The Rise of Short Video Platforms

How did we get here and where do we go from here?

While the western world was still working with horizontal videos, causing everyone to hold their phones with two hands to view videos in full-screen mode, there was a phenomenon developing in China that would then go on to lead the short, vertical video revolution.

We may think of Vine as the first short video platform in the US. It certainly was the platform that revolutionized the idea of really short (6s) video loops and brought out creativity that the world didn’t know was possible.

Further, we may think of Snapchat as the first platform to bring vertical video in the modern sense of the word - where a full screen immersive experience can be brought while operating the phone with one hand as it is meant to be held and used. When Snapchat introduced Stories, a whole class of creators came to light with exceptional talent. However, that did not catapult into the short video format we know today.

Instead, short videos as we know it today emerged in China and in the last decade, has taken the world by storm as the clear new media format winner. Kuaishou was among the first platforms to launch short videos in November 2012. Today, TikTok dominates this space and a number of players are trying to replicate the success.

Even though Snapchat pioneered vertical videos for the west and with the launch of Discover, brought premium content in short, vertical video format, Snapchat was not the platform that brought UGC short videos to market.

The world’s largest short video platforms, until 2020, were built by China. Today, China continues to dominate the innovation in this area while the rest of the world is playing catch up.

Silicon Valley vs China In Video, Circa 2015

In January 2015, Kuaishou was already exploding in China with over 10M daily active users. In July 2015, Musical.ly hit #1 on the US app store - Musical.ly was the first app made in China to win the US market in a big way. Chinese VC firms like 5Y Capital bet on Kauishou and Musical.ly early, fueling the short video revolution.

While a few select Silicon Valley VCs participated in Musical.ly’s funding rounds, it was still largely ignored as an app on which teenagers did meaningless activities. Facebook, for one, did not think Musical.ly was a threat to Instagram’s future.

Instead, in 2015, Silicon Valley was obsessed with the Live revolution. Meerkat, a live streaming app, had become the darling of the VC community. Twitter supposedly paid $50M-$100M to purchase Periscope before it launched and cut out its social graph access to Meerkat, which eventually shut down. Rumors were that, despite several warning signs that users may not be hosting live sessions as often as expected, Meerkat was kept alive far too long by investors who believed in the Live revolution.

Today, Kuaishou and Bytedance, the world’s largest short video platform owners, are both $150B+ companies.

Live as a use case proved out to be unsustainable for a standalone platform and ended up becoming a secondary use case on large platforms such as Facebook, and that too, with most of the views happening after the Live session is over, on the recorded video. Meerkat eventually morphed into Houseparty, which brought Live to a small personal group. However, after having raised over $70M, Houseparty ended up selling to Epic Games in a major down round, at ~$35M.

There is more to talk about Live as a use case and the exceptions in the gaming community that led Twitch to its success. But, that’s for another post.

Silicon Valley vs China In Video, 2021

We’re here in 2021 and everyone around the world agrees that short video as the new media format is here to stay and become an integral part of every industry in the next decade. This world is frantically trying to scramble and capture a piece of the pie as aggressively as possible.

But, the world is different now. Silicon Valley is no longer driving innovation in this area. After a decade of innovation in social networks, innovators dilemma is showing its ugly face. Nearly every major social platform is building a short video story. However, none of them are innovating yet. They are barely playing catch up to TikTok and the Chinese brilliance. But, innovators dilemma is real and there is no reason that Silicon Valley and the Internet companies will be exempt from it.

Unfortunately, this game is long and hard. Without real innovation, it will always be a game of catch up and that does not allow leap frogging to the next big thing. And China is and will remain exceptionally strong in playing the long game.

US Startups trying to build the next big thing in this area have insufficient support from the VC community. Small dollars have gone in here and there with tentative support - for example, Clash raised a seed round (estimated $4M) and merged with the Vine successor, Byte, to solve the creator economy with short videos. But, reality is that it is impossible to make a dent with $4M in this area.

The Chinese VCs have been aggressive in funding and grooming short video platforms. TikTok itself spent billions of dollars in multiple markets to achieve rapid growth. Kuaishou was similarly deeply funded by 5Y, Tencent, and others. Alibaba backed VMate - a short video platform that was very successful in India - to the tune of $100M. Likee, Helo, Billbilli, and others have received similar levels of funding.

Meanwhile, the US VCs are largely sitting out the early and growth stage funding rounds, waiting for winners to emerge before they take a chance. If the VCs are all waiting, how do those who wish to innovate make progress? The answer is virality - at least, that’s the expectation. But, virality is a complex topic and requires its own post to unpack.

So, we’re at crossroads here. Innovation and growth before funding or funding to drive innovation and growth - that’s the question!

But, one thing we can all agree on - short videos will dominate our future in practically every field - enterprise, social, education, commerce, and much much more!

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PS: At Rizzle, we are getting beyond the current state of short videos and are decidedly innovating the future - more about what we’re building in a future post.