China's ByteDance Ltd. has unseated Tencent to claim the throne of China's mobile internet market. Its flagship platform Douyin, the Chinese version of TikTok, surpassed China's "national messenger" WeChat for the first time ever in total time spent. ByteDance Ltd. has taken the lead in short drama, music, and web novel platforms, and is now seeking consolidation across each ecosystem to "lock in users." Analysts say competition is intensifying to capture time spent rather than user numbers as the mobile internet market reaches saturation.
According to an analysis by research firm QuestMobile on the 11th, on July Douyin's total time spent topped WeChat's for the first time. Douyin's daily active users (DAU) rose 19% from a year earlier, and average time spent per person per day increased 8%. However, WeChat still leads in user scale. In July, WeChat's DAU was 931 million, more than 200 million higher than Douyin's 714 million.
Douyin, operated by ByteDance Ltd., is China's largest short-form platform and has a strength in boosting content consumption time by drawing user interest based on its recommendation algorithm. WeChat, run by Tencent, is China's largest messenger and payments app. Through in-app "mini programs," it also supports a variety of services such as shopping, delivery, and reservations, effectively serving as an all-in-one mobile platform.
At the group level, ByteDance Ltd.-affiliated apps' share of time spent among China's top 50 mobile apps rose to 40.9% from 33.6% a year earlier. Tencent-affiliated apps fell to 29.1%, widening the gap between the two groups to 11.8 percentage points.
◇ Expanding a Douyin-centered ecosystem to capture user time
ByteDance Ltd.'s reversal is analyzed as the effect of increasing time spent rather than user numbers. Caijing said, "As the mobile internet market enters a saturation phase and new users steadily decline, platform competition is shifting from user acquisition to capturing 'user time,'" adding, "While WeChat remains the most widely used digital infrastructure, Douyin is becoming the most popular entry point."
The secret behind ByteDance Ltd.'s success in expanding user time is that it built its own content ecosystem and established a virtuous cycle among platforms within it. Beyond Douyin, ByteDance Ltd. operates the short drama platform "Hongguo," the music streaming platform "Qishui Music," and the web novel platform "Fanqie Xiaoshuo," absorbing demand by category and then pursuing consolidation across platforms. It shifts user interest gained in one service to another, keeping consumption going within the ecosystem.
First, Qishui captures the demand for music consumption generated on Douyin. After users briefly encounter songs in short-form videos, they move to Qishui to listen to the tracks. In addition to music streaming, Qishui supports music releases, copyright registration, and monetization. If a song is completed on "Miaoxiang," a music creation and release platform under Qishui launched in June, it can immediately enter Qishui's music distribution network.
Fanqie Xiaoshuo serves as a content supplier that expands its web novel intellectual property (IP) into short drama, AI animation, and film. In March, ByteDance Ltd. opened more than 500,000 original Fanqie Xiaoshuo IPs to partners. IPs validated in the web novel market are reenacted as short drama, AI animation, and further into film.
This virtuous cycle is proving to be a particular strength in China's mobile internet market, where acquiring new users has become difficult. Caijing noted, "What acts as dispersion pressure on users in individual app markets is being converted within the ByteDance Ltd. ecosystem into a phased expansion of IP assets."
◇ 'Short-drama boom' in China… Hongguo rises to a dominant No. 1 with a free strategy
Hongguo's growth is also notable. Its DAU reached 168 million in July, up 107% from a year earlier, and within three years of launch it became the fourth-longest app by time spent in China's mobile internet. According to QuestMobile, as of February, Hongguo's average daily time spent per person reached 125 minutes. That's about as long as watching a feature-length movie every day.
Behind Hongguo's success is the free business model that ByteDance Ltd. has built. Unlike existing short drama platforms, it lowers the barrier to entry by making not just portions but entire series available for free to draw users at scale, and it applies a self-developed recommendation algorithm to increase time on platform. Profit is secured not from user payment revenue, but from advertising revenue based on a large user base. On top of that, AI is reducing content production expense and time, rapidly increasing content supply.
◇ Linking purchases via AI chatbots… shifting revenue from ads to transaction brokering
ByteDance Ltd.'s next task is "purchase consolidation." Through its AI assistant "Doubao," ByteDance Ltd. is trying to capture users' purchase intent and link it to a transaction. As of July, Doubao's DAU reached 168 million, about 4.6 times the level of a year earlier. For consumer AI products, it's not easy to cover computing expense with a free model alone, so the company is looking beyond its ad-centric revenue model to secure revenue from actual transactions.
To this end, ByteDance Ltd. has been piloting in-app ordering and payment functions since March. In April, it launched a service where Doubao selects the most suitable products for users. Starting in August, it began charging platform fees on hotel reservations made through Doubao. Instead, it does not run ads such as giving certain merchants priority exposure. The monetization model has shifted from "ad sales" to "transaction brokering."
Caijing analyzed, "If users can get a trustworthy answer within 30 seconds and complete a product order, that can have greater commercial value than browsing content for 30 minutes," adding, "Going forward, platforms must not only capture users' time but also prove they can understand users' intent and act on their behalf."