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Instagram is launching a video-music remix feature to finally fight back against Chinese social rival TikTok. Instagram Reels lets you make 15-second video clips set to music and share them as Stories, with the potential to go viral on a new Top Reels section of Explore. Just like TikTok, users can soundtrack their Reels with a huge catalog of music, or borrow the audio from anyone’s else video to create a remix of their meme or joke. 

Reels is launching today on iOS and Android but limited to just Brazil where it’s called Cenas. Reels leverages all of Instagram’s most popular features to frankenstein together a remarkably coherent competitor to TikTok’s rich features and community of 1.5 billion monthly users including 122 million in the US according to Sensor Tower. Instead of trying to start from scratch like Facebook’s Lasso, Instagram could cross-promote Reels heavily to its own billion users.

But Instagram’s challenge will be retraining its populace to make premeditated, storyboarded social entertainment instead of just spontaneous, autobiographical social media like with Stories and feed posts.

“I think Musically before TikTok, and TikTok deserve a ton of credit for popularizing this format” admits Instagram director of product management Robby Stein. “No two products are exactly the same, and at the end of the day sharing video with music is a pretty univeral idea we think everyone might be interested in using. The focus has been on how to make this a unique format for us.”

Throwing Instagram’s Weight Around

Starting in Brazil before potentially rolling out elsewhere could help Instagram nail down its customization and onboarding strategy. Luckily, Brazil has a big Instagram population, a deeply musical culture, and a thriving creator community, says Stein.

It also isn’t completely obsessed with TikTok yet like fellow developing market India. As Facebook CEO Mark Zuckerberg said about trying to grow Lasso, “We’re trying to first see if we can get it to work in countries where TikTok is not already big.” Instagram used this internationalization strategy to make Stories a hit where Snapchat hadn’t expanded yet, and it worked surprisingly well.

Instagram also has the US government on its side for a change. While its parent company Facebook is being investigated for anti-trust and privacy violations, TikTok is also under scrutiny.

Chinese tech giant ByteDance’s $ 1 billion 2017 acquisition of Musical.ly, another Chinese app similar to TikTok but with traction in the US, is under review by the Committee For Foreign Investment In The United States. ByteDance turned Musical.ly into TikTok, but it could have to unwind the acquisitions or make other concessions to US regulators to protect the country’s national security. Several Senators have also railed against TikTok injecting Chinese social values via censorship into the American discourse.

Perhaps Instagram’s best shot at differentiation is through its social graph. While TikTok is primarily a feed broadcasting app, Instagram can work Reels into its Close Friends and Direct messaging features potentially opening a new class of creators — shy one who only want to share with people they trust not to make fun of them. A lot of this lipsyncing / dancing / humor skit content can be kinda cringey when people don’t get it just right.

How Instagram Reels Works

Users will find it in the Instagram Stories shutter modes tray next to Boomerang and Super-Zoom. They can either record with silence, borrow the audio of another video they find through hashtag search or Explore, or search a popular or trending song.

Facebook’s enormous music collection secured from all the major labels and many indie publishers powers Reels. Users pick the chunk to the song they want, and can then record or upload multiple video clips to fill out their Reel. Instagram has been building towards this moment since June 2018 when it first launched its Music stickers.

Instagram is adding some much-needed editing tools for Reels like timed captions so words appear in certain scenes, and a ghost overlay option for lining up transitions so they look fluid. Still, Reels lacks some of the video filters and special effects that TikTok has purposefully built to power certain gags and cuts between scenes. Stein says those are coming though.

Once users are satisfied with their editing job, they can post their Reel to Stories, Close Friends, or message it to people. If shared publicly, it will also be eligible to appear in the Top Reels section of the Explore tab. Most cleverly, Instagram works around its own ephemerality by letting users add their Reels to their profile’s non-disappearing Highlights for a shot to show up on Explore even after their 24-hour story expires.

Instead of having to monetize later somehow, Instagram can immediately start making money from Reels since it already shows ads in Stories and the Explore tab.

Cloning TikTok isn’t just about the features, though Reels does a good job of copying the core ones while leaving out AR effects and transitions for now. But creating scripted content is totally new for most Instagram users, and could feel too showy or goofy for an app known for its seriousness. Instagram may have to lose its artful, cool vibe to embrace the silliness of tomorrow’s social entertainment.


TechCrunch

Welcome to TechCrunch’s China roundup, a digest of events that happened at major Chinese tech companies and what they mean to tech founders and executives around the world.

The talk about U.S.-China relationships over the past two weeks has centered heavily on the NBA controversy, which has put the interest of some of China’s largest tech firms at stake. Last week, Houston Rockets general manager Daryl Morey voiced support for Hong Kong protests in his since-deleted tweet, angering China’s NBA fans and prompting a raft of local tech companies to sever ties with the league. But some businesses seem to be back on track.

Tencent, which is famous for a slew of internet products, including WeChat and its Netflix-like video service, has been NBA’s exclusive streaming partner since 2009 and recently renewed the deal through the 2024-25 season. As many as 490 million fans in China watched NBA programming through Tencent in just one season this year, the pair claims.

The basketball games are clearly a driver of ad revenue and subscribers for Tencent amid fierce competition in China’s video streaming market, but following Morey’s statement, the company swiftly announced (in Chinese) it would suspend portions of its broadcast arrangements with the NBA. Popular smartphone brand Vivo and Starbucks’s local challenger Luckin also promised to pause collaboration with the NBA.

It was a tough call for businesses having to choose between economic interest and patriotism, and Tencent was tactful in its response, pledging only to “temporarily” halt the streaming of NBA “preseason games (China).” As public anger subsided over the week, Tencent resumed airing NBA preseason games on Monday. After all, the content partnership reportedly cost Tencent a heavy sum of $ 1.5 billion.

Entertainment giant turns to education

tiktok edutok

TikTok is probably the Chinese Internet service being most closely watched by the world at the moment. Its parent firm ByteDance, last reportedly valued at $ 75 billion, has ambitions beyond short videos.

This week, more details emerged on the upstart’s education endeavors through a WeChat post by Musical.ly founder Lulu Yang, whose short-video startup was acquired by ByteDance and subsequently merged with TikTok. Yang confirmed he was helping ByteDance to develop an education device in collaboration with phone maker Smartisan’s former hardware team, which ByteDance has absorbed. The product, which leverages ByteDance’s artificial intelligence capabilities, will be a “robotic learning companion” for K-12 students to use at home.

The news arrived in the same week that ByteDance’s flagship video app TikTok announced producing educational content for India, where it’s used by 200 million people every month. The move is designed to assuage local officials who have vehemently slammed TikTok for hosting illicit content, as my colleague Manish Singh pointed out.

Diving into education appears to be a sensible move for ByteDance to build relationships with local authorities, which can at times find its entertainment-focused content problematic. The multi-billion-dollar online education industry is also highly lucrative. ByteDance, with 1.5 billion daily users across TikTok, Douyin (TikTok for China), Toutiao news aggregator and other new media apps, is in a good position to monetize the enormous base by touting new services, whether they are educational content or mobile games.

Also worth your time

  • A total of 53 major video streaming services in China have introduced a “safe mode” for teenagers as of this week, state media reported (in Chinese). During the controls mode, underage users won’t be able to search for content, send real-time comments or private messages, upload or share videos, or reward live streaming hosts with virtual gifts. It’s part of China’s national effort to protect young people from consuming harmful digital content and internet addiction, which has also spawned age checks processes in Tencent games. 
  • Xiaohongshu, a fast-growing social commerce app in China, is back in Android app stores nearly three months after it was banned by the government for undisclosed reasons. Rumors had it that the service, which was reportedly valued at more than $ 2.5 billion last year, was used to spread pornography and fake reviews. It’s hardly the first tech company hit by media regulation, and it can probably learn a thing or two from ByteDance, which has aggressively ramped up its content moderation force following a sequence of crackdowns by the government.
  • Meituan will partner with 1,000 vocational schools in the country to train as many as 100 million workers from the service industry over the next ten years, the Hong Kong-listed company announced (in Chinese) this week. Food delivery makes up the bulk of the on-demand services giant’s business but its footprint spans a wide range. The classes it provides to prepare workers for a digital era will also touch upon skincare, hair styling, manicure, plastic surgery, hospitality and parenting, a program highlighting the extensive reach of technology into Chinese people’s every life.
  • Chinese workers turn out to be big advocates for the application of AI. According to a survey by Oracle and research firm Future Workplace, workers in India (60 percent) and China (56 percent) are the most excited about AI. Japan, where the labor force is shrinking, ranks surprisingly low (25 percent), and the U.S. has an equally mild reaction (22 percent) toward the technology.


TechCrunch

Popular short-form video app TikTok has been slowly ramping up its advertising strategy this year as it increases its focus on monetization. However, the company still generates a smaller of its revenue from in-app purchases — and that number hit a high of $ 9 million in May, according to a report from Sensor Tower. That represents 500% year-over-year growth from the $ 1.5 million spent in May 2018, and 22% growth from April’s $ 7.4 million.

Arguably, TikTok’s hasn’t put much emphasis on its in-app purchase strategy. For now, the Beijing-based app owned by ByteDance is more heavily focused on driving user growth. It knows that putting some of its best features behind a paywall could potentially limit user adoption and engagement — especially as TikTok looks for growth in emerging markets like India, where it recently said it has 200 million users, 120 million who are monthly actives.

In India, the app overtook Facebook as the most downloaded social networking app in the first quarter of the year, and is now looking to pull in more advertisers. The Economic Times recently reported brands like Pepsi, Snapdeal, Myntra, Shaadi.com, and Shopclues have signed on to advertise.

Meanwhile, Indian users only accounted for half a percent of in-app purchases — just around $ 45,000, said Sensor Tower.

The lack of spending points to how little TikTok has focused on virtual goods. Instead of offering its video effects or filters for purchase, TikTok’s coins are used for buying gifts which can be sent to live streamers to show support.

Despite TikTok’s inattention to its virtual goods strategy, iOS users in China spent $ 5.9 million, of the total $ 9 million spent on in-app purchases in May, accounting for nearly 65% of purchases. In the U.S., both iOS and Android users spent a combined nearly $ 2 million, or 22%, of the app’s gross revenue.

TikTok’s installs are continuing to climb, Sensor Tower also noted.

In May, around 56 million users worldwide installed the app for the first time — a 27% increase over April. However, new installs were down by 21% from January’s 70.8 million. To some extent, India’s brief ban on the app impacted these figures — the app likely lost a potential 15 million new users in April, Sensor Tower had earlier estimated.

To date, TikTok has seen 1.2 billion installs, up from a billion at the end of last year. This figure doesn’t equate to active user numbers, however. On that front, TikTok said last summer it has 500 million monthly actives, and hasn’t publicly shared an updated number since. Life-to-date user spending is currently at $ 97.4 million, with the app expected to pass the $ 100 million milestone this month, the new report said.


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