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Tencent continues to expand its portfolio beyond its messaging services WeChat and QQ. In its most recent move, the company looks to enter the China’s fast-growing mobile short video and live streaming sector by leading a $350 million investment round in photo and video app Kuaishou, according to a report from Bloomberg.
Tencent’s investment gives Kuaishou a valuation of about $3 billion, according to Bloomberg.
While China seems at times to be overrun by new short video and live streaming services, Kuaishou is in a decent position compared with its competitors. The service claims to have 400 million users for its mobile photo-sharing service, and more than 50 million daily active users on its short video and live streaming side. The company also says its users upload more than 5 million new videos daily.
According to data from QuestMobile, mobile app users spent an average of 343 minutes on Kuaishou in December 2016, ranking it 11th among monthly time spent with all mobile apps in China, with live streaming platform Momo trailing in 14th place.
In addition, recent research from Analysys International Qianfan found that Kuaishou ranked third in terms of reach among mobile short video-sharing apps users in China, with 43.2%. Kuaishou was surpassed by only MiaoPai (61.7%) and Toutiao Video (53.1%).
Kuaishou, which launched in 2011, has found a somewhat different route to success compared with competitors like MiaoPai and Momo by tapping into an underserved audience in China’s rural areas and smaller cities and villages. Despite the ongoing trend of urbanization in China, a significant portion of the population still lives in rural areas—42.7% in 2016, according to the National Bureau of Statistics China.
Early on, Kuaishou, or Kwai as its app is known in foreign markets, earned a reputation for showcasing users engaged in silly stunts or vulgar activities. That sort of content is likely to give advertisers pause, but stricter enforcement of content rules by government regulators in China has reportedly tamped down on that type of material.
Those concerns may be immaterial for the moment anyway. Like many other live streaming and short video-sharing apps in China, Kuaishou has thus far monetized by letting users pay content creators through so-called virtual gifts, and taking a portion of the payments for itself.
For its part, Tencent is likely interested in replicating Kuaishou’s success in penetrating rural areas in other markets in Asia where large portions of the population still live outside of cities.
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