TikTo growth slows down? Meta is using the same method it used to kill Snap to kill TikTok

Meta counterattacks TikTok, is Reels grabbing market share from short video competitors?

Meta's financial report for the third quarter of 2022 was besieged on all sides, but what comforts Zhago is that after two years of polishing, Reels seems to be able to take over the jobs of other short video companies.

Therefore, Zago said in Meta's financial report: "Reels has more than 140 billion views per day on Facebook and Instagram, a 50% increase from six months ago. Reels has increased the usage time of our APP, and the trend looks good. We believe that we have gained the time share of competitors such as TikTok."

So is Reels really taking away other people’s market share? How will the overseas short video competition end? Let’s not answer this question for now, but first review how Meta ignored the competition and then built defense and barriers through heavy acquisitions and platform grafting .

In 2012, he bought the photo social networking site Instagram and built a photo social networking empire

In October 2012, when Facebook (now renamed Meta) completed its acquisition of Instagram, the smartphone Internet had just emerged. At that time, the popularity of smartphones and the improvement of camera lenses brought about a wave of photo sharing and mobile social networking. Seeing the rapid growth of Instagram, Zage felt threatened and decisively bought Instagram at a high price of US$715 million.

Meta's acquisition of Instagram and a series of subsequent large-scale acquisitions were all successful. The subsequent development of these acquired businesses also proved that when Zago spent a large amount of money to buy them, it was true love, and it also proved that he had a good vision.

From Instagram's subsequent development, we can see that with Meta's money, people and strategic support, Instagram has become a top-level application with over 1 billion active users, and its monthly active users are close to 1.4 billion (some media reports also say that the monthly active users exceed 2 billion).

In the early and middle stages of Instagram's development, Zago was able to retain the founding team. Its two main founders did not leave until 2018. The reason for the original team's departure at that time was mostly related to Instagram's growth dilemma and the strategic mistake of betting on vertical screen long videos IGTV. In Zago's opinion, it was no longer able to keep up with the times.

2013-2016: Snapchat rises, Meta is too busy building its mobile messaging empire to care

At the end of 2012, shortly after Meta acquired Instagram, Snapchat, owned by Snap, achieved rocket-like growth thanks to its interesting gameplay of self-destructing messages and AI filters, and its rapid growth trend continued until 2016.

At that time, Snapchat's user base was growing rapidly, and it attracted a large number of young people. It also received investment from Tencent as early as 2013, and was called the Facebook killer. However, Meta did not start to pay attention to and graft Snapchat's functions until 2016, 3-4 years later. The reasons are nothing more than three points: it could not see it, it could not see it clearly, and it was busy with other things.

At the time, Zago and Meta were indeed busy with other things, namely mobile instant messaging. Mobile Internet was just emerging, and many instant messaging tools were launched. Meta's own Messenger messaging app, which was derived from Facebook, was struggling to keep up and seemed to lose a large part of the market.

[Although Messenger's predecessor, Facebook Chat, was launched in 2008, it was only a private messaging service embedded in Facebook. It did not appear as an independent mobile app until 2011, and its functions were separated from the Facebook app in April 2015.]

At that time, a mobile messaging app called WhatsApp was growing the fastest. Knowing that he could not beat it, Zha Ge once again made a generous move to buy it . In February 2014, Facebook officially announced the acquisition of WhatsApp for a price of up to 19 billion US dollars, an amount that no one could refuse at the time.

By marrying Whatsapp, Zago proved to the world his vision and that this was another true love. Today, Whatsapp has more than 2 billion daily active users, while its original spouse FB Messenger has more than 1 billion daily active users.

From 2016 to 2019, after being busy in the mobile messaging application battlefield, it began to copy stories and squeeze Snapchat

By August 2016, 3-4 years had passed since Snap's rapid growth. Meta, which had separated from Snap, began to copy the Stories method in a high-profile manner. Meta's slogan was that AR was the future of mobile Internet, and it came up with a bunch of AR filters.

At that time, the three major platforms, Instagram, Facebook, and WhatsApp, had already begun to take shape, so Meta's strategy to attack Snap was a platform grafting strategy. The AR+Stories gameplay was first moved to Instagram and then promoted to the Facebook application in 2017 .

With the huge user base of its three major social platforms, Stories has penetrated users very quickly. In 3Q16, the daily active users on Instagram exceeded 100 million, and reached 150 million in 4Q16. By the first quarter of 2019, the number of people using Stories accounted for more than half of Facebook and Messenger, Instagram, and WhatsApp.

In 2017, Zago and Meta could finally breathe a sigh of relief, no longer worrying about users being attracted to Snap. Snap's growth momentum was also suppressed, and Stories began to contribute more and more advertising inventory and revenue.

In early 2018, the Cambridge Analytica scandal fermented, and Zago was invited to a tea party by Congress. After that, the company had to focus on the content review, user data privacy and security of the platform. For nearly 18 months, no new features were introduced. It was not until 2019 that the company refocused on new products and experiences.

Since 2017, TikTok has risen strongly under the miracle of ByteDance

The comprehensive Copy Stories strategy has squeezed Snap's growth space, but while it is waging this war, a new competitor, TikTok, is rising and has become an "enemy" that Meta must take on during the epidemic.

[The predecessor of TT overseas can be traced back to Musical.ly, which was launched in 2014. The product was popular for a while after its launch, but it did not become a national-level application due to lack of resources. In August 2017, TikTok was launched simultaneously in more than 150 countries and regions. In November 2017, ByteDance also acquired the music video sharing and interactive social application //Musical.ly. In August 2018, the Musical.ly APP was discontinued, and all its resources and assets such as users and data were merged into TikTok. When acquiring //Musical.ly, //Musical.ly had been operating overseas for 6 years, with 230 million overseas users and nearly 70 million monthly active users, while TikTok had only been online for three months at the time]

The figure below shows the two stages of TT's overseas development. The dividing point is probably when it was acquired in 2017. Before the acquisition, it was developing slowly and stealthily, and after the acquisition, it was rising rapidly. This is not unrelated to ByteDance's miracles. After verifying the successful model in the Chinese market, ByteDance has rapidly promoted TT's overseas growth with its advantages in experience, technology, resources and talents. In 2020, due to the ban in India, TT's users fluctuated slightly, but it could not stop its rise in the global market.

A taste of lasso, a grafted Reels on the whole family bucket

TikTok was blessed by fate. When TT began to grow rapidly in 2017, Meta was struggling to deal with the crisis brought by Cambridge Analytica in 2018. As a result, it did not launch an independent short video application Lasso to fight back until the end of 2018. However, judging from the actions of this application, Zago did not mobilize the company's resources to go all out at the time, so the application was quietly closed in July 2020.

Then, in early 2020, the pandemic broke out overseas, and Meta also focused on employee safety, working from home, and supporting platform advertisers. The outbreak undoubtedly slowed down Meta's deployment of the battle with TT, so it was not until August 2020 that Meta officially launched the immersive short video feature Reels on Instagram, and officially launched it in more than 50 markets around the world in the third quarter.

In 4Q20, Meta's civilian version of the VR headset Quest2 sold well. Overly excited, Zago boasted about the bright prospects of VR and the Metaverse in the 2Q21 financial report, and announced in October 2021 that the company was renamed from Facebook to Meta.

While Meta is inexplicably excited about the prospects of the Metaverse, it has not reduced its emphasis on Reels. Zago said in the 2Q21 financial report: "Videos account for half of Facebook's usage time, and Reels is the biggest factor in the increase in Instagram interactions." At that time, Reels had also covered 100 countries, and the company began to mention TikTok as its most powerful competitor.

In 1Q22, Reels accounted for 20% of Instagram usage time. Half of the usage time on Facebook came from videos. Reels is growing very fast on Facebook.

In 2Q22, users spent 30% more time using Reels on Facebook and Instagram. On Instagram, Reels accounted for half of the content shared in messages. The annualized revenue of Reels ads also reached $1 billion.

In 3Q22, Zago said in Meta’s financial report: “There are more than 140 billion views on Facebook and Instagram every day, a 50% increase from 6 months ago. Reel has increased the usage time of our app. The trend looks good. We believe that we have gained time share from competitors such as TikTok.”

In addition to the encouraging data on the user side, Reels contributed annualized advertising revenue of US$3 billion in the quarter. Although the development of Reels still had a negative impact of US$500 million on quarterly revenue, the company believes that the level of commercialization will catch up with Stories and Feeds in 12-18 months.

The question is: Has Reels really suppressed TikTok?

Judging from the number of users, TikTok's user growth rate has slowed down since 2022. It no longer has the same momentum as in the past. This is probably related to ByteDance's active adjustment of its pace in the context of a bad economic environment. It is hard to say how much of this is due to the suppression caused by Meta's launch of Reels. By the way, Google's Youtube has also grafted the short video Shorts function on the main APP, which has become a new time-killing function.

Short videos are a time-consuming black hole for users. In terms of usage time, TikTok's usage time is comparable to Instagram, although the growth rate of total usage time has also slowed down recently. Given that Instagram has more users than TT, it can be seen that TT users are obviously more addicted to short videos themselves.

Judging from the data, the number of TT users and usage time has slowed down, but it is impossible to infer whether this is temporary or whether it is suppressed by Meta's full-family bucket. Judging from Meta's short video strategy, the encirclement and suppression strategy organized by Zhago against TT is effective to a certain extent. These strategies include:

Platform grafting strategy: This strategy was used in the previous battle with Snapchat, and helped Meta win. Currently, Reels is fully grafted onto its three major social platforms. With the social flywheel blessing, the Reels function quickly penetrated into the users of social platforms. Meta disclosed that short videos contributed the main growth in usage time, which shows that there are still many users on the platform who are attracted to watch short videos. When the needs of these users are met here, it will be more difficult for TikTok to grab them.

Social or content? Meta no longer wavers: From 2017 to 2018, Meta struggled with the question of which was more important, social or content, and ultimately chose social, because the survey concluded that meaningful social connections enhance people's happiness, while passive consumption of content does not. So at the time, Meta focused on creating meaningful groups and services such as watching videos together that seemed to build connections, and cleared the platform of video content that was popular with users but not social. When Meta turned back to create Reels, a pure content product, did Zha Ge feel that it was a slap in the face of your previous understanding?

[Zha Ge from 3Q17: “But too often right now, watching a video is just a passive consumption experience. Time spent is not a goal by itself. We want the time people spend on Facebook to encourage meaningful social interaction.”

Zha Ge from 2Q22: "In Instagram, we see the Reels makes up more than half of content reshared into messages. So our strategy isn't about public versus social content and interaction. It's really about enabling a flywheel that compounds both."]

In other words, Meta no longer distinguishes between public content and social content and interaction, but uses social networking as a flywheel for content product growth. In Chinese terms, this is very similar to video accounts, combining public and private domains to drive growth.

Immersive + AI: In recent financial reports, Meta has emphasized its investment in AI. It has undoubtedly seen the power of AI in immersive short videos, which is also the winning magic weapon of Douyin and TikTok. Meta is a good apprentice. In addition, Reels is full-screen immersive from the beginning, which is undoubtedly Meta's subversion and rebirth of its own social application. It can be said that immersive + AI are the two wings of the bird that makes short videos become a time black hole, and neither is indispensable.

Creators: Of course, Meta has not forgotten the creators, including tools, gameplay, operations, and commercial incentives, without leaving any behind.

Judging from the above data and analysis, Meta's suppression of TikTok has obviously achieved certain results, but TT is not Snapchat. Compared with the previous Snapchat, TT's biggest advantage is that it has established a sufficient scale of users through blitzkrieg.

The reason why the blitzkrieg was successful for TT was that its parent company, ByteDance, was skilled in its tactics and had the money to spend. In a short window of time, TT grew much faster than Snapchat at the time. When Meta came back to fight, TT had already grown to a considerable size, and Meta could not snatch away these users. Considering the development of the Internet overseas, TT still has new users to continue to penetrate. In addition, as an independent short video application, TT has unique advantages in establishing user cognition and mind, which also gives it a unique advantage in competing for core users.

Meta has established its own successful defense against short videos, but where will the next threat come from? I think this is the question that Zago is most concerned about. Is it the AR/VR metaverse? Roblox? Or something else?