TikTok is quickly taking the entertainment and social media space by storm. What is TikTok? TikTok is an app and social media platform on which users create and share short videos — 15 seconds or less — from their mobile devices. Many people use TikTok to record themselves lip-syncing to their favorite songs, while others create social video content backed by sound bites. TikTok encourages users to engage with others through “response” videos or “duets” where they showcase their own video alongside the original upload.
TikTok users do not have to follow friends or accounts to view the uploaded videos. TikTok's algorithm curates personalized video recommendations based on users’ viewing history and preferences, making binge-watching homemade videos an almost certainty.
Musical.ly, founded in 2014 by Chinese entrepreneurs Alex Zhu and Luyu Yang, had a similar idea that once captured an audience of more than 100 million monthly active users. Then came along TikTok in 2016, an app released by ByteDance, a Beijing-based media and tech company founded in 2012 by Yiming Zhang. ByteDance first developed a series of apps around user-generated content and aggregation/recommendation platforms. TikTok quickly gained in popularity and became its biggest success with usage surpassing Musical.ly by 400 million monthly active users.
Fueled by TikTok’s emerging success, ByteDance wanted to expand its international presence and took the first step to purchase Musical.ly in 2017. After the merger, ByteDance felt that TikTok better reflected the breadth of created content and, therefore, merged Musical.ly into TikTok in August 2018.
In 2018, TikTok was downloaded 663 million times, comparable to Facebook's 711 million. Analytics sites App Annie and Sensor Tower reported that TikTok received the third most app installations worldwide in 2018 and is ranked as a top social media app, with 188 million downloads in the first quarter of 2019. At times, the app is ranked higher than social media giants like Facebook, Instagram, Snapchat, and YouTube. Its main source of revenue comes from in-app purchases. In February 2019, about $5.5 million in virtual coins was purchased globally, a 243% increase compared to February 2018.
The short video app is already poised to hold a dominant position in Asia and North America, and is expected to experience significant growth in the Asia Pacific region. ByteDance executives projected that TikTok will generate $18 billion in revenue in 2019 and $29 billion in 2020. In addition to its ambition to expand into further locations and markets, the company is also making changes to improve its user interface and content by incorporating new features like live streaming, games, first-person point-of-view stories, a chronological friend timeline, and in-video shopping.
While some critics view TikTok as another social media outlet that might soon fade away, its growing popularity among the younger generation shows signs that it might be on its way to infiltrating the mainstream. It will be interesting to see where TikTok is heading.
Cathay Bank and ByteDance are independent entities and are not affiliated with or related to each other. Cathay Bank does not endorse or recommend any activities, products, or services mentioned in this article.
This article does not constitute legal, accounting or other professional advice. Although the information contained herein is intended to be accurate, Cathay Bank does not assume liability for loss or damage due to reliance on such information.