WeChat's TikTok rival drives advertising and e-commerce boom
WeChat's short video feature Channels is generating strong revenue from ads and e-commerce sales.
Monthly active users reached 1.3 billion in June as people spend nearly twice as long watching short videos.
WeChat continues to expand and bring in more profit as its TikTok-like short video feature generates strong advertising and e-commerce revenue, according to new data from owner Tencent Holdings. The social media app started as a messaging tool in 2011 but has become an all-in-one platform for Chinese smartphone users.
Tencent said on 18 August 2023 that WeChat and Weixin monthly active users reached 1.327 billion by end of June, up from 1.319 billion in the previous quarter. The vast majority of users are estimated to be in China. In Q2, time spent on WeChat Channels almost doubled year-on-year with double-digit daily active user growth, said Tencent president Martin Lau on 17 August.
With users spending more time on short videos, Tencent now monetises the attention. Channels contributed 3 billion yuan in ad revenue in Q2, driving 34% ad sales growth. The ad load on Channels remains a fraction of rival platforms, but Tencent will "progressively enhance our ad load", said chief strategy officer James Mitchell.
Live-streaming e-commerce is another money-maker, as rivals earn around half their ad revenue this way. WeChat's gross merchandise volume from live-streaming e-commerce grew 150% in Q2 from a low base. On 17 August, Tencent reported 11% higher Q2 revenue at 149.2 billion yuan, missing estimates. Its 26.2 billion yuan profit also missed estimates but was up 41% year-on-year.
Channels, launched in beta in January 2020, was called Tencent's new hope by CEO Pony Ma last month amid economic headwinds. Though user numbers are undisclosed, Channels' monthly active users reached 813 million in June 2021, ahead of Douyin and Kuaishou.
Tencent has introduced paid subscriptions, live streams and live-streaming e-commerce on Channels, taking a commission.
WeChat's short video feature Channels nearly doubled time spent watching videos in Q2 with 1.3 billion monthly active users.
Channels earned $411 million in Q2 ad revenue, driving 34% growth and is exploring e-commerce commissions.
Tencent hopes Channels can power new growth amid economic headwinds, with over 800 million estimated monthly active users.