Bytedance’s education ventures I The upbeat

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In focus / Bytedance
Issue #12

  • Bytedance’s education ventures
  • The upbeat
Dear reader,

What do you think will be the future core business of Bytedance? Contrary to current trends, it may not be Douyin-based advertising or gaming. In fact, the future of Bytedance could very well be something less popular with China’s younger generation—education.

This week, we provide an overview of Bytedance’s education business ventures. We’ll take a look at how the company has tried to replicate its TikTok success in the education sector—with less than stellar results thus far.

As usual, we follow up with the most important news updates on the world’s most valuable startup. Please reply to this email with your comments, feedback, or inquiries.

Enjoy,
Wei and Tony
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Bytedance’s education ventures
The next money-making business
Bytedance may have made its name with short-video and news aggregator apps, but it seems unusually determined to break into the education sector.

Over the past two years, the TikTok owner has made several attempts to gain a foothold in online education through the launch of new apps, acquisitions, and investments. Underperforming apps are being abandoned even as new ones keep appearing, fresh off the production line.

Analysts contend that Bytedance is merely pushing ahead with its usual cash-burning strategy while leveraging its massive user base to expand into online education. However, edutech is more complicated than simply rolling out apps.

In December 2017, before the company had made any kind of foray into education, Bytedance held an educational industry conference to talk about the potential integration of the sector with technology. The event marked the first hint dropped by the Beijing-based unicorn about its pedagogical ambitions.

Since then, the company has actively moved into the online learning sphere.

Timeline

  • In March 2018, Bytedance acquired OpenLanguage, an online English course provider.
  • In May 2018, it launched Gogokid, a one-to-one tutoring platform for Chinese children to learn English online with foreign teachers.
  • In July 2018, it launched Haohao Xuexi, a knowledge-sharing app that features content covering career advice, parenting, culture, and wealth management.
  • In August 2018, Bytedance led a $49.5 million Series C funding round in San Francisco-based education technology company Minerva Project.
  • In December 2018, it launched AiKID, a foreign teacher live-streaming platform.
  • Bytedance licensed some patents in January from now-defunct smartphone maker Smartisan, which the company indicated was meant to expand and develop its online education business.
  • In May, it launched a K-12 online education platform Dali Ketang, which offers courses from primary school to high school. Chinese tech news outlet 36Kr reported that Bytedance acquired another online teaching platform named Qingbei Wangxiao to help with the development of Dali Ketang.
  • In July, it was reported that Bytedance was testing a short-video-based English-learning app named “Tangyuan English.”

Setbacks

Of all of its online education offerings, Bytedance has invested most money into Gogokid. China Entrepreneur Magazine reported in January that Bytedance has plowed over RMB 400 million (around $56.7 million) into the platform since it was founded last year.

But that didn’t prevent the platform from suffering setbacks. In April, Bytedance reportedly laid off over half of Gogokid’s employees, including reducing its sales team by around 70% to 200 employees.

At the same time, Chinese media reported that AiKID had suspended its operations four months prior to the Gogokid layoffs.

Technology and a massive user base (total monthly active users just reached 1.5 billion) are Bytedance’s core strengths, which have led to the company’s success in mobile apps; however, that success has yet to be replicated in the education sector, said Pan Xin, vice president at the online business division of New Oriental, the first Chinese learning company to list in New York.

Nevertheless, the education mogul suggested that Zhang Yiming, the founder and CEO of Bytedance, has a “passion” for the education business, adding that Bytedance would eventually disrupt the education market following a period of “trials and errors.”

Bytedance’s education arrangements
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The upbeat
Highlights from recent headlines
Strategic moves

TechNode: “TikTok owner ByteDance has introduced an in-app search engine for its popular Jinri Toutiao newsfeed app, a move that challenges Baidu’s monopoly in China’s search market.”

Bytedance has launched a mobile site for the search engine, consisting of only a search bar and a search button. According to Bytedance employees, the company also already has “more than ten thousand devices” up and running to provide support for its search services. While Bytedance’s search service is not likely to go head-to-head with Baidu since most of its search results are still within the Bytedance content ecosystem, it could boost the company’s revenues by deploying more targeted ads.

AdNews: TikTok may be opening its first Australian office; it could be operational as early as the end of this year, according to industry sources.

The Australian office would be the latest in the dozen or so existing offices operated by the short-video app around the world. A local office could enable Bytedance to more effectively deal with regulatory issues in Australia and decrease the possibility of business-disrupting bans like the one experienced this April in India.

TikTok: TikTok has secured a partnership with GIF platform GIPHY to integrate its functionalities into the short-video platform, allowing users to add trending GIF stickers to their videos with the click of a button.

The partnership is a move by TikTok to boost engagement on the platform by introducing a visual element that audiences are already familiar with. The prospect of turning TikTok memes into the GIF format could also drive growth for the short-video platform. According to analytics firm Sensor Tower, TikTok and Douyin have been installed more than 156 million times in the second quarter of 2019.


New experiment in social

36Kr: Following Duoshan and Feiliao, Bytedance has made another foray into the social app market by adding a new group chat function to short-video app Douyin.

In addition to enabling users to create group chats with friends on Douyin, the feature also allows users to invite friends directly from Tencent’s messaging app WeChat and QQ. While this is not likely to challenge WeChat’s dominance, the size of Douyin’s existing user base means the feature could prove to be more successful at gaining a share of the social market than Duoshan and Feiliao, neither of which are performing well at the moment.


Competition with Kuaishou

TechNode: “The number of people using both Douyin and Kuaishou more than doubled in the 12 months leading up to June, according to a report from mobile data research firm QuestMobile.”

Previously, Douyin and Kuaishou targeted relatively different audiences, but to sustain their fast growth, both players are looking to lure users from the other platform. With Kuaishou planning to boost its daily active user count to 300 million by January 2020, the rate of overlapping users will likely only increase.
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