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Editor’s note: This article comes from the WeChat public account “Yuanqi Capital” (ID: yuanqicapital), Analyst: Bu Yao, 36 krypton released with authorization.

TikTok’s revenue in the US market is expected to reach 500 million US dollars this year, which is a remarkable achievement.In May this year, Douyin and TikTok’s global revenue exceeded 95.7 million US dollars (about 680 million yuan), an increase of 10.6 times compared with May 2019.Among them, about 89% of revenue comes from China, followed by the United States, contributing 6.2% of revenue.
In the first two months of this year, TikTok ranked first in downloads in the United States.
In terms of user numbers, India is TikTok’s largest overseas market, followed by the United States with developed social media.TikTok disclosed last year that it has 26.5 million monthly active users in the United States, of which about 60% of users are between 16 and 24 years old.According to the latest APP download data released by Sensor Tower, TikTok’s global downloads exceeded 119 million in May. The country with the largest installation was India, which accounted for 20% of the total downloads; followed by the United States, which accounted for 9.3%.
In 2019, it is estimated that TikTok’s global revenue is about 200 million to 300 million U.S. dollars. This overseas flagship project of ByteDance still maintains a “trembling” growth.In this article, Genki Capital will interpret TikTok’s growth momentum in the United States.
1 Amateur star dream to capture Americans
Charli D’Amelio (Charli D’Amelio) is the most followed person on TikTok in the United States. In the summer of 2019, she was only 15 years old and uploaded the video synchronized with her lips for the first time. After 11 months,She gained 61.4 million fans and became the hottest “net celebrity”, even surpassing professional singer Loren Gray.
Charli D’Amelio (Source: Internet, Financial Graffiti)
Addison Rae has 45 million followers on TikTok, ranking second, and mainly releases dance videos.Zachary King is famous for his edited magic videos, and currently TikTok is the third most popular celebrity.Ranked fourth, Loren Gray, a star before, was active on music.ly (the predecessor of TikTok America) in the sixth grade.
Just like in India where there is no shortage of social media, TikTok is also popular in the United States, where social media ancestors were born. This is the stage for civilians. Amateurs here have the opportunity to become “net celebrities”, and these amateurs can be described as life in the past.”Mediocre”, they get a lot of attention by releasing dances or funny videos that are not good-looking.
Charlie even felt inferior for her obesity before uploading the video for the first time. TikTok gave many users like Charlie the opportunity to show a more authentic self.
In the United States, about 60% of TikTok’s 26.5 million monthly active users are between 16 and 24 years old.From May 2019 to February 2020, the average time American children spend on TikTok increased by 116% to 82 minutes. In February this year, 16.5% of American children used TikTok, second only to Instagram’s 20.4%.
According to the download data of App Annie, in 2019, TikTok is the hottest application in Canada and India, ranking second in the United States and the United Kingdom.As early as October 2018, TikTok’s U.S. downloads exceeded 6 million, with a growth rate exceeding 400% of global downloads.
The November 2019 data provided by Priori Data shows that India is still far ahead, with 190.6 million downloads.The United States ranked second with 41 million TikTok downloads.
Among U.S. users 18 and older, TikTok gained 22.2 million mobile visitors in January this year, 23.2 million in February, and 28.8 million in March.According to the latest Comscore data, the number soared to 39.2 million in April, which is three times that of using the APP in April last year.
Source: Statista, Vitality Capital
Source: APP Ape, Yuanqi Capital
Yuanqi Capital judges that although TikTok downloads are already large, the potential of the US market is far more than that.
As of October 2019, only 9% of U.S. Internet users used the app, another 5% expressed interest in using it, 49% of people’s willingness to use the app remained unchanged, but 37% reportedThey have never heard of this app.
During the epidemic, quarantined Americans increased their leisure time, which gave TikTok a good opportunity for growth.According to Comscore, users aged between 25 and 34 have increased from 22.4% to 27.4% of total users, while those aged between 35 and 44 have increased from 13.9% to 17.1%.From January to April this year, TikTok’s independent access users increased from 9 million to nearly 14 million.
Source: Comscore, Yuanqi Capital
TikTok’s popularity in the United States is synchronized with the world.According to Sensor Tower data, it was downloaded 219 million times in the fourth quarter of 2019.By the end of 2019, TikTok had downloaded 1.65 billion downloads.Downloads in 2019 accounted for 44% of total downloads.
Source: Sensortower, Vitality Capital
2 Past and present life: what do Americans like about it
Why is TikTok so popular?
Steik Heinrich, head of global marketing at TikTok, once said on the variety show that we live on social media and (social media) is showing your perfect self, not your real self. People who like TikTok show their ownThe real side.
Selena Gomez posted a photo on Instagram to set a Guinness record, but by TikTok, the number of fans can only be ranked forty. The fact that she must face in TikTok is that unilateral idol worship is in TikTok.It doesn’t work, what users want is fun, close and easy to imitate.
It is this truth and grounding that allows TikTok to break out in the US where social media competition is fierce.In 2019, the employees of TikTok’s parent company, ByteDance, more than tripled in the United States. The company said that there are more than 1,000 employees in the United States from Mountain View, California to New York, and there were about 300 companies in the same period in 2018.
To build leadership in the U.S. market, TikTok has hired Vanessa Pappas, YouTube’s global creative director, to serve as the head of the U.S. business. Since then, it has been digging out high-level legal, marketing, and music copyrights from Microsoft, Warner Music, and Hulu.tube.
The most striking of course is that ByteDance appointed the former Dini-level vice president Kevin Mayer this year as ByteDance Operator (COO) and TikTok Global CEO.
Kevin Mayer (Source: Internet, Vitality Capital)
Yuanqi Capital believes that the birth and development of TikTok has inherited American genes, which is the key to its ability to become one of the most successful Chinese companies’ overseas projects.
The predecessor of TikTok was Musical.ly, which was created by Alex Zhu and Louis Yang in 2014. It originated from a short educational video idea. The app was ranked first in the App Store in 2015.When the popular video app Vine was shut down in October 2016, many young short video users turned to Musical.ly.
Alex Zhu (Source: Internet, Yuanqi Capital)
In November 2017, ByteDance acquired Musical.ly for $1 billion, and in August 2018, ByteDance announced that it would close Musical.ly and merge it into TikTok.The co-founder of Musical.ly said that the combination of Musical.ly and TikTok is natural because they all share a common mission to create a community where everyone can be a creator.
After the merger, TikTok became truly popular in the United States.In September 2019, TikTok became the number one free non-gaming iOS app in the United States for the first time.According to Sensor Tower data, the popularity of TikTok in the United States peaked in December 2018, with 6 million installations that month.
TikTok’s popularity also influenced popular music. Lil NasX’s song “Old Town Road” reached the top of the Billboard list after the TikTok fire. This song was not famous before.
3 User growth: abandon the assumption of traditional social media
TikTok provides various tools that video producers need, and can also search for sound as the soundtrack of the video. It also strongly encourages users to interact with other users by “responding” to the video or “duo”. Users can copy the video and put themselvesAdd to the video.
The hashtag also has an amazing appeal on TikTok.On TikTok, the hashtag exists as a true and functional organizing principle. It is a collection of various challenges, jokes and other activities.For an American audience, TikTok is a bit like a compilation of popular shows, showing only the most attractive elements and the most attractive experiences.
TikTok’s travel challenge
TikTok solves the problem that both Twitter and Instagram want to solve, that is, how to involve people.TikTok’s approach is to show the user a video, then let the algorithm mark it, and then push it to the user to push the user to generate content.Through this technology and strategy, TikTok judges that the recommendation of friends based on real relationships is hindering the expansion of the user’s social circle. TikTok has abandoned these hypothetical logics of other social media from the beginning.
For users who have just opened TikTok, the first step questions such as “what should I watch” and “what should I post” are perfectly solved on TikTok. TikTok will continuously recommend videos to new users.
Twitter’s popularity is as a tool to focus on others while being followed by others, and to expand services on this basis. It observes user behavior and tags user behavior.
In contrast, YouTube also has recommendations, and many of its recommendation functions are designed to increase interaction.
TikTok will make assumptions the moment the user opens the application, just like a Facebook that can fill up the information source before the user adds friends.
TikTok encourages users to jump from one group of viewers to another, create a scene similar to simulating a temporary group of friends, gather users to do something that will be done in the group of friends, such as sharing jokes, improvising songs, talking aimlessly, etc.Within the application, the feedback of other users is timely and rich, and it has a virus-level spreading capability, and this spreading is spread across the entire platform without restriction.
So far, users have spent about US$456.7 million on TikTok, up from US$175 million five months ago. From a revenue perspective, US users spent about US$86.5 million on the app, becoming TikTok’s firstThe second important market.
4 Policy challenges: conflict and trust
The popular TikTok also encountered resistance from localization in the United States.As a popular social application, TikTok is also involved in the whirlpool of privacy and content censorship in the United States.
In November 2019, the U.S. government conducted a national security review of TikTok’s parent company ByteDance’s acquisition of Musical.ly for $1 billion, and two U.S. senators also proposed a bill that bans federal employees from using government-issued telephonesTikTok.
Officials raised concerns about how TikTok handles and stores user data, leading some government entities, including the military, to ban the application from its government-issued mobile phones.
TikTok paid a $5.7 million fine to the Federal Trade Commission in 2019, accusing it of violating the provisions of the Children’s Online Privacy Protection Act, illegally collecting personal information of children under the age of 13 without parental consent, and in connection with COPPAIn another lawsuit, TikTok settled with $1.1 million.
In addition, TikTok also faced accusations of reviewing content, and TikTok explicitly denied these allegations.
In March 2020, the US Senate held a hearing, and US Senator Josh Hawley said he would promote legislation that would prohibit all federal government employees from using TikTok on all federal government equipment.From last year to this year, there have been US senators who have used national security as a reason to request a review of the impact of TikTok’s expanding influence on national security.
TikTok responded that the data of American users is stored in the United States, but the American senator pointed out that ByteDance is governed by Chinese law.TikTok said that China has no jurisdiction over the content of the application, the program does not operate in China, and is not affected by any foreign government.
Not long ago, TikTok appointed an initial member of the US-centric content review committee to advise on its policies because it faces US review in terms of data sharing and review systems.TikTok said that its “Content Advisory Committee” will be increased to about twelve members.In early March, TikTok announced that it had established a “transparency center” in Los Angeles to show regulators and the public how to censor content.
TikTok advertises in the US
Meyer, who took office in May, is a high-profile task, which is how to make the US government and people trust TikTok.At the same time, according to Reuters, TikTok has been hiring more American engineers to reduce its reliance on Chinese employees, and established a team in Mountain View, California to oversee data management. ByteDance also hired a senior data security supervisorRoland Clautier, by the end of this year, the company will recruit another 100 security, data and privacy protection personnel.
For the development of TikTok, well-known investor Wang Yuquan gave three things worth doing: establishing a luxurious board of directors, hiring a well-known lawyer, and hiring a public relations company to lobby the US government if necessary.
All of this lies in making TikTok win the trust of the American people.
*The opinions in the article are for reference only and do not constitute investment advice.

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