Decoding China's Short-Form Video Revolution for India

Exploring how India can navigate its growing market, drawing lessons from Chinese platforms like Douyin and Kuaishou.

Hi there!

This week on Eximius Echo, we delve into China's pioneering role in short-form video consumption, a trend that India is actively embracing. Exploring the factors driving China's short-form video market, including the success of platforms such as Douyin and Kuaishou, we analyse the demographics, strategies, and market dynamics driving their remarkable success. By drawing parallels with India's burgeoning market, we uncover key trends and insights that can influence India's short-form video landscape, ranging from tailored content strategies to the seamless integration of social commerce.

If you’ve not heard of us, Eximius is a sector-differentiated fund focusing on FinTech, SaaS, Online Media & Gaming, and HealthTech. You can find out more here. This newsletter is an attempt to share ideas, insights, and context within the realms of our chosen sectors. Let’s dive in.

Defining the Chinese Market

Over the years, India has emerged as one of the largest Internet economies in the world. Boasting a multifaceted demographic dividend combined with the political stability seen in developed economies like the US, India is now a powerful frontier for new ideas and innovation to flourish. 

As we study gaps, trends, and white spaces in the Indian market, we aim to pre-empt groundbreaking solutions that can revolutionise markets. For this, we often look to China given the similarities both economies share – rampant growth driven by a large consumer class, centuries-old history influencing cultural and social behaviour, and similar consumption patterns.

With over 76% internet penetration, it is the digitally native users that form the heart of the Chinese consumer class. But, what do the Chinese use the internet for the most? The answer is consuming short-form videos.

Short-form videos dominate the consumption patterns in China with over 1 billion consumers. Short-form videos not only get the most eyeballs but also enjoy a very consistent and interactive user base. Douyin and Kuaishou, the largest players in the industry with over 1 billion mobile users, see about 60% of their total user base active daily who spend about two hours a day on average on their platforms. Combining this with the fact that this content accounted for 31% of Chinese people’s online time, more than any other form of online entertainment, it is clear that short videos strike a unique chord with the average Chinese user. 

What Dominates the Chinese Market?

Talking about market segmentation, Douyin and Kuaishou have the highest market share (54% together as of 2022) while catering to very different parts of the market. 

Thus, while drastically different, both Douyin and Kuaishou app garners 750 million users every month and is one of the most popular apps in China. Douyin is specifically popular amongst younger generation users in Tier 1 and 2 cities. Large metropolitans like Beijing, Shanghai, and Guangzhou are its biggest markets with the above three cities constituting ~21% of the audience. In terms of age profile, 52% of Douyin’s users are under the age of 30.  

A major reason for the app’s popularity was the use of its signature watermark filters which hindered plagiarism, multiple options for music selection, and sophisticated video-editing tools that were made to be as accessible as possible. The platform has also worked to consistently optimise its algorithms to personalise user experience as much as possible while reducing the cognitive load. The UI is easy to navigate which is further augmented by a robust recommendation engine that reduces the need to search for videos/topics. This has made the app more seamless for older users.

Another key factor has been Douyin’s marketing philosophy. The platform frequently introduces ‘challenges’ that can be attempted by any user. Celebrities and influences are frequently brought in to further popularise them and bring in their audiences. These spurts of virality along with the inherent intuitiveness of the platform help make it a large sensation.

Kuaishou, on the other hand, recorded an MAU of 700 million in the 4th quarter of 2024 while its average DAU in the same period was 382 million. Initially positioned as a GIF-making app, the app pivoted to a short video creation platform with an added live-streaming functionality. Kuaishou Technology owns the platform, which trades publically with a market cap of $27.2 billion.

Unlike Douyin, Kuaishou focuses on users based in rural areas. Roughly 65% of the app’s users live in cities that are tier 3 or lower with a large chunk of its user base comprising students, farmers, white-collar workers, etc. In terms of gender profile, ~45% of its users are women.

Its unique positioning in tier 3+ regions has enabled Kuaishou to find a unique wedge in the market. Alongside offering relatable content for an average person’s life, Kuaishou also emphasises heavily on social commerce. As per a report from Tencent, Chinese people from lower-tier cities are 200% more interested in mobile shopping than those from higher-tier cities. This allowed Kuaishou to achieve a GMV of $56 billion in the last quarter of 2023. 

Thus, while drastically different, both Douyin and Kuaishou denote how large outcomes can be created using the power of short video content.

Where does this leave India?

Quite similar to China, India is also slated to undergo a huge boom in this market. We’re already seeing early signs of this with the growth of Meesho, ShareChat Live, and others. According to a report from Redseer Strategy Consultants, the Indian opportunity can amount to a market of $8 billion to $12 billion by 2030. With a user base of 250 million for just the homegrown platforms, this will quickly become an important market for brands to interact with customers. 

Akin to Chinese consumers, Indians prefer platforms that provide a seamless UI experience which minimises cognitive load and a need to deliberately search for new content. 

Further, the primary demographic represented in this audience will be non-metro consumers who interact with vernacular languages, (83% of users from tier 2+ cities) which matches well with the Chinese market. Therefore, there are a few trends/learnings that can be anticipated in the Indian market:-

1) Localised Content: One of the biggest factors behind the success of Kuaishou has been its ability to offer relatable and localised content to its viewers. Given India’s diverse sociocultural landscape, this will play a huge part in creating pan-India successful platforms. In 2022, 85% of the short video content consumption was in Hindi and other regional languages.

As per a report from Social Beat, Bewakoof – a popular casual-wear apparel company marketed in TikTok during its heyday in India through localised campaigns saw 60% incremental growth in install volume and a 20% reduction in cost per install.

To achieve this, it is also important to offer a simple video creation suite as pioneered by Douyin.

2) The Rise of Live Gifting: In China, quite a few popular short-video platforms allow people to live stream to have deeper interactions with their user bases. Kuaishou has been a large proponent of this model. Buying virtual gifts is the largest contributor to the platform’s revenues as the platform charges a hefty tip on all purchases.

In India, this channel is expected to generate revenue worth $1.7 billion by 2030. There is already a precedent of Indian users being familiar with virtual gifting as 22% of gaming content consumers have tipped or gifted streamers in the past. This is driven by cultural factors like going to live performances and tipping. Therefore, this behaviour is only expected to increase in the future.

3) E-commerce Integrations: Short video platforms also provide ample opportunities for social commerce. As denoted in the below figure, video platforms’ gross merchandising volume (GMV) in China is expected to amount to 35% of the ecommerce market by 2025.

We expect similar behaviour from the Indian user base. While Indian ecommerce platforms are already working to enhance their gamification aspects, we expect them to partner with/integrate popular short-video platforms to entice users to purchase.

The positive forecasts for this sector indicate a change in consumer preferences who are now looking for more personalised forums for finding new products. This is coupled with a desire to be more connected with these brands socially. We are already seeing huge traction for this idea in two of our portfolio companies; Oyela, and Shuru. The former is a network-driven social commerce platform that empowers people looking to build new-age brands. The latter is a hyper-local social media network that helps be more connected with brands around them with a special social commerce play.

Therefore, as the Indian users’ preferences evolve, we expect short-form videos to emerge as a popular model to not just reach out to them, but create local entrepreneurs. This combined with ONDC can create a very powerful commerce channel for Tier 2 / 3 audiences.

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