Bytedance in focus: Game start

Last June, we reported that longstanding Bytedance app Jinri Toutiao had launched “Jinri Games,” its version of WeChat mini-games, or lightweight games which run on WeChat’s platform.

Within Toutiao’s selection of in-app mini-programs—another adaptation of a WeChat innovation—Android users could for the first time choose from a variety of casual games.

Since then, mini-games have become available in Bytedance’s humor app Pipixia and most recently, Douyin. The additions allow independent gamemakers to adapt or develop 10-megabyte programs for each platform.

These moves preceded Bytedance’s March acquisition of gaming company Mokun Technology. That could mean that the $75 billion startup will begin releasing homegrown offerings which could rival those of Tencent.

But it faces stiff opposition in doing so, not only from WeChat’s parent company but also from other major platforms like NetEase or Steam, not to mention China’s strict internet regulators.

Mini-games for developers

When Douyin launched its mini-game ecosystem in February, certain aspects made it a potentially more attractive choice for developers compared to WeChat.

First and foremost, its revenue split was more generous. Douyin allows developers of small- and medium-sized games to collect 60% of mini-program income. Developers of larger games with a daily advertising revenue exceeding RMB 1 million receive 50%. First-time mini-program developers gain an extra 10% income across the board.

Douyin revenue model

In comparison, WeChat only offers revenue incentives for mini-programs it deems “original,” whether in terms of game mechanics, artwork, storylines, or background music. From November 2018 through May 2019, developers earned between 30% to 70% of game revenue, depending on their originality and advertising income as well as in-game purchases.

On June 1, WeChat revamped its revenue structure, giving more “original game” developers the chance to receive 70% of ad revenue. In addition, advertising revenue share for other developers were adjusted to 50% across all categories. The new changes helped to level the playing field with Douyin.

WeChat revenue model

However, Douyin still holds some advantages. For one, the app makes it easier for developers to get extra benefits. Compared to WeChat’s “original game” certification process, which requires applying for approval, qualifying to be a first-time developer on Douyin’s platform is relatively simple.

In addition, Douyin’s capacity to spawn viral videos could give games a publicity boost. WeChat only allows users to send mini-programs to friends and group chats; on Douyin, the home of short-video stars, games can be shared more broadly across audiences with less effort, provided the related videos are catchy enough.

The same may be true for games on Toutiao. Due to its AI-powered content sorting, the news app may help trending mini-programs gain traction more quickly than word-of-mouth.

Finally, both WeChat’s and Douyin’s revenue structures still fall short of what is offered by popular platforms such as Apple’s App Store or Google Play: a solid 70% cut of ads and in-app purchases. However, the barrier to entry for mini-game developers is significantly lower on Douyin and WeChat due to their small size.

Homegrown games

Bytedance has been busy doing more than just creating platforms for games. It’s also been inventing offerings of its own, including a Douyin title called “Music Jump Ball,” set to viral video songs and reminiscent of the landmark WeChat mini-game “Jump Jump.”

In March, Bytedance spent an undisclosed amount to acquire Shanghai-based Mokun Technology, which had previously developed a mobile game distributed by Tencent. As of last month, Bytedance had formed an 100-person team to focus on game development, Chinese media outlet LatePost reported. The team became the company’s third game-focused division, joining existing teams for casual games and mini-games.

In China’s current media environment, however, content creation carries potential pitfalls. Tencent and other gaming-heavy platforms suffered heavy losses last year when authorities, citing concerns over the health of minors, stalled the release of licenses for new titles for nine months.

Nor is Bytedance a stranger to content controversy. Its app Pipixia was originally released to replace the defunct Neihan Duanzi, which ran afoul of rules banning vulgar content. And the popular Toutiao has been censured multiple times for, among other things, hosting pornographic content and mocking a Communist martyr.

The upbeat

Highlights from recent headlines

Product launch and product removal

• Tech Planet: Bytedance is internally testing a short-video-based English-learning app named “Tangyuan English,” leveraging its existing advantages in the short-video vertical to push into the Chinese education landscape.

By pulling English-teaching videos from Douyin, Tangyuan English could leverage traffic from the viral short-video platform and substantially reduce the cost of user acquisition, which reportedly exceeds RMB 1,000 per user for some online education companies. Prior to Tangyuan English, Bytedance had launched six education products; two of those are English-learning apps that are struggling at the moment.

• TechNode: “Bytedance’s new social app Feiliao, also known as Flipchat, has been removed from Apple’s App Store fewer than two months after its release.”

As of July 16, the app had been restored on Apple’s App Store. As Bytedance’s newest experiment in the social app market, Feiliao’s performance has been lackluster. The app only has 543 reviews on Apple’s App Store and an average score of 3.9, with a number of users complaining about excessive restrictions on content, as well as slow responsiveness.

User base numbers

• Caixin Global: “ByteDance, the parent company of popular short-video platform TikTok, said Tuesday it now has 1.5 billion monthly active users globally across its portfolio of apps.”

Bytedance’s global monthly active users (MAU) rose sharply over the past half-year, growing 50% compared with the figures from January. However, the gap between the company’s combined daily active users (DAU) of 700 million (as of the end of June) and its MAU indicates that users still do not use Bytedance products as frequently as apps like WeChat.

Meanwhile in Russia

• Reuters: “The Chinese video app TikTok will store Russian user data locally to comply with Russian law, the communications watchdog Roskomnadzor said on Monday after a meeting with the company.”

Russia’s requirements are similar to those being implemented in China, which require companies like Apple to hand over all data collected on Chinese users. Apple sends all Chinese iCloud data to the state-owned Guizhou-Cloud Big Data Industry (GCBD). Storing data locally is not without its risks. After the iCloud transfer, many iOS users in China reported a dramatic increase in the number of spam messages, though whether this is related to GCBD is unknown.

Investigations and allegations

• Pandaily: “UK regulators are investigating ByteDance‘s short-video application TikTok on how they handle the personal data collected from younger users, and whether it prioritizes the safety of children on its social network.”

TikTok has already revised its user agreement to limit users under 13 to an ecosystem where only curated, age-specific videos are available. However, it seems that these nonbinding restrictions have not done enough to satisfy UK regulators.

• Economic Times: Two Indian parliamentarians alleged that short-video app TikTok shares user data of Indians with China’s government and helps spread “fake news” and “malicious content” in India, just days after another member of parliament made a similar claim.

Despite the allegations, Indian courts are not likely to ban TikTok unless it finds solid proof of illegal data collection and transfers. In response to one of the claims, TikTok stated that it abides by the laws of the countries where it operates. In April, TikTok was banned in India for two weeks for spreading pornography and encouraging predatory behavior.