen users.

At the same time, the length of time users use short videos is also increasing. Judging from the per capita daily usage time of short videos in China, the per capita daily usage time of short videos in China continues to grow. According to data from the China Online Audiovisual Program Service Association, as of March 2021, the average daily usage time of short videos in China is 125 minutes, which is 125 minutes compared with 2020. At the end of December this year, 5 minutes were added, and the user stickiness of short videos continues to increase. As of December 2021, short video users accounted for 25.7% of the total time spent online, surpassing instant messaging and becoming the field that accounts for the longest time people spend online, with rapid growth momentum.

2. Market size: The industry is booming and achieving ultra-high-speed growth

While the scale of users and usage time are growing, various short video platforms in my country are also actively exploring more diverse platforms. The short video industry is booming and the market size is growing at a very high speed. According to data released by the China Online Audiovisual Program Service Association, the market size of my country's short video industry will reach 291.64 billion yuan in 2021, a year-on-year increase of 42.17%.

3. MCN institutions: more than 34,000 in 2021

According to data released by iiMedia, China's MCN market has shown explosive growth in recent years, and the number of MCN institutions in China will reach 34,000 in 2021. As the online live broadcast industry develops more and more maturely, anchor capabilities, traffic operations, etc. all require professional management. MCN organizations, whose main business is incubating Internet celebrity anchors, have gained development opportunities with the prosperity of the live broadcast industry. They have exploded due to the influence of online live broadcast. industry-related fields.

4. The industry goes overseas: Tik Tok becomes the most visited Internet site in the world in 2021

As early as 2014, Viva Video developed by Hangzhou Quwei Technology Co., Ltd. , and Video Show developed by Shanghai Yingzhuo Information Technology Co., Ltd., which focuses on overseas markets from video editing tools. At the end of 2016, Kuaishou began to try internationalization and launched the overseas version of Kuaishou Kwai; in May 2017, ByteDance also began to go overseas, launching the international version of Tik Tok overseas, and focusing on the Southeast Asian, Japanese and Korean markets. In November 2017, ByteDance acquired the American short video sharing platform Musical.ly and integrated it with Tik Tok. In 2018, ByteDance and Alibaba simultaneously launched Indian local language social products Helo and VMate.

In April 2020, Kuaishou launched SnackVideo overseas, and Zynn was launched in the United States in May 2020. In August 2021, Kuaishou made major organizational and strategic adjustments to its overseas business: it merged SnackVideo from Kwai Middle East, Kwai Latin America and Southeast Asia markets into one Kwai product, with the form and page design almost consistent with the domestic main website. TikTok announced that as of September 2021, the number of monthly active users of the platform around the world has reached 1 billion. According to Cloudflare data, TikTok is the most visited Internet site in the world in 2021, surpassing Google.

5. Advertising revenue: the main source of revenue in the short video industry, the growth rate is slowing down

Currently, the revenue of my country’s short video industry mainly comes from advertising revenue, e-commerce commissions, live broadcast sharing and Games etc.

Advertising revenue is divided into revenue from information flow advertising, revenue from open-screen advertising and revenue from self-service commercial open platforms. E-commerce commission income is divided into commissions from self-owned e-commerce and third-party platforms. Generally, Douyin takes 2-10% and Kuaishou takes 5%. The general proportion of live broadcast sharing is 30%-50%.

iResearch data shows that the growth rate of advertising revenue on my country’s short video platforms dropped to 67% in 2020, with the total scale reaching 133.6 billion yuan. From the demand side, short video advertising is still the focus of major advertisers. The platform's continuously optimized content ecosystem continues to increase the overall user volume and user stickiness, becoming fertile ground for advertisers' marketing growth. Overall, leading platforms are also continuing to explore more commercialization possibilities, and are gradually opening up live broadcast advertising, search advertising, etc. in terms of advertising formats. According to preliminary calculations, the advertising market size of China's short video industry in 2021 will exceed 180 billion yuan.

Industry competition pattern

1. Regional competition: MCN institutions are mostly located in first-tier/new first-tier cities, with the most in Beijing

Since 2017, China’s MCN industry There was explosive growth. At present, China's MCN industry mainly has seven types of business formats, with content production and operation formats as the basic core, and the other five major formats - marketing format, e-commerce format, brokerage format, community/knowledge payment format and IP licensing format as monetization extensions. Combination seeks differentiated development.

In recent years, MCN institutions have blossomed all over China. Data shows that in 2021, China's MCN institutions are mostly located in first-tier/new first-tier cities. Among them, Beijing accounts for the largest proportion, reaching 22.3%, followed by Guangdong and Shanghai, with 19.0% and 10.5% respectively. Taken together, with the exception of Beijing, which has the characteristics of the capital, MCN companies are mostly located in the eastern coastal areas of my country, and most of them are concentrated in economically developed provinces and cities.

Note: The above data comes from Crowley’s 2022 MCN Institutional Survival Situation Survey. The survey period is from January to March 2022, and the total sample size is N=600.

2. Enterprise competition: The competition pattern is stable, and platform factions are blooming

As a mainstream Internet application, the market competition pattern of the short video industry is relatively stable. Douyin short video and Kuaishou short video are firmly in the first echelon of the industry; ByteDance's Xigua Video and Douyin Huoshan Edition, Baidu's Haokan Video, and Tencent's Weishi are in the second echelon; iQiyi, SuiKe, Short video apps such as Kuaishou Express Edition, Bobo Video, and Meipai are in the third echelon. From a dynamic development perspective, the usage of users in the second echelon has increased significantly.

At present, the competitive factions in my country’s short video industry mainly include Toutiao Series, Tencent Series, Kuaishou Series, Baidu Series, Sina Series, Alibaba Series, Meitu Series, Bilibili Series, 360 Series and NetEase Series. Video platform factions are in full bloom. Among them, Douyin, one of the most popular video platforms currently, belongs to the Toutiao series; Kuaishou short video belongs to the Kuaishou series.

Industry development prospects and trend predictions

1. Development prospects: The market size of the short video industry will be close to one trillion yuan in 2027

In the future, short video platforms will We will further seek new breakthroughs, such as adding live broadcasting, e-commerce and other businesses. At present, the leading short video platform is already developing online live broadcast business, and is seeking to deepen relationships with other content creators, while developing new functions to deepen the relationship between creators and User interactivity. The increasing penetration of 5G and the development of artificial intelligence and big data technology will provide new support for short video platforms. In addition, the country has strengthened its supervision of the industry, and platforms have also strengthened their review of short video content posted by users. Taken together, the short video industry has huge development potential.

Prospective predictions indicate that due to the outbreak of the epidemic, the development potential of short videos will be further explored. The market size of the short video industry will grow at a rapid rate from 2021 to 2023, with a compound annual growth rate of around 35%; 2024 -The growth rate of the market size will slow down in 2027, but it will still maintain a growth rate of 16%. The market size of the short video industry is expected to reach 962.4 billion yuan in 2027.

2. Development trend: Short videos, social networking, life, etc. will be further integrated in the future

Short videos can link multiple scenes, accept more resources, and the ecological environment will become clearer and can be integrated with Cross-penetration in multiple fields has gradually evolved into an Internet lifestyle. In 2021, the short video industry will begin to enter the fields of local life, paid short dramas, and graphic and text planting. In the future, short videos, social networking, life, etc. will be further integrated. At the same time, short video platforms are actively exploring commercialization, and integrating e-commerce development is the most important direction. After the rise of live streaming e-commerce, short video platforms + live streaming e-commerce have become a hot spot in the market. The development prospects of the short video industry continue to be promising, and it has become a heavyweight product occupying users' usage time under the video carrier. Pinduoduo, Tencent and others continue to increase their focus on the short video track. There is still the possibility of reshuffling the short video market in the future.

For more detailed research and analysis on this industry, please refer to the "China Short Video Industry Market Prospects Forecast and Investment Strategy Planning Analysis Report" by the Qianzhan Industry Research Institute.