ByteDance expands again, short dramas enter the Japanese market

Author: Tu Ke Chuhai

Image source | pexels

Against the backdrop of the continuous rise in global digital content consumption, Chinese internet companies are launching a new wave of cultural expansion overseas, using short dramas as a vehicle.

ByteDance's Douyin short dramas have recently been reported to be expanding into overseas markets with a dual-line strategy. Following the launch of the free short drama platform Melolo in Southeast Asia last November, it has recently targeted the Japanese market with the launch of the paid short drama application PikoShow, which has drawn significant attention from the industry due to its deepening globalization strategy.

Testing the Japanese Market

The short drama application named PikoShow has recently launched in the Japanese market. Unlike Melolo's "advertising + free viewing" model, PikoShow adopts a typical "free first, then paid" strategy: the first 3-5 episodes are available for free as lead content, while subsequent episodes require payment to unlock viewing.

This model transformation is seen as ByteDance's precise strategy tailored to the characteristics of different markets. Japan, as the third-largest streaming market globally, has a mature user payment habit, and the per-episode payment model can effectively enhance ARPU (Average Revenue Per User). Data shows that the scale of Japan's video-on-demand market reached $4.5 billion in 2023, with short, fast-paced vertical content becoming a new favorite among Generation Z. The launch of PikoShow precisely fills the gap in the local market for fast-paced, strong-plot short dramas.

Southeast Asia as a Testing Ground for Free Models

In contrast to the paid trial in the Japanese market, Melolo's operational strategy in Southeast Asia showcases a completely different business logic. This short drama application, which emphasizes free viewing, has covered over 30 countries and regions, including Indonesia, Vietnam, and Thailand, since its launch in November 2023. According to the latest data from DataEye, as of the end of February 2024, Melolo's global downloads exceeded 1.3 million, with Southeast Asia contributing 99% of the traffic, and Indonesian users accounting for nearly 60%, followed closely by Vietnam and Thailand.

This regional difference stems from market characteristics: Southeast Asia has a lower per capita GDP but a large population base, making users more price-sensitive. Melolo's profit model, which relies on built-in advertising and brand placement, has resulted in an average daily user engagement time of 78 minutes in Indonesia, demonstrating strong user stickiness. Industry insiders analyze that this "rural encircling the city" strategy not only reserves a user pool for future paid models but also dilutes content costs through scaled traffic.

A $10 Billion Blue Ocean Competition

TikTok's official release of the "Short Drama Overseas Marketing White Paper" reveals a grander market picture: it is expected that in the next 3-5 years, the overseas short drama market scale will leap from the current hundreds of millions to the $10 billion level. By region, the United States leads with an expected revenue share of 45%, followed by Japan and South Korea (25%) and Southeast Asia (18%) This growth expectation is prompting a collective charge from domestic manufacturers. In addition to ByteDance, companies like Maple Leaf Interactive and Dianzhong Technology have built distinctive overseas matrices.

Source: TikTok for business

Next Stop: North American Market?

Data shows that in February 2024, global in-app purchase revenue for short drama applications reached $58.7 million, with the U.S. market accounting for $26.54 million, or 45%. The willingness of users to pay is 7.2 times that of the Southeast Asian market. However, challenges are also evident: giants like Netflix and Amazon have begun to layout vertical content, and local regulations are stricter regarding data privacy and content review.

In the face of a complex situation, Chinese manufacturers are building differentiated barriers. ReelShort's "Tip the Screenwriter" feature, which is being tested in the U.S., allows users to pay to change the plot direction, resulting in a repurchase rate increase to 34%.

From Southeast Asia to Japan, and from free to paid, the overseas journey of domestic short dramas is writing a new commercial legend. This is not only an upgrade breakthrough in the content industry but also a global projection of China's cultural soft power.