From February 5 to August 5, exactly six months, WeChat 5.0 refreshed the update cycle of a popular application.
However, from the just-released WeChat 5.0, this version is simply too "big." The new version was released late today due to internal and external rights sorting, product refinement, and Tencent's mid-to-long-term planning. In these six months, Pony Ma defined WeChat as "Tencent's opportunity for internationalization" and at the same time proposed commercialization requirements for WeChat. The former we have seen from the skyrocketing number of overseas users of WeChat, which reflects the efforts of the WeChat team; the latter we see in today's WeChat 5.0 framework.
The newly released WeChat 5.0 has added multiple functions and adjusted several features, all revolving around one central point - how to commercialize WeChat? In this proposition, Allen Zhang is the product manager, while Pony Ma is the chief designer. How to achieve commercialization without harming the product, and how the product can support commercial demands, is the biggest challenge for WeChat 5.0. We attempt to explore the efforts made by WeChat in finding this balance from the following aspects.
WeChat Pay: The cornerstone of the mobile commerce empire
WeChat Pay is a new feature added in version 5.0. We learned that WeChat Pay supports Web QR code payment, App redirection payment, and Official Account payment. However, when purchasing emoticons in the WeChat Emoticon Store, WeChat Pay was not invoked; instead, the App Store's "in-app purchase" mechanism was activated, requiring login with an Apple iTunes account to make the purchase.
Below is our payment experience. When the first transaction occurs, it triggers the WeChat Pay function, requiring the filling out of personal information, bank card information, SMS verification of phone numbers, and setting up a payment password. Once a bank card is bound, no further input of the above complex information will be required for future payments; only the WeChat Pay password needs to be entered to complete transactions. Regarding payment security issues, WeChat currently offers the solution of the "WeChat Secure Payment" logo.
Once a transaction has occurred, the "My Bank Cards" option will appear on the WeChat personal homepage, through which you can view the already-bound bank card numbers or continue binding bank cards. Currently supported banks include:
Supports debit and credit cards: China Merchants Bank, Construction Bank, Everbright Bank, Guangfa Bank, Industrial Bank, CITIC Bank, Agricultural Bank
Only supports credit cards: Industrial and Commercial Bank of China, Bank of China, Ping An Bank, Shenzhen Development Bank, Ningbo Bank
If we say that due to the promotion and construction of WeChat Official Accounts, using QR codes as a medium, many merchants have taken their first step into the mobile commerce world, allowing the buildings of the mobile commerce empire to sprout like mushrooms after rain; then WeChat's payment function is like electricity, an indispensable element in any building, bringing light. WeChat Pay makes it easier for merchants who have opened Official Accounts to conduct business.
As for what WeChat Pay can do, it currently depends on the services provided by Official Accounts, such as topping up phone credits, buying movie tickets, purchasing coupons... WeChat hands over the space for imagination to its partners. However, currently, WeChat Pay is hidden within "Official Accounts," only being invoked during transactions, and even the bank card binding function appears only after a transaction occurs. For example, when updating to WeChat 5.0 this morning, many people were searching for where the WeChat Pay function was located. Therefore, at this stage, WeChat Pay is still feeling its way forward, and WeChat officials are carefully exploring usage scenarios.
WeChat Pay holds greater potential for imagination, namely its ability to revolutionize the rules of the commercial society through the direct QR code scanning payment function it plans to launch in the future, regardless of whether online or offline. Currently, the provided Web QR code scanning payment and App redirection payment depend on Tencent's promotion efforts, and in this aspect, Alibaba's Alipay is ahead. We noticed that WeChat Pay uses Tenpay's payment license, naturally excluding Alibaba from this "ticket" for WeChat; in the foreseeable future, the resentment between Tencent and Alibaba will deepen due to mobile payments or internet finance, and now this knot is slowly tightening.
In the future, if WeChat Pay launches offline "QR code scanning payment," it will possibly construct a relatively short closed loop: scan QR code - purchase goods - WeChat Pay. Under this model, merchants can quickly receive money, customers can quickly get products, and the links in commercial transactions are greatly reduced. Through Web QR code scanning payment, we can enjoy this sensation to a certain extent; in the future, through offline QR code scanning payment, the mobile commerce society will be established. This is not just WeChat Pay's business, but also Alipay's dream.
Scan: A huge entry point with unlimited commercial imagination
In the previously leaked version, "Scan" was the startup page of WeChat 5.0, with the slogan "Scan to Discover a New World." In the official version of 5.0, the startup page became a small game called "Plane Battle" (commonly known as "Fight Planes"), where you need to finish playing before entering WeChat.
I learned from Tencent that the "Fight Planes" game was decided as the startup page at a later stage, and originally there was a textual introduction to the "Scan" function. So even though the final version of WeChat 5.0 did not highlight "Scan" as the flagship feature, it still reflects the importance of "Scan" in the new version of WeChat.
"Scan" was previously hidden under the third-level menu of "Add Friends" in the old version of WeChat (see left image below, click to view large image), and also available under the third-level menu of the "+" button in the upper right corner of the Contacts menu (see right image below). In the WeChat 5.0 version, "Scan" has been promoted to the "Discover" menu as a second-level menu, and the "Scan" function has been removed from the "Add Friends" button (third-level menu) in the "Contacts" section. Similarly, the "Friends" menu has been changed to "Discover," removing the single "Add Friends" function and instead becoming an entry point for various commercial transactions.
The "Scan" function in WeChat 5.0 includes: QR code, bar code, cover, street view, translation. Each function is a commercialization attempt.
1) QR Code
This doesn't require much explanation, as we are already very familiar with it from previous versions. QR codes were invented by Japan's Toyota in 1984 and have since been widely used in the commercial world. In China, although Alipay or other third-party platforms have promoted the use of QR codes in the commercial world, the trendsetter is the WeChat Official Account platform launched in August last year.
On August 18 last year, WeChat launched the Official Account platform (iFanr began promoting the QR code for Official Accounts on the website on July 3), and QR codes, as a convenient way to add subscriptions, were widely used by Official Accounts, marking a milestone event with CCTV beginning to promote WeChat QR codes on television in April. Initially, QR codes served as a bridge between Official Accounts and subscribers, but after gradually expanding to offline merchants, they gained industry significance.
In WeChat 5.0, we have learned that WeChat Pay initially supports Web QR code scanning payment, and I predict that it will support offline QR code scanning payment in the future, i.e., using QR codes as a medium to build a bridge between physical goods and transactions. Here, I am referring to the future ubiquity of QR codes, for eating, watching movies, going to the gym, booking rooms... scanning QR codes and paying via WeChat. I call this a "revolution."
Revolution is long-term, and the resistance to the success of the revolution will be immense. The "Cover" and "Bar Code" Scan functions introduced this time are attempts at reform. Reform means accepting first, then changing, rather than completely overthrowing. The resistance to reform is far less than the resistance to revolution. Reform and opening up is reform, not revolution.
2) Bar Code
From practical experience, the functionality of the bar code overlaps significantly with the QR code (as shown in the figure above, click to view the large image), mainly because the QR code scanning function has largely encompassed the bar code's capabilities. Listing it separately in version 5.0 may primarily inform users that WeChat has the capability to scan bar codes - bar code scanning can be achieved by default in QR code scanning. It is estimated that in subsequent versions, these two functions will merge.
WeChat 5.0 declares its ability to scan bar codes, mainly because it is the most widely used commodity identification technology in social life. Bar codes were born in the 1920s, and broadly speaking, they actually include QR code technology. They are now widely used in commercial systems. Supporting bar code scanning in WeChat 5.0 is compliance with existing commercial rules, and specific use cases may start with price comparison. Since almost all products have bar codes, the closed loop of "WeChat scan - compare prices - online shopping" will cause pain to all physical merchants - unless they rudely mark "XX and WeChat Not Allowed Inside."
Of course, closing off is not as good as embracing. Just recently, I saw some figures: Shanghai's retail outlets decreased by 2,600 in the first half of the year, but online store sales increased by 57.4%. Leveraging Online to drive Offline, from this perspective, Tencent and Alibaba are again converging differently.
3) Cover
WeChat 5.0 supports scanning book covers, CD covers, and movie posters. Based on my experience, the cover scanning experience is quite good. It can realize the "object-to-object" transaction experience, for example, if I see you holding a copy of "Steve Jobs Biography," I can scan the cover and buy it without you telling me the title, and then I search and place an order to buy it. Currently, scanning book covers redirects traffic to QQ Shopping, Amazon, Dangdang.com, along with Douban reviews appearing; 3C products redirect traffic to Tencent's Yixun.com.
(Scanning results of covers, left and right are book covers, right side is CD cover. Click to view large image)
After scanning a CD cover, if it is in the QQ Music-supported music library, music can be played directly within WeChat (only play/stop buttons are available), otherwise, it shows no results. After scanning a movie poster, you can view Douban movie reviews, and previews of some movies can be watched. Clearly, in the future, this entry point's traffic can be redirected to Tencent Video, and currently, the functionality seems somewhat "meager."
After introducing the "Scan" function, WeChat has transformed into a giant traffic entry point. Although Taobao refused this traffic to keep the transaction process entirely within its own system, for most people, this is a highly desirable resource. To what extent WeChat's entry resources can be opened will mean to what extent Tencent will remain open.
Currently, we do not know how much Amazon, Dangdang.com, and Douban, as downstream traffic recipients of WeChat, pay Tencent. However, referencing Google's payment to Firefox - $1 billion for three years, this price should be substantial. Of course, we cannot rule out the possibility of revenue sharing, although this possibility is less likely.
4) Street View and Translation
The imaginative space for WeChat Street View will be discussed separately below. Let's talk about translation. I believe it is just an innovative attempt. For the majority of WeChat's 500 million users, the use cases for foreign language translation are not many, but considering WeChat as an entry-type product, it will still have a certain impact on competitors such as Google Translate, Youdao Translate, and Baidu Translate. Translation is an "outsider" among the "Scan" functions; it might just be a pure tool, and the role of "traffic entry" it plays is not significant.
Overall, with the addition of the "Scan" function, WeChat's commercial space imagination has suddenly expanded, especially its role as a traffic entry point, which will bring tangible benefits to Tencent and its partners. The next challenge is not the popularity of QR codes or the size of the product database supporting cover scanning and bar code scanning, but how to cultivate user habits. I previously exchanged ideas with industry insiders, and in the mobile internet era, "mobile search" might be a false proposition, as people may not need search. Today's "Scan" function of WeChat lets us see the prototype of this: what you see is what you get, eliminating the need for a search intermediary. If WeChat can successfully cultivate user habits, it may even redefine what mobile search is.
WeChat Games: A Glittering Gold Mine
It was indeed somewhat unexpected that the startup page of WeChat 5.0 was a small game called "Fight Planes," surprising even some employees within Tencent who were testing the beta version. However, this was also expected, as Tencent, China's largest gaming company, generates more than 1 billion yuan in income each quarter from games. In the earnings report meeting in March, Tencent President Martin Lau also talked about the commercialization steps of WeChat, starting with the gaming platform:
Three directions - O2O, location-based services, location-based e-commerce. Advertising models are basically not considered. The order of exploration is "first test the gaming platform, then explore O2O and location-based e-commerce models."
Today's updated WeChat 5.0, aside from the "Fight Planes" game on the startup page, actually only launched one game: "Everyday Love Elimination," a game similar to "Bejeweled," but with added social elements, making it more playable. Apparently, Tencent is controlling the number of games launched, hoping to become a platform provider, with third-party developers enriching the WeChat gaming platform. However, there is currently no guidance document on how the WeChat friend relationship chain will be used, so the prosperity of the ecosystem will take time, and it will likely start with Tencent leading the way.
(The WeChat gaming platform uses the App Store's in-app purchase mechanism, requiring a 30% revenue share with Apple.)
The potential of the WeChat gaming platform has already been demonstrated by its competitor Line:
Line generated $58 million in revenue in the first quarter this year, with half of the income coming from the social gaming business, and 30% from paid emoticons. Various Line games have been downloaded 150 million times.
WeChat games adopt a mechanism similar to Line Games, requiring separate downloads from the App Store, then using the WeChat relationship chain or QQ relationship chain to play games. If we remember the vegetable-stealing series games from Kaixin.com and Renren.com, we will believe in the terrifying viral effect when social games encounter friend relationship chains. Five years later today, with the widespread adoption of smartphones, social games have shifted from the PC platform to the mobile platform, bringing games closer to people.
The industry's prospects are also very optimistic. The primary good news is the recent acquisition of 91 Wireless by Baidu for $1.9 billion, as the company has already generated 10 million yuan monthly from mobile gaming business. According to data published by the National Press and Publication Administration General Administration at last month's ChinaJoy, mobile gaming revenue in China reached 3.24 billion yuan in 2012. Data from the Chinese Publishers Association and IDC claim that mobile gaming revenue in the first half of 2013 was 2.53 billion yuan. Consulting firm Analysys International provides even more optimistic data, predicting that mobile gaming revenue will reach 10 billion yuan in 2013, doubling year-on-year. These data all point to one conclusion: mobile (phone) gaming is just beginning, and the gold mine is far from being fully tapped.
Line's success proves that mobile games based on social circles have very high stickiness, calling upon your social network relationship chain, friends interact and play games together, which is much stickier than temporary social networks built solely due to game attributes. Even more frightening is that, since WeChat is attempting to shape a new mobile internet on the mobile platform - in WeChat 5.0 we see attempts at mobile commerce, after people finish playing games, they can still IM, browse the Moments feed, and shop via "Scan" in the WeChat world. This complete closed loop is Tencent's strategy.