In September 2016, the messaging app WeChat had more than 768 million daily users. 50% of these users use WeChat for at least 90 minutes a day and 35% of their total mobile use was spend on the WeChat application (WeChat, 2016). In recent years, WeChat has become one of the largest platform communities in the world. WeChat is currently dominating the mobile internet in China and will continue to do so in the future. In order to understand WeChat’s long-term strategy this informative article will mainly focus on the recently introduced feature of WeChat: the WeChat Mini Programs.
But first, for the people who do not know WeChat that well, you should know that WeChat has become more than just a messaging app. Besides its messaging feature, WeChat’s other main features are (Bhagat, 2017):
- WeChat Moments – WeChat’s main social media feature
- WeChat Pay – WeChat’s in-app pay feature
- WeChat Game – WeChat’s games feature
There are many other features (fun fact: there is even a “Go Dutch” feature that allows users to easily split bills and pay using the WeChat Pay feature), but they will not be covered in this article.
This article highlights the WeChat Mini Programs functionality, because it has the potential to disrupt the application industry. In short, the WeChat Mini Programs enables (third party) apps (so called mini programs) within the WeChat app. One of the main advantages is that users do not need to download or install the mini programs. This will lead to phone storage and time savings for the users. Furthermore, the development of a mini program is faster and cheaper (Brennan, 2017). In the following video this new feature is further explained:
The mini programs can also be extremely powerful for SMEs. For example, a restaurant chain could develop a mini program that allows customers to browse through the menu, order food, pay the bill and “Go Dutch” all within the same app. This new feature offers endless new opportunities for companies (for more examples click here). However, there are also some limitations for the mini programs. For example, the mini programs have fewer possibilities than normal apps. Also, the use of QR codes is very common in China, but not outside of China. Therefore, it would be harder to implement this system outside of China.
In the lecture of yesterday we saw some examples of companies opening up to third parties. This led to an enormous increase in market cap. With WeChat opening up to third parties by allowing them to build apps within WeChat, it has a great potential to grow as well. Especially when you take the network effect into account (more users using mini programs will lead to more mini programs, which will lead to more users etc.). With the introduction of this new feature, WeChat is also taking on the App Store and Play Store, because probably less (especially Chinese) people will download apps from both stores. Creating the mini program platform WeChat also has a new source of income. In this triangular platform (between users, companies and WeChat) WeChat could charge companies to increase their revenue. In conclusion, Mintor (2017) argues that WeChat is transforming into a new mobile operating system (OS) and could even compete with the IOS and Android OS in the future.
I agree with Mintor and believe that this could be WeChat’s long-term strategy. Please let me know your thoughts about WeChat’s mini programs in the comment section!
Bibliography:
Bhagat, R. (2016, 29 september). 5 WeChat Features That WhatsApp Should Really Use. Retrieved from https://www.forbes.com/sites/rahilbhagat/2016/09/29/5-wechat-features-that-whatsapp-should-really-use/#1806fc837eea
Brennan, M. (2017, 1 februari). WeChat Mini Apps by Matthew Brennan, China Marketing Summit 2017 [Video]. Retrieved from https://www.youtube.com/watch?v=OjBc_3bHbJQ
Minter, A. (2017, 19 januari). WeChat’s App Revolution. Retrieved from https://www.bloomberg.com/view/articles/2017-01-19/wechat-s-app-revolution
WeChat. (2016). The 2016 WeChat Data Report. Retrieved from http://blog.wechat.com/2016/12/29/the-2016-wechat-data-report/
HI Jeroen,
this is a very interesting post! In Europe we tend to forget about the growth of the WeChat platform in China.
I agree with you when it comes to WeChats strategy of growing into a new operating system. In their platform envelopment they already entered functionally unrelated markets such as payment.
Opening up for third party developers is a very clever move since it increases the network effect (like you pointed out), increases revenues for WeChat and also the value of the platform.
However, do you think that for app like WeChat it is possible to reach a Winner takes it all position? WeChat is characterized by strong network effects and low multi-homing. So it is easy for them to increase their platform and network effect but I would not describe them as Winner takes it all. Users are very demanding when it comes to apps (Singh and Singh, 2017) and there are several complex use cases. WeChat can offer many functionalities to serve as many customers as possible but I doubt that there will be one app that serves everybody in every way.
Reference: Singh, N. and Singh, S. (2017). The race to be the all-in-one app. [online] TechCrunch. Available at: https://techcrunch.com/2016/09/16/the-race-to-be-the-all-in-one-app/ [Accessed 5 Oct. 2017].
Thank you for your interesting article Jeroen.
Having lived in China for half a year I know and used WeChat intensively and I can truly say that this is one of the best applications on the market, especially in China. It is unbelievable to see how integrated WeChat is in the life of a Chinese youngster and how important it became in mine. WeChat cannot be compared to Facebook, Instagram, WhatsApp and your local bank application because it is all in one. Honestly, people in China use WeChat for everything.
After reading your article I did some research on WeChat myself and this led me to an article about the Mini Programs. In this article 7 reasons are described for not using the WeChat mini programs. The main idea of the article is that the Mini Programs are not new at all and that the non-install applications are already existing for a long time and that their known by: “Webpages”. In his article he states: “they are webpages, created in a language very similar to traditional web-APPs, and WeChat simply gives you a way to cache their code on your phone” (Graziani, 2017).
Additional problems with the new mini programs are numerous. For example, the code in which the new mini programs must be written is wxml which is not known to many application developers. This will cost the developers as well as the entrepreneurs much time and thus money. Another big problem is that there is no app store for the mini programs. This means that a mini program can only be found trough QR-codes or by exactly typing in the name of the mini program in the mini program section of WeChat.
However, history has taught us that WeChat, and thus Tencent, is very good at playing the consumer needs. It is not without reason that 35% of the time Chinese people use their phone, they are on WeChat. But, we should not forget to look at the downsides of each innovation, even though we all love the application.
References:
Graziani, T. (2017). 7 reasons that you don’t need to develop a Wechat Mini Program. [online] WalktheChat. Available at: https://walkthechat.com/7-reasons-dont-need-develop-wechat-mini-program/ [Accessed 5 Oct. 2017].
Hi Jeroen, interesting article you wrote there! I have used many messaging app (What’sapp, Viber, FB messenger, LINE, WeChat) before and I gotta say, WeChat is the most well developed and interactive messaging app from my experience. Thanks to these mini programs integrated within WeChat, it has made life way much more convenient and technologically advanced (e.g. ordering a taxi on WeChat, paying via WechatPay so you would not need to carry your wallet everywhere). I believe there might come an app like WeChat targeting the West, or it might be WeChat itself if it plans to shift its focus to the West too. But when, I do not know (hopefully it will be soon!). You mentioned you believe that WeChat is transforming into a new mobile operating system and might even compete with the IOS and Android OS in the future. As Mintor (2017) mentioned, WeChat is starting to become more powerful and self-contained, that might lead to Chinese phone consumers stop asking what phone and operating system they should buy, and start contemplating what phone best runs WeChat. That might be a long-term threat to iOS and Android, as well as any company that makes phones to run them. I see where the points are coming, however, I do not think WeChat will become the new mobile operating system, but just a powerful app that is dominating certain parts of the world. Just like Facebook that is popular in the West, WeChat is also considered more as a social media platform for users to share their “moments” or run their businesses. WeChat did really well with monetising its platform, by developing these mini programs so that there is both side benefits for the users and for the providers (network effects apply here). Therefore, I do believe that WeChat has the potential to succeed in the West too if users here start placing the trust within the app and think beyond the line of “privacy invasion”.
Cheers!
Xian Tse
Reference:Minter, A. (2017, 19 januari). WeChat’s App Revolution. Retrieved from https://www.bloomberg.com/view/articles/2017-01-19/wechat-s-app-revolution