Every few years a new “bright shiny object” appears on the digital scene. Sometimes these companies go on to be huge (Amazon AMZN, Google, Facebook, etc.) and other times they fail massively – Excite.com, Go.com/Infoseek, Vine, Friendster, etc. Other companies may not be the “bright shiny object” of their early years, but they are still gaining momentum and traction, such as Snap. Even MySpace, a company that most people probably assumed was shut down and written off entirely, is still alive with about 4% of American social media users reporting they are currently using Myspace in a quantitative study I conducted with 2,400 Americans in June of last year.
Which flavor of “bright shiny object” is TikTok? Short-term or long-term?
TikTok has received a lot of attention in the U.S. and around the world recently, including the announcement of the new CEO of TikTok (and COO of parent company Byte Dance), Kevin Mayer, the head of Disney DIS’s Direct to Consumer services and International (including Disney+). Mayer was previously the planning and M&A guru at Disney. Forbes writers Dawn Chmielewski and Abram Brown reported in detail the search by Byte Dance for a CEO of TikTok and the hiring of Mayer.
So the question is now: is TikTok more like Vine (short 6 second video serviced owned by Twitter TWTR and shut down) or more like YouTube, owned by Google GOOGL, which reportedly has revenue over $15B a year – mostly advertising – and over 125M monthly unique users in the U.S. alone.
While some analysts look at TikTok as competition for the social networks – Facebook, Instagram, and Snap, there are many reasons to think of TikTok as more of a competitor to YouTube. TikTok is not about sharing what you did today or where you went (though there is some great travel content on TikTok), but more about creating and sharing content, such as songs, dances, ideas, challenges – all presented in short video form. Unlike Vine, which limited users to six seconds, a TikTok can be as long as 60 seconds, with a function that combines four videos of 15 seconds each. Furthermore, you can upload to TikTok longer videos shot outside of the Tik Tok app.
TikTok, whose mobile app is free, is owned by Byte Dance of China. Byte Dance is a private company with many reports that it is worth $100B and beyond. Byte Dance runs a similar service to TikTok in China, Douyin, which was launched in 2017.
TikTok was launched outside of China in 2018 and merged with Musical.ly, another company owned by Byte Dance, that year. Douyin and TikTok when translated from Mandarin mean: “shaking sound” and “vibrating sound” respectively.
TikTok was the most downloaded, mobile, non-game app worldwide in January and February of this year. There are over 800M worldwide users. In China there are 400M users which doubled in one year. About half of all smartphone owners in China are using TikTok. Byte Dance is also growing TikTok in India where they have over 120M users. Southeast Asia is another growing area for TikTok.
In the U.S. TikTok is reported to have 60M monthly users, who spend on average 45 minutes a day on the app. A majority of U.S. users of TikTok are female (57%). Over 40% percent of TikTok users are between 16 and 24 years old. Roughly 50% of TikTok’s global audience is under the age of 34. While only 9% of US internet users say they have used TikTok, 49% of teenagers say they have used the app. Another demographic strength for TikTok are the large number of families, siblings, and co-workers that collaborate on TikTok dances, challenges, lip syncs, etc. When you watch TikTok you see many multi-generational users.
Though privately-owned, it was reported that TikTok grossed over $175M in revenue in 2019. TikTok revenue comes from in-app purchases (virtual goods and subscriptions), sponsorships and advertising. All of these areas are likely to grow for TikTok as the platform grows in numbers of users and as TikTok gears up their revenue sales teams.
Tiktok has hired many top Facebook executives and others from Snapchat, YouTube and other companies, before the hiring of Mayer. It is expected that TikTok will continue to pursue some of the top talent at the successful social media and digital video companies. TikTok has a large office in Los Angeles (the largest presence outside of China) and their European efforts are headquartered in London.
Vine failed for many reasons, including that six seconds was too short a time for some people to express their creativity. Furthermore, Vine was bought by Twitter where it withered. It was not a good brand fit with Twitter or demographic fit. TikTok is the main business of Byte Dance outside of China and will not have the problems Vine had at Twitter. Also, the TikTok app has a lot of strong functionality that did not exist for Vine, such as powerful viral tools, easy video recording and editing, mobile first, a great recommendation algorithm and strong social features.
TikTok is also more than just dances and Vine-like antics. They also have people giving short video advice on health, exercise, the stock market, travel, DIY (do-it-yourself), and even politics. Naturally these categories will reach young people, as well as a more mature audience.
I spoke to a number of 20-30 year olds in the media world and most of them said they used TikTok. Numerous people I spoke to said that TikTok is more like a short/mobile first version of YouTube. I think TikTok is going to challenge YouTube more than than TikTok will challenge Instagram or Facebook.
I think TikTok will be grow substantially, and quite possibly, will have the longevity of YouTube, which is 15 years old this year. Vine, in comparison, lasted 5 years. My projection of strong, future growth for TikTok in the U.S. is supported by the high evaluation score that TikTok receives from its users – a 4.7 score out of a 5-point scale.
If you doubt the appeal of TikTok, take a few minutes and explore the videos on the app. And don’t miss this one – “The Five Stages of TikTok” on TikTok which you can search for on TikTok or you can watch it on YouTube:
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