TikTok is leaning on video games to keep users hooked

TikTok wants to tap mobile gaming for growth

TikTok is the latest tech company to turn its sights on the game industry, following Netflix’s major gaming push and after years of increasing investment in the market from Big Tech players like Amazon, Google and Meta. A report from Reuters yesterday said the company is testing games in Vietnam right now, with a planned Asia rollout as soon as this fall.

It’s not a surprising move: As more tech platforms look at a future beyond mobile and where future growth might come from, games are emerging as lucrative hubs of online interaction. But for TikTok, gaming presents a unique opportunity. The social video app is on track to surpass 1.5 billion monthly users this year, making it among the most popular platforms on the planet. A successful game, in that context, could make serious waves in the industry.

TikTok has been dabbling in games for years. Since 2019, parent company ByteDance has been distributing mini-games and other gaming content via the version of TikTok for the Chinese market, called Douyin. Now, it wants to do the same on Tiktok, giving it a much bigger potential audience.

• TikTok has dipped its toes into gaming already with a partnership with Zynga last year for a dancing game called Disco Loco 3D. The app exists on the web, accessed via an in-app browser window and powered by HTML5, similar to mini-games on Facebook’s Instant Games platform. Prior to that, it worked with the nonprofit Feeding America to release a mini-game, Garden of Good, last June.
• TikTok chose not to monetize the Zynga title with in-app purchases. Instead, both parties treated it like an experiment, signaling TikTok’s interest in gaming and Zynga’s history of trialing new platforms.
• “We see a tremendous opportunity to reach new audiences across the globe through TikTok’s massive and unparalleled user base,” Bernard Kim, Zynga’s publishing president, said at the time.

Gaming could be valuable to TikTok, in more ways than one. The TikTok app is already one of the most engaging social platforms ever made, with a unique algorithm that serves a never-ending stream of tailored videos to a user’s feed based on their preferences and behavior on the platform.

• Gaming could give TikTok another input stream for its algorithm, providing data on what users like and what elements of game design prove to be the stickiest.
• Games are also great ways to keep users engaged. TikTok already features informal challenges and other competitive elements nurtured organically by its user base. Like on YouTube and Twitch, gaming is a major pillar of the online video ecosystem, and TikTok is no exception. Capitalizing on that audience by serving them games is a smart strategy.
• Mobile gaming is already the most lucrative segment of the global games business. It’s on track to surpass $100 billion in revenue, market research firm Newzoo estimated last month, making it nearly twice as large as the console gaming market.
• TikTok could use gaming as a revenue driver, filling titles with ads and, if it continues to distribute games via the web, turning to microtransactions, too. (By relying on web games, TikTok could avoid paying Apple 30% of in-app purchase revenue, though Facebook ran into trouble with that approach last year.)

TikTok has major advantages over Netflix and others. Netflix has treated games as mostly a subscriber benefit — the games don’t live inside the Netflix app, but rather as links out to app stores that prompt users to download them. TikTok, on the other hand, can try more ambitious projects thanks to its large, engaged user base and creator tools.

• An Israeli analytics firm called Watchful says it’s found evidence that TikTok is experimenting with mini-games embedded within live videos, TechCrunch reported.
• Watchful says creators could stream a live game to viewers and also incorporate the audience, similar to technology on Facebook Live and Twitch. It’s uncovered a Pictionary-style game called Draw & Guess, though TikTok declined to comment on the live video experiments.
• It may not be all mini-games. ByeDance last year acquired Moonton, a Chinese mobile game developer known best for creating Mobile Legends, a League of Legends-inspired mobile online battle arena game. ByteDance has its own gaming arm, Nuverse, that was founded in 2019 to lead acquisitions and original game development.
• “ByteDance is taking a global approach to its video game business from day one,” analyst firm Niko Partners wrote at the time. “The biggest challenge for ByteDance will be to create a self-developed hit that it can operate over the long term.”

— Nick Statt

A MESSAGE FROM TRUSTED FUTURE

Innovators across the country are unlocking new technological frontiers using AI, 5G, IoT and the cloud to create opportunities never before possible that fundamentally expand our ability to solve important problems —technologies that can improve health outcomes, cut greenhouse gasses and make factories more competitive.

Learn more

TGIF: How to spend your weekend

Arena Clash — Horizon Worlds. Meta’s social VR world, Horizon, may still be a work in progress, but it already has one hit: Arena Clash is a team shooter that’s equally fun for beginners and advanced players. With five minutes per match, it’s just enough time to get you sucked in, but not too long to get frustrated when you’re outmatched or outnumbered. Plus, allowing people to revive teammates makes it more of a group challenge, and a great way to have some fun with others in VR.

“The Wilds” — Amazon Prime. File under guilty pleasures: “The Wilds” is a survival show about teenagers who are stranded on a remote island after a plane crash. The teens soon find out, however, that not everything is as it appears to be. It’s like “Truman Show” meets “Cast Away,” and while the show may not win an Emmy, it’s still highly entertaining. Season 2 premiered on Amazon Prime earlier this month.

Adam Mosseri’s TED Talk — Instagram. We’ve heard it all before: Web3 is going to revolutionize the internet, empower creators and make today’s gatekeepers obsolete. Usually, that idea is being brought forward by people invested in the success of Web3 startups. But when the person leading some of those very gatekeeper platforms proposes that very same idea, it’s worth a listen — if only to find out which role Instagram might play in a future where creators are a lot less dependent on just a handful of platforms.

Tony Fadell cleans out his garage — TechCrunch. Tony Fadell recently published a book about his seminal work on consumer electronics products like the iPod, the iPhone and the Nest thermostat. After he was done writing, he apparently had some spare time to clean out his garage, unearthing a bunch of interesting device prototypes in the process. Fadell shared photos of these devices and their backstory with TechCrunch, which was able to compile them into this fun stroll down memory lane. You can find more about the book itself on Fadell’s website, and The Verge had a great interview with him as well.

— Janko Roettgers