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March 23, 2019
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PicsArt hits 130 million MAUs as Chinese flock to its photo editing app

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If you’re like me, who isn’t big on social media, you’d think that the image filters that come inside most apps will do the job. But for many others, especially the younger crowd, making their photos stand out is a huge deal.

The demand is big enough that PicsArt, a rival to filtering companies VSCO and Snapseed, recently hit 130 million monthly active users worldwide, roughly a year after it amassed 100 million MAUs. Like VSCO, PicsArt now offers video overlays though images are still its focus.

Nearly 80 percent of PicsArt’s users are under the age of 35 and those under 18 are driving most of its growth. The “Gen Z” (the generation after millennials) users aren’t obsessed with the next big, big thing. Rather, they pride themselves on having niche interests, be it K-pop, celebrities, anime, sci-fi or space science, topics that come in the form of filters, effects, stickers and GIFs in PicsArt’s content library.

“PicsArt is helping to drive a trend I call visual storytelling. There’s a generation of young people who communicate through memes, short-form videos, images and stickers, and they rarely use words,” Tammy Nam, who joined PicsArt as its chief operating officer in July, told TechCrunch in an interview.

PicsArt has so far raised $45 million, according to data collected by Crunchbase. It picked up $20 million from a Series B round in 2016 to grow its Asia focus and told TechCrunch that it’s “actively considering fundraising to fuel [its] rapid growth even more.”

PicsArt wants to help users stand out on social media, for instance, by virtually applying this rainbow makeup look on them. / Image: PicsArt via Weibo

The app doubles as a social platform, although the use case is much smaller compared to the size of Instagram, Facebook and other mainstream social media products. About 40 percent of PicsArt’s users post on the app, putting it in a unique position where it competes with the social media juggernauts on one hand, and serving as a platform-agnostic app to facilitate content creation for its rivals on the other.

What separates PicsArt from the giants, according to Nam, is that people who do share there tend to be content creators rather than passive consumers.

“On TikTok and Instagram, the majority of the people there are consumers. Almost 100 percent of the people on PicsArt are creating or editing something. For many users, coming on PicsArt is a built-in habit. They come in every week, and find the editing process Zen-like and peaceful.”

Trending in China

Most of PicsArt’s users live in the United States, but the app owes much of its recent success to China, its fastest growing market with more than 15 million MAUs. The regional growth, which has been 10-30 percent month-over-month recently, appears more remarkable when factoring in PicsArt’s zero user acquisition expense in a crowded market where pay-to-play is a norm for emerging startups.

“Many larger companies [in China] are spending a lot of money on advertising to gain market share. PicsArt has done zero paid marketing in China,” noted Nam.

Screenshot: TikTok-related stickers from PicsArt’s library

When people catch sight of an impressive image filtering effect online, many will inquire about the toolset behind it. Chinese users find out about the Armenian startup from photos and videos hashtagged #PicsArt, not different from how VSCO gets discovered from #vscocam on Instagram. It’s through such word of mouth that PicsArt broke into China, where users flocked to its Avengers-inspired disappearing superhero effect last May when the film was screening. China is now the company’s second largest market by revenue after the U.S.

Screenshot: PicsArts lets users easily apply the Avengers dispersion effect to their own photos

A hurdle that all media apps see in China is the country’s opaque guidelines on digital content. Companies in the business of disseminating information, from WeChat to TikTok, hire armies of content moderators to root out what the government deems inappropriate or illegal. PicsArt says it uses artificial intelligence to sterilize content and keeps a global moderator team that also keeps an eye on its China content.

Despite being headquartered in Silicon Valley, PicsArt has placed its research and development center in Armenia, home to founder Hovhannes Avoyan. This gives the startup access to much cheaper engineering talents in the country and neighboring Russia compared to what it can hire in the U.S. To date, 70 percent of the company’s 360 employees are working in engineering and product development (50 percent of whom are female), an investment it believes helps keep its creative tools up to date.

Most of PicsArt’s features are free to use, but the firm has also looked into getting paid. It rolled out a premium program last March that gives users more sophisticated functions and exclusive content. This segment has already leapfrogged advertising to be PicsArt’s largest revenue source, although in China, its budding market, paid subscriptions have been slow to come.

picsart 1

PicsArt lets users do all sorts of creative work, including virtually posing with their idol. / Image: PicsArt via Weibo

“In China, people don’t want to pay because they don’t believe in the products. But if they understand your value, they are willing to pay, for example, they pay a lot for mobile games,” said Jennifer Liu, PicsArt China’s country manager.

And Nam is positive that Chinese users will come to appreciate the app’s value. “In order for this new generation to create really differentiated content, become influencers, or be more relevant on social media, they have to do edit their content. It’s just a natural way for them to do that.”

News Source = techcrunch.com

China’s Qutoutiao is burning millions of dollars to take on TikTok parent

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Chinese startup Bytedance is finding itself surrounded by challengers as its empire of new media products, including global video app TikTok and Chinese news aggregator Jinri Toutiao, gather steam. Tencent tried to play catch-up with a handful of new short-video services, and a Facebook clone of TikTok was reportedly in the making.

Less famous players also tried to take on Bytedance, but the costs of keeping up with the world’s most valuable startup are high. One company that’s made its mark is Qutoutiao, which is pronounced “chew-tow-ti-ow” and means “fun headlines” in Chinese.

Like ByteDance, the Shanghai-based company began as a news aggregator banking on personalized content often characterized by gossipy news and viral videos. By the time Qutoutiao debuted in 2016, Jinri Toutiao had more than 40 million daily users and was fast growing by feeding people what they wanted. Qutoutiao needed something more than just clickbaits and the solution was a costly scheme that rewards users with cash prizes for consuming more content and getting their friends to sign up.

Screenshots of the Qutoutiao app, which is characterized by clickbait content akin to those on Jinri Toutiao

The startup was able to play the expensive game on account of sizable fundings. Before pushing ahead with an $84 million initial public offering in the U.S. last September, the firm had secured $242 million from backers including Tencent. All that capital arrived within two years since its launch, and much of the money went to acquiring and retaining users.

In its fourth quarter, sales and marketing expenses soared 463 percent to almost $200 million. Revenues climbed 484 percent to $440 million in 2018, but the increase was tempered by the firm’s skyrocketing net loss, which widened to $283 million compared with $14.3 million just a year ago.

qutoutiao loss

So far the spending spree appears to be paying off. In the three months ended December 31, monthly active users nearly tripled to 93.8 million, the company claims in its latest financial results. People spent an average of 63 minutes on the firm’s services each day over the quarter, doubling from about 30 minutes in the year-earlier period.

Bytedance’s Jinri Toutiao is still ahead by a large margin with 2.4 billion MAUs in 2018, although that’s the result of six years in operation. TikTok, on the other hand, has collected over 1 billion downloads worldwide. But Bytedance, too, is hemorrhaging money over its ambitious global vision. It lost a staggering $1.2 billion last year, The Information reported earlier citing sources.

Small-town base

In the long run, Qutoutiao vows to improve its margins by “controlling user engagement expenses,” chief executive and founder Tan Siliang, who previously worked at Yahoo China and games publisher Shanda as a senior engineer, told analysts last week on a conference call. “As our user base continues to expand, our user acquisition expenses as a percentage of revenues will decline.”

The company is also aiming high. Last week, Tan said in an internal meeting that he believes “Qutoutiao will quickly rise to become a Top 10 internet company in China by 2019,” multiple Chinese outlets reported. To that end, the boss plans to double the company size by adding 2,000 staff this year, a move that contrasts with large-scale layoffs that have recently shaken up Chinese tech heavyweights like NetEase.

We’ve reached out to Qutoutiao for comments on the reports and will update the story when we hear back.

What’s also notable about Qutoutiao is its overwhelmingly small-town base, areas that China’s tech giants increasingly covet as markets in large urban centers reach saturation. The company says 70 percent of its users live in cities that are Tier 3 and below, far and remote from megacities Beijing, Shanghai and the likes.

“[Small-town residents] used to rely predominantly on TV for news. Now with Qutoutiao, they could obtain much more timely, personalized and diverse news and information and, as a result, become frequent readers,” said Tan on the call. “The Qutoutiao app has total installations of about 300 million so far, which still has considerable further penetration potential given a 1 billion population that live in Tier 3 and below cities.”

Like Bytedance, Qutoutiao has branched out to other media forms. It also runs Midu, an e-book app that has collected 5 million users by providing a more thoughtful alternative to its clickbait-filled news app. More recently, the company trailed Bytedance’s to test out a short video service, which hasn’t officially launch but will make a big push in the second quarter. And the startup is ready to splurge if the app grows large enough to face off TikTok.

“On the short video side, it is hard to give an estimated budget on the marketing side because it really depends on how popular or what kind of traction it receives with users,” said chief financial executive Wang Jingbo during last week’s conference call. “In case it has very strong traction with users such as TikTok, we will definitely be spending much more on the marketing side.”

News Source = techcrunch.com

Instagram prototypes video co-watching

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The next phase of social media is about hanging out together while apart. Rather than performing on a live stream or engaging with a video chat, Instagram may allow you to chill and watch videos together with a friend. Facebook already has Watch Party for group co-viewing and in November we broke the news that Facebook Messenger’s code contains an unreleased “Watch Videos Together” feature. Now Instagram’s code reveals a “co-watch content” feature hidden inside Instagram Direct Messaging.

It’s unclear what users might be able to watch simultaneously, but the feature could give IGTV a much-needed boost, or just let you laugh and cringe at Instagram feed videos and Stories. But either way, co-viewing could make you see more ads, drive more attention to creators that will win Instagram their favor, or just make you rack up time spent on the app without forcing you to create anything.

The Instagram co-watch code was discovered by TechCrunch’s favorite tipster and reverse engineering specialist Jane Manchun Wong, who previously spotted the Messenger Watch Together code. Her past findings include Instagram’s video calling, music soundtracks, and Time Well Spent dashboard months before they were officially released. The code mentions that you can “cowatch content” that comes from a “Playlist” similar to the queues of videos Facebook Watch Party admins can tee up. Users could also check out “Suggested” videos from Instagram, which would give it a new way to promote creators or spawn a zeitgeist moment around a video. It’s not certain whether users will be able to appear picture-in-picture while watching so friends can see their reactions, but that would surely be more fun.

Instagram declined to comment on the findings, which is typically of the company when a feature has been prototyped internally but hasn’t begun externally testing with users. At this stage, products can still get scrapped or take many months or even over a year to launch. But given Facebook’s philosophical intention to demote mindless viewing and promote active conversation around videos, Instagram co-watching is a sensible direction.

Facebook launched Watch Party to this end back in July and by November, 12 million had been started from Groups and they generated 8X more comments than non-synced or Live videos. That proves co-watching can make video feel less isolating. That’s important as startups like Houseparty group video chatrooms and Squad screenshare messaging try to nip at Insta’s heels.

It’s also another sign that following the departure of the Instagram founders, Facebook has been standardizing features across its apps, eroding their distinct identities. Mark Zuckerberg plans to unify the backend of Facebook Messenger, WhatsApp, and Instagram to allow cross-app messaging. But Instagram has always been Facebook’s content-first app, so while Watch Party might have been built for Facebook Groups, Instagram could be where it hits its stride.

Speaking of the Instagram founders Kevin Systrom and Mike Krieger, this article’s author Josh Constine will be interviewing them on Monday 3/11 at SXSW. Come see them at 2pm in the Austin Convention Center’s Ballroom D to hear about their thoughts on the creator economy, why they left Facebook, and what they’ll do next. Check out the rest of TechCrunch’s SXSW panels here, and RSVP for our party on Sunday.

News Source = techcrunch.com

How I podcast: Bullseye’s Jesse Thorn

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The beauty of podcasting is that anyone can do it. It’s a rare medium that’s nearly as easy to make as it is to consume. And as such, no two people do it exactly the same way. There are a wealth of hardware and software solutions open to potential podcasters, so setups run the gamut from NPR studios to USB Skype rigs.

We’ve asked some of our favorite podcast hosts and producers to highlight their workflows — the equipment and software they use to get the job done. The list so far includes:

Ben Lindbergh of Effectively Wild
My own podcast, RiYL

For week three, I’ve asked my longtime friend and professional podcaster, Jesse Thorn, to share his thoughts. “America’s Radio Sweetheart” is the host of several long-running shows, including NPR’s Bullseye and the comedy podcast, Jordan Jesse Go. He’s also the owner and proprietor of Los Angeles-based podcasting network Maximum Fun, which hosts a ridiculous number of shows, including Judge John Hodgman, My Brother, My Brother and Me and Oh No, Ross and Carrie.

He’s highlighted his unique setup with a requisite side order of Hyphy.

I bought this recording booth on Craigslist. For years, I recorded in my house, and walls lined with books and lots of soft furniture were enough to make my recordings sound passable, but then my wife told me to get an office. The intern in our living room kept waking up the baby.

The office is in a concrete loft building, very unforgiving for sound, so I ended up in a guy’s backyard in Harvard Heights, in central LA [checking out this booth]. He was a huge Samoan dude who’d run a Pacific Islander R&B label until his business partner went on tour as Justin Bieber’s vocal coach. I bought it for three grand, hired a guy with a van to bring it to the office and set it up, and we were in business.

Guests often comment on the booth — the spectrum runs from, “this is a little low-rent” to “what am I, in one of the Saw movies?” Honestly I think that helps keep our conversations human. It’s not quite soundproof; one of our producers is a particularly loud laugher and he ends up on the tape a lot. But honestly I kind of love it.

Also pictured: My lucky mug. It has E-40’s “In A Major Way” album cover on it.

News Source = techcrunch.com

China’s YY eyes overseas live streaming with $1.45B Bigo buyout

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One of China’s top live streaming companies YY bought a stake and obtained the right to purchase a majority share in Bigo last June, and now the other shoe has dropped after YY fully acquired the Singapore-based startup behind live streaming app Bigo Live and short-video service Like.

That’s according to an announcement YY made on Monday, which disclosed it has bought out the remaining 68.3 percent of all the issued and outstanding shares of Bigo for a price tag of about $1.45 billion.

Bigo’s connection to YY is deep-rooted. Li Xueling, a veteran Chinese journalist who’s also known as David Li, founded YY in 2005 well before the heyday of mobile-based live streaming apps. With the intent to bring the China-tested business to overseas markets, Li started Bigo in 2016 to replicate YY’s lucrative revenue model where the platform operator takes a cut whenever viewers reward streamers with virtual gifts, which can be cashed out.

YY racked up $675 million in net revenues and a net income of around $100 million from the fourth quarter of 2018, its latest earnings report shows.

The Bigo buyout is set to be a huge boost to YY’s international ambitions as its home market has been divided up between YY itself, its spin-off Huya that focuses on esports streaming and Huya’s archrival Douyu. Curiously, both Douyu and Huya are backed by Tencent, the company best known for the WeChat messenger but is also China’s largest games publisher.

To bring the domestic rivalry into perspective, Nasdaq-listed YY recorded a monthly mobile user base of 90.4 million in the fourth quarter. Huya, which priced its U.S. initial public offering at $180 million last August, posted a monthly of 50.7 million users from the same period. Douyu hasn’t recently unveiled its size as the company is reportedly mulling to go public in the U.S., but third-party data analytics company QuestMobile put its MAU in December at 43 million.

“We are very excited to announce the completion of the acquisition of Bigo. It is an important milestone for YY group which demonstrated our confidence and commitment to the globalization strategy,” said Li of YY in a statement.

Huya and Douyu have also ventured beyond China for new growth with their respective overseas brands Nimo TV and Nonolive. In its Q4 earnings report, Huya singled out foreign markets as one area of focus in 2019 and its Nimo already enjoys having a powerful ally, Tencent, which signed an agreement last July to help it with gaming content and brand recognition.

Huya’s overseas brand Nimo TV

“In addition to our vigorous domestic growth, we have successfully leveraged our unique business model to enter new overseas markets,” said chief executive Dong Rongjie. “We believe we are delivering long-term value through strategic investments in overseas markets in 2019 and beyond.”

While anchoring in Southeast Asia, Bigo has debuted in over 100 countries worldwide and been in the top ten of Apple’s app store not just in neighboring countries like Vietnam and Cambodia but also in Paraguay, Yeman and Angola, according to data collected by app tracking service App Annie. Growth in India has been particularly strong this year as the country captured 32 percent of Bigo’s 11 million new Android users who downloaded the app via Google Play between January and February, according to data provided by SensorTower.

Li estimated in 2017 that Bigo was generating an annual revenue of $300 million at the time. Bigo claims 200 million registered users to date with MAUs reaching almost 37 million worldwide. Its popularity has, however, gone hand in hand with its reputation for hosting offensive content, but the startup has assured it deploys resources to closely screen content. Back in China, YY, Huya, Douyu and the likes are constantly grappling with the government’s tightening grip over online information, which puts the burden on media companies to keep a robust content monitoring team to not only rid illegal videos but also parse the country’s opaque definition of what’s considered “inappropriate”.

Update (March 5, 2019, 13:00pm): Added details on Bigo’s growth and Huya’s overseas expansion

News Source = techcrunch.com

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