The Rise Of Weibo: Lessons Twitter Can Learn From Chinese Upstart
Yue Wang ,
Forbes Staff
Jun 6, 2017 @ 10:44 PM
A Sina Weibo display at the Global Mobile Internet Conference (GMIC) in Beijing.(AP Photo/Mark Schiefelbein)
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In a bid to turn around its slowing business, Twitter could do worse than learn a thing or two from its Chinese rival – the microblogging site, Sina Weibo.
While the U.S. company struggles to grow its user base, which has hovered around 300 million over the past few years, Weibo is thriving.
While both platforms share similar features, such as a 140-character limit on messages, the Beijing-based service has overtaken Twitter in both market influence and user numbers. Weibo, which reported a 30% rise in monthly active users to 340 million in the first quarter of 2017, now has a market capitalization of $16.4 billion. Twitter, which is actually banned in China, has 328 million monthly active users and a $13.5 billion market capitalization.
The company is 50% owned by Sina Corporation, a Chinese media company that is also behind one of the country’s largest news sites, Sina.com. Chinese e-commerce giant Alibaba, which has a 31% stake, is the second largest shareholder.
Advertisers are also flocking to Weibo. With 80% of its total revenue coming from online advertisements, the company reported a 67% rise in total income to $199 million in the last quarter, according to its latest financial results. In contrast to Twitter’s $62 million loss in the first quarter, it is profitable – Weibo’s net income increased by a whopping 561% to $47 million over the same period.
| Twitter Vs. Weibo In Numbers | | MAU (In mlns) | 2017 Q1 Revenue ($mln) | Net Income ($mln) | Market Capitalization ($bln) | | Twitter | 328 | 548 | -62 | 13.5 | | Weibo | 340 | 199 | 45 | 16.4 |
Here are three key reasons for Weibo’s success:
Richer Content
While Twitter has largely remained the same over the years, Weibo has evolved into a multimedia blogging platform with features that combine Twitter, Pinterest and Tumblr. It is also relaxing its 140-character limit and offers users the ability to share more images and video – a reflection of the company’s belief that Chinese millennials will increasingly ditch text in favor of richer content.
In a way that is similar to YouTube, Weibo works with hundreds of partners creating video content around areas including education, food, sport and entertainment. It is also the preferred partner of major TV networks such as state broadcaster CCTV, creating short-form versions of its hugely popular Spring Festival gala.
Weibo’s reach has also extended beyond China -- both the NFL and NBA have opened accounts on Weibo to capitalize on interest from Chinese sports fans, with uploaded clips of the 2017 Super Bowl game attracting more than 80 million views during their first 24 hours, Weibo Chief Executive Wang Gaofei said in a recent analyst’s call.
Charles Chao, chief executive officer of Sina Corp., Sina Weibo's largest shareholder. (Photo by Nelson Ching/Bloomberg)
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And there’s the interactive, fun side of Weibo. Famous Weibo bloggers are often invited to broadcast clips through the app, which also allows viewers to purchase virtual gifts such as flowers and Ferraris for their favorite stars. According to the company, one fashion blogger received almost 8 million yuan ($1.2 million) in digital gifts during Weibo live streaming shows last year. The result is that, in March, total video views increased more than fivefold from a year ago, according to Nomura Securities analysts. Video advertising now represents close to 20% of Weibo’s total ad revenue, according to the company.
“There are constant improvements to the Weibo product,” says Zhang Xueru, a Shanghai-based analyst at research firm 86 Research. “The company is bringing in richer media content by partnering with not only celebrities but many small media sites. It has a pretty healthy content ecosystem.”
Revamped Feed
Weibo is also conscious of the need to retain users, with the development of algorithms at the core of this. By analyzing factors such as a user’s click history, Weibo can push content it feels is more relevant to that individual – which keeps users engaged and inside the app for longer.
No Competition
A third reason contributing to Weibo’s rise is censorship – or China’s so-called “Great Firewall.” Aside from Twitter, the country’s censors have also blocked the likes of Youtube and Instagram, freeing Weibo from the kind of competition Twitter is grappling with globally.
“Instagram and Youtube have taken away some users from Twitter,” says Morningstar analyst Marie Sun. “In China, there are no such platforms and Weibo believes it can fill the void.”
But it doesn’t mean the company has no competition at all. Tencent’s instant-messaging app WeChat is an ever present threat to its user base, as increasing numbers of people spend more time reading news and watching videos there. Weibo’s answer has been to create more content partnerships with third parties and introduce more live streaming.
It also attracts more users by partnering with popular smartphone brands including OPPO and Vivo, which pre-installs the Weibo app on their phones. The strategy allows the company to reach more young users in China’s lower-tier cities, where consumers have embraced the cheaper Chinese handsets. Now, more than half of Weibo’s active users live in third- and fourth- tier cities such as Luo Yang and Yin Chuan, according to China’s Everbright Securities.
What’s more, Weibo stands out from WeChat by allowing users to follow and interact with celebrity accounts. “WeChat is more like a personal tool,” 86 Research’s Zhang says. “Weibo, however, is China’s leading open social media platform.”
And it’s a company with plenty of space to grow. Currently, it accounts for just 2% of China’s $42 billion online advertising market. As advertisers pay more for video ads, its revenue potential looks strong, said M Science analyst Henry Guo.
Follow me on Twitter @yueyueyuewang
https://www.forbes.com/sites/ywang/2017/06/06/the-rise-of-weibo-lessons-twitter-can-learn-from-chinese-upstart/#1945876e20b0
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