Daily average video views on Weibo, the leading social media in China, increased seven times year-over-year, surpassing 2 billion in the fourth quarter of 2016. Video advertising, launched in the second quarter of 2016, contributed over 10% of its total advertising revenue in the second half of the year, according to Weibo.
Though the total user base and usage of Twitter-like services in China began to decline in 2013, Weibo regained momentum in 2016 thanks to the significant consumption growth in short videos and live video streams, especially the former.
Weibo monthly active users reached 313 million and total revenue was US$212.7 million in the fourth quarter of 2016. 90% of the monthly active users accessed Weibo on mobile in December 2016, up from 83% a year ago.
Mobile short video sector saw explosive growth in China in 2016.
“We’re seeing advertisers shifting their ad budget to mobile, social and video ads”, Wang Gaofei, CEO of Weibo, said in November 2016. At the same time, TV ratings are going down in China, Charles Chao, Chairman of Weibo, said so on today’s earnings conference call, so the company expected TV ad spending would shift increasingly to online.
The list prices for Weibo’s video ads were much higher than their previous offerings, according to CFO Herman Yu. Total advertising revenue, which represents 87% of Weibo’s total annual revenue, increased over 40% in 2016 from the previous year.
Weibo’s short video sharing and live streaming services are supported by Yixia Technology, the mobile video service developer which operates short video app Miaopai and live streaming app Yizhibo. Miaopai launched a pre-roll ad program earlier this month. Like the existing successful live video streaming services such as YY, Yizhibo enables virtual gift giving. Launched in the second quarter of 2016, Yizhibo was able to generate virtual item sales from the beginning. Weibo currently doesn’t take revenue cuts from either Miaopai or Yizhobo.
In November 2016, Yixia Technology announced US$500 million in Series E funding from a group of investors including Weibo, which contributed US$120 million, and WePiao, the Tencent-backed e-ticketing, and film distribution company.
A variety of Chinese online services has benefitted from the short video trend. Taotiao, a content aggregation and recommendation app, recorded 1 billion daily video views as of November 2016. Very soon Weibo will be competing with Toutiao and other mobile content platforms, including Tencent, UC (owned by Alibaba) and Baidu, for short video consumption and mobile video advertising.
Social sharing is what Weibo differs from all the others. Also, Weibo has a big pool of key opinion leaders (KOL). Weibo is the primary platform for Chinese celebrities to post videos and live video streams.
For other KOLs Weibo has rolled out some monetization methods, paid content, advertising, and e-commerce, to encourage quality content creation. Hou Ning, a KOL in personal finance, has made RMB 3 million in paid content, according to Weibo. Zhang Dayi, a marketing staff of an apparel company and one of the most famous KOLs in fashion, made hundreds of millions yuan showcasing new goods through live video streams. Only one-third of KOLs currently have access to those monetization channels but Weibo says they will open the opportunities to more KOLs in the future.
At an event in Beijing last month, Charles Chao, CEO of Sina and Chairman of Weibo, said that 2016 was the best year in the history of Sina, largely thanks to Weibo’s performance (in Chinese). Weibo’s stock price more than tripled in 2016 from a year ago.
Its market cap has surpassed that of Twitter as of this writing. Although starting off modeling after Twitter together with a wave of other Chinese microblogs, Weibo has added many other types of social features and enabled publishing of various content categories.