Internet Industry in 2020: 12 Questions I Want to Ask and Preliminary Answers


Editor’s note: This article is from WeChat public account “Internet and Entertainment Strange Group” (ID: TMTphantom), author Pei Pei, 36 氪 released with permission.2019 is almost over.For the Internet industry, this is another year of rapid change and endless change; every year for the past ten years.It is believed that major Internet companies have already seriously considered the strategies and tactics of 2020, and investors are also considering how to plan for the next year.If you want to find a key word for the upcoming 2020, it is “uneasy”-the experience of the past ten years is becoming more and more unreliable, everyone more and more needs to learn, there are so many new things, and the macro situation is changing so fast.And the industry base is getting bigger and bigger.Here are 12 questions that the Strange Band hopes to pose to the Internet industry in 2020.I can’t blame the prophet, just the learner.For the following 12 important questions, I have tried to give some preliminary answers through the information I have and the logic I think are feasible.However, in the future, after all, one step at a time, my answer must have many errors; moreover, there must be some important issues that I did not realize.If the questions raised by this strange thief can bring some reference to the industry, then you are satisfied.Since the rise of the mobile Internet in 2010-11 (marked by the birth of Weibo, WeChat, and Xiaomi mobile phones), China’s Internet industry has experienced a complete generation.The Internet giants that are calling for the wind and rain are either rising in the mobile era or part of the PC era giants that have followed the mobile trend.In the foreseeable future, we will still be in the era of mobile Internet, but the competition is becoming more and more intense, and the value of existing experience is getting lower and lower.We need to stay away from the comfort zone and try to open up new paths in the deserted land.This is the main purpose of this article written by this strange thief-throwing bricks and attracting jade, the Internet industry should need to throw bricks.(The battle plan was formulated by commanders and staff officers, but was made by frontline soldiers) 1. The overall pattern Since 2016, the Internet industry has been shouting “traffic dividends are exhausted”; however, in 2017-19, China ’s mobile devicesUsers still increased by more than 200 million, and the average daily length of users also increased by 30-45 minutes.In other words, the past three years have been the “end of the mobile traffic bonus.”At present, China has 1.1 billion smartphone users, and the average daily screen time is about 4.5 hours; both are approaching the “theoretical upper limit”.It can be said that until today, the Internet giants have not yet entered the era of so-called “stock games” and “attacking each other’s bases”.To give a very simple example: when the vibrato rose unstoppably, the growth of the fast hand did not stagnate; the claim that the vibrato took the length of WeChat users was also unfounded (the user duration of the vibrato and fast hands was actually created by themselvesof).By operating market segments, layering users, and occupying the remaining empty space, Internet giants in the same industry may still achieve coexistence: Think about it. In 2019, the performance of Ali, and Pinduoduo is very good.However, the above scene should be called “quietness before the storm”.At the latest in the first half of 2020, most of the remaining “blank land” will be opened up; the monetization of old users will encounter bottlenecks; the sluggish real economy will continue to affect the Internet.Therefore, we will eventually enter the era of “stock games” or “giants hurt each other.”Will this era be far more cruel than before?Will competition logic and growth logic be completely different?In the end, will everyone stand in line and form a few more tight groups?In any case, the future will not be better than the past … (War will become more and more cruel. Be careful, do not fall in love with it.) 2. Problems with the Internet’s queues Investors generally believe that there are several “camps” in China’s Internet industry, Just like the Allies / Axis countries in World War II: Tencent, Ali, Baidu, and the rising headlines, if any, Lei Jun, and so on.However, the above view is wrong.It can be said that until 2019, the phenomenon of “stations” and “system building” in the Internet industry is still in its infancy, far from being a camp.First, the “Tencent Department” does not exist.When Tencent makes strategic investments in startup companies, it often does not even agree to prohibit Ali or byte beating investment; Tencent rarely participates in the management of strategic investment objects, which is often criticized.Secondly, the “Ali system” does not exist, because in recent years, Ali has become more and more inclined to consolidate important investment objects into a consolidation table system-Cainiao Network, Are You Hungry, and Word of Mouth?At the beginning, it was consolidated.Finally, the “Baidu Department” and “Headline Department” actually do not exist. Their most powerful subsidiaries or sub-applications are actually within the scope of consolidation.Entering 2020, “station teams” may be more important because the competitive environment has deteriorated and the financing environment is not optimistic.The Internet may really be in a situation where “three / four camps stand side by side”, and the traffic and content of each camp are relatively closed.Tencent, Ali and ByteDance may be more concerned about the day-to-day management of investment objects, and emerging companies (if they still exist) will increasingly welcome their involvement.Will this be the “new normal”?Is this new world not beautiful at all?(Will the Internet world be fiddled with by several giants?) 3. The natural contradiction between user concentration and layering In the late development of mobile Internet, there is a natural contradiction in traffic patterns: On the one hand, users are getting more lazy,The more and more unwilling to install many apps, they prefer the “one-stop service”, and the traffic is concentrated on a small number of head platforms (strong Hengqiang); on the other hand, the user experience is getting richer and more autonomous, Pay more and more attention to the illusory things such as “tonality” and “vertical features” (layering, classification).There are business opportunities in both aspects of the contradiction. The problem is that you can hardly have both.In the past few years, we have seen rapid video apps such as Douyin and Kuaishou grow rapidly to become “all-round platforms”, and have entered the fields of show live broadcast, game live broadcast, and e-commerce delivery. This is the result of “Hengqiang Hengqiang””Dimensional strike”; we have also seen that vertical platforms such as B Station and Xiaohongshu have steadily expanded their user base and realized monetization. This is the result of “vertical tone”.In the game industry, the above-mentioned “schizophrenic” trend is even more obvious: on the one hand, national categories such as “eating chicken” have swept the country almost overnight;Fascinating.In the process of “schizophrenia” mentioned above, the most painful are those platforms or content that “can’t be high or low”: neither has the ability to do super platforms, national-level content, nor has the characteristics or tone to attract vertical fans.Especially in the fields of video and e-commerce, “medium player” is almost synonymous with “decline”.In 2020, will we see the polarization of the entire Internet industry?In the future, will it be a few head platforms plus a large group of featured applications / content providers?I would love to see it!(Always remember: the person who is proud at the beginning may not laugh to the end) 4. The 2B Internet that will never come?Over the past two decades, successful Chinese Internet companies have been doing 2C business.Strictly speaking, the vast majority of Internet companies in the world do 2C business; in the United States, 2B software / IT solutions companies and 2C Internet companies are also two circles (Amazon may be an exception).Since 2018, for various reasons, Chinese Internet companies and investors have increasingly emphasized the importance of 2B business.Unfortunately, even by 2020, it will be difficult for us to see that the 2B business will contribute substantial profits to any Internet company.2B and 2C are completely different businesses. The latter pays attention to scale effect, high-profile, fast iteration, and funnel theory. The former is almost the opposite of it.Internet companies are actually more suitable for B2B2C, such as helping banks with loans, and providing C2B experience for traditional corporate customers.The most important thing is: what’s the point of winning the 2B market?How big can China’s largest 2B software company be?If not the traditional 2C business is approaching the bottleneck, which Internet giant will heavily invest in 2B?For Internet giants, even if the traffic dividend is completely exhausted, 2B is not the only strategic direction.The following directions are at least equally attractive: overseas expansion; integration of upstream content; smart home (IoT); further enhancement of data monetization.Of course, for external investors, the “trillion-scale 2B solution market” sounds sexy; the question is, can Internet companies eat it? Can they make a profit even if they do? I am not optimistic about thisAttitude. (Some battles you ca n’t win, but you still have to fight) 5. The multiple problems of overseas expansion People have once naively thought: relying on the successful experience and combat power cultivated by one billion users in the Chinese market, Chinese Internet companies will go abroadIt is a smooth road, and the Internet will be the first choice for China’s “exporting business model.” The success of TikTok seems to validate this view. However, by the second half of 2019, we see that things are not so good. In a nutshell: march to developmentThe country will get harder and harder to enter developing countries. U.S. politicians’ hostile attitude towards TikTok can explain a lot of problems: They think that it is dangerous for a Chinese company to collect the privacy data of U.S. citizens. In EuropeMany Chinese companies have suffered losses in user privacy. European and American regulators can evenCompanies issue sky-high prices, not to mention Chinese companies? In addition, North American Internet giants such as Facebook and Google are far from being as incompetent as many Chinese think—they do not work overtime, but they are not efficient in responding to challenges. In 2020,The strategic direction of China’s Internet going to the sea will probably point to developing countries-Southeast Asia with traditional strengths, South Asia on the rise, Middle East with more money and less people, emerging Latin America and Eastern Europe, etc. The problem is that most of the above are either low or mediumThe income market, or cultural background, is very different from China. In the field of games and other content, the difficulty of going overseas may be slightly lower; at the platform level, going overseas will still be difficult. Will the Internet giants adopt a more pragmatic and conservative attitude toward overseas expansion?Or take advantage of the money to speed up expansion and try your luck? Different companies will make different choices. (War in other people’s territory is a reward) 6. “Privatization” of traffic and “personalization” of brands”At the end of 2019, no one knows the names of Li Jiaqi and Wei Ya. In fact, they are already the characters of Taobao live broadcast.It ’s just that we ’re heading for a bigger world in the near future. Users like Li Jiaqi very much, and his conversion rate is very high. Brands are also looking forward to the top brands such as Li Jiaqi and Estee Lauder who will sell the first sharp goods to him at the lowest price on the entire network.At the same time, we see that traditional brand advertising is declining; “stars” such as Li Xiang have tried to bring goods very poorly; traditional video platforms and brokerage companies have not yet copied their own Li Jiaqi / Via. What is going on?In a nutshell: we are in an era of “brand personalization”. Users are no longer interested in traditional fake big air propaganda and high-profile personalities. They want to see that they can breathe, be grounded, have a tone, haveProfessional Internet celebrity / content / brand. People often ask me “what is tonality”, and I will answer: you will never mistake Li Jiaqi as a passerby, you will never mistake Guo Degang for Jiang Kun, and you will never think of KunTing mistakenly thought that Guo Jingming, this is the tone! This is the fundamental reason for Weibo’s decline and fast hands becoming popular, long videos falling and vibrato becoming popular: You are more willing to see cosmetic face, poor acting skills, and operatingSet up dummy data traffic brush flowers, was willing to see his true self, the influx of people Fan, UP main quips ground gas?Don’t get me wrong, I know that many UP anchor / anchor staffing is also operated, but it is still more credible.The “personalization” and “tonalization” of communication methods must accompany the “privatization” of traffic.Station B has one fan on top of Weibo and ten fans. The value of WeChat group is far more than that of WeChat group-because the former is more “private”.Traditional media, traditional advertising platforms, traditional traffic distribution mechanisms, and traditional content ecology are constantly being suspended.All in all, the closed loop of fans is constantly shortening, and fans are paying more and more attention to “content itself” and “creator itself” rather than the system behind it.Is this good or bad for the Internet industry?All I know is that this is a big change and someone must benefit.(Every time you reshuffle, there are several happy and sad.) 7. Aboriginal people of mobile Internet have grown up. They are smarter than you. By 2020, the first batch of post-90s will reach 30 years old, and the first batch of post-00s willBe at least 20 years old.Aboriginal people of the mobile Internet after 95-10. For them, the mobile Internet is “of course existed”; just as for the post-80s, TVs, cars, and refrigerators “of course existed.”They are very smart, smarter than you and me. They are flying and playing with virtual social networks. They often have good payment habits.Most of them are happier than their parents and are good at doubting authority and deconstructing everything.I found that most people in the post-70s-80s did not understand the post-95-10s growth environment and underestimated their acceptance of new things.For example: I recommended the Gate of Destiny to a post-80s executive, and after reading two episodes, he said that he could n’t understand, “Such a complicated thing cannot be popular”; he thinks that young people should be moreI like the “simple and rude content” of the Tang family.The fact is that none of the post-95 generations I know are fans of the Tang family (he belongs to the previous generation), and everyone can understand the complex “time machine” and “world line convergence” theory of “Gate of Destiny”.why?Because that’s how they grew up!Since the post-95s are so smart, why do many people still feel that they are “lazy, degenerate, and unable to suffer?”Because there is no need!They know that “the world is not worth it”. The 996 theory is nothing more than a fattening capitalist. In the final analysis, everything is done for personal development and happiness.They are steadily taking over the Internet-from the right to speak, the length of their users, to the revenue contribution.Many investors think they understand them, but they don’t.Can Internet companies learn to please 95-10 as soon as possible, break stereotypes, and mingle with them?I’m not too optimistic; this is bound to be a long road.(If you do n’t study, you will be defeated and you will be captured.) 8. E-commerce industry: After the magic 2019, for the e-commerce industry, 2019 is quite amazing: the macro economy is clearly decelerating.The growth rate is not bad, and Double Eleven also reported a new high.However, the performance logic of Ali, Jingdong, and Pinduoduo is different-Ali is enjoying the “Amoy e-commerce ecosystem” bonus accumulated over the years; Jingdong is re-setting its tactical focus based on profit; Pinduoduo is being brutalGrowth, repurchase rate improvement, and healthy cash flow are the foundations for its ups and downs.For these three giants, macroeconomic factors must give way to the company’s own factors.However, entering 2020, the situation will change greatly: Ali may allocate some resources to O2O, offline retail, cloud computing, overseas emerging areas, and focus on long-term sustainable development rather than short-term growth / profit for core e-commerce.Jingdong needs to find new growth points; the base of Pinduoduo will be huge enough to become more and more similar to Taobao, and the real battle between the two giants has just begun.Pinduoduo’s GMV is likely to reach 1.5-2 trillion in 2020, just slightly worse than is only one road left in front of it, and that is to challenge the overlord role.And Ali is not afraid of challenges.The two sides will struggle in all fields: Pinduoduo will endeavor to enter the mid-to-high-end brands, strengthen its contract fulfillment capabilities, and develop content e-commerce businesses such as live broadcasting; Ali will fight against Duoduo through the cost-effective / Taobao low-price attack, and strive to keep the mid- to high-end brands.We cannot predict the outcome of the battle-it is the execution / operation that determines the outcome, not the strategy.I want to know: When Pinduoduo breaks through 2 trillion GMV, what is its next main growth engine?Will growth end?Will it flatten out?If high growth is still possible, is it because of something we haven’t realized yet?(Anyone must personally lay down the place they want to occupy.) 9. Game industry: Tencent, vertical categories and overseas markets. It can be considered that the 2020 game market will run around three main factors: The first is Tencent, its DNFThe LOL mobile game is destined to shake the world and put an end to the “hand-to-hand” era. The second is the vertical category. In 2019, the “Ark of Tomorrow”, “The Shining Warmth” and “The Invisible Guardian” opened several breakthroughsSuccessors will desperately expand the breakthrough; the third is overseas markets, after all, the game is easier to go to sea than other content and platforms.If Tencent’s new products achieve unexpected results, and vertical categories continue to grow by word of mouth, then most of the space for “medium content publishers / distributors” may be squeezed.However, it can’t be generalized. Compared with the giant monster Tencent, most game companies are actually small companies.The vertical explosion like “Tomorrow’s Ark” is enough to feed a large listed company, even if the profit of “Invisible Guardian” (tens of millions) is not low.Hundreds of game companies will pour in vertical categories such as secondary, feminine, and ultra-leisure, as well as new games such as open world and VR / AR.How many years can the growth of the gaming industry continue?I have always disagreed with demographic analysis of this problem.Today, mobile game users seem to be many, but most of the payments still come from men aged 30-40, followed by high school students / university students.Female users are only partially developed, not to mention the real middle-aged and elderly people.In the field of Internet content, the gaming industry has the strongest fighting power and the most innovative spirit, which is why I am optimistic about it.Where is the next breakthrough innovation?I think it’s interactive narrative and VR / AR.Wait and see.(Never underestimate the strength of existing leaders in the market) 10. Short video / live industry: The battle between quick hands and Douyin?Both Kuaishou and Douyin are approaching their “natural user caps” and have already robbed each other of their users.They are not short of money: we estimate that the fast hand’s operating income in 2019 is about 55 billion yuan, and the vibrato is about 70 billion yuan (excluding headlines and other applications).In the past few years, the two have largely remained well waterless; in 2020, brutal direct competition will become mainstream.I believe that both will survive, and the positioning will become increasingly blurred and comprehensive; other short video platforms will increasingly have no room for survival.In the field of live shows and e-commerce, fast hands and vibrato have proved that the huge and highly sticky user pool of short videos can be directed to other functions and realized quickly.Where else can we go next?Gaming, e-sports live broadcast, self-employed e-commerce, long video?The key is not to kill the golden rooster in order to get the golden eggs-the tone and stickiness of the short video community is still the most important.Douyin’s product ideas are more specific and more “non-standard”, so the expansion to other functions is slightly slower, but the advertising monetization ability is extremely strong; fast hands are just the opposite.At the current point in time, my prediction is: Kuaishou will cooperate with Tencent to increase the traffic base and explore more efficient advertising monetization, and the headline department will increasingly try its own e-commerce; both will remain firmExpansion to the content end, this content end includes not only games, short videos, but also all forms of content such as film and television, VLOG, two-dimensional.Again: both can survive and grow, but their growth paths will become more and more similar.If there must be a winner, who would it be?I have an answer in my heart, but I don’t want to say it now.(No matter how powerful your opponent is, you must fight fiercely) 11. Internet advertising: “Integration of product and effect” is the effect of eating the brand?Since 2017, with the rise of Douyin, short video ads have shown great power.We estimate that the combined advertising revenue of Douyin and Kuaishou will exceed 70 billion yuan this year (not including e-commerce revenue from goods).Short video ads work well, have a good user experience, are flexible, and maintain a certain brand tone.From this perspective, advertisers do not need to maintain a large and improper brand advertising budget.Especially in the economic downturn, anyone hopes that advertising will lead to an immediate increase in sales.WeChat friends circle ads have been fully effective in 2019.Station B began to try short video tape delivery.Mango TV is planning the first variety show with cargo theme.All in all, performance (CPA / CPS / CPL / ROI assessment) advertising is still expanding and it is evolving.Headline advertising sales can understand ROI even more than customers, and can come up with several feasible advertising sales frameworks at any time.This is the main reason why Tencent advertising has been unable to beat the headlines (rather than “there is no technology in Taiwan” as many people think).What platforms and formats are most suitable for performance advertising?First of all, you must have tonality (also this nihilistic word, but this is the reality) and characteristics; secondly, you must have a certain degree of interaction or sociality; again, you must have flexible delivery methods and fasterresponding speed.Douyin and Kuaishou meet all of the above conditions, and station B and WeChat circle of friends also meet.If there is a vertical platform that meets the above conditions, no matter the user base, the single user monetization efficiency will not be too low, right?Will there be a rise of such vertical advertising platforms in 2020?I think it’s possible, but I don’t know who it is.(The more cruel the battle, the more adrenaline will rise.) 12. Audio / Music: The last traffic depression in the Internet?Obviously, the battle for user time is coming to an end.At the end of 2019, the average daily bright screen time of Chinese smartphone users is about 4.5-5.0 hours, which is close to the physiological limit.It is impossible to stare at a cell phone all day long.There is only one case where users do not need to stare at the phone or even brighten the screen: audio entertainment, including music, FM, knowledge payment, etc.This may be the last traffic depression of the mobile Internet.Tencent Music and Litchi FM have all been listed or applied for listing, and NetEase Cloud Music and Himalayan are also coming soon.I have no worries about the traffic prospects of audio entertainment-the current music / audio applications have not yet reached half of the heights of radio / recorders in history, and have not completely occupied the minds of users.Things must be reversed, people are always tired of the “mobile phone bright screen” thing.Listening to books, listening to music, and listening to cross talks are all great forms of entertainment.Moreover, just because there is no need to brighten the screen, audio apps can stay in the background for a long time, and there is no need to join the eyeball wars of users of various apps (if you use an Android phone, you must have a deep understanding of this).The problem lies in commercialization-the advertising prospect of audio entertainment is definitely not as good as the video / information stream (as it is in the broadcast era); if you rely on paid subscriptions, it will not have any advantages over long videos; if you rely on knowledge to payHow about it?At present, knowledge payment is basically based on impulse payment, and a solid industry system has not yet been formed.According to the practice of the Internet industry, it is always to seize users, and then slowly consider monetization; but now the users of audio entertainment have been almost seized.Tencent Music realized fast cash flow through the “bright screen entertainment method” of live broadcasting; what about other platforms?I am optimistic about this track, but I have no answer.(Before you start the battle next year, watch this sculpture first.) I wish you a happy Christmas and a happy New Year!I hope next year will be a fruitful year-solving problems among problems is the way of the development of the Internet industry and the way of development of this world..