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WeChat Therefore We Bot?The Commercial History of WeChat
May 2016
By Joe Medved (@joevc @LererHippeau)& Sisi Song (@hiSisiSong)
Messaging Has Become the Dominant Social Medium
See full report here: http://www.businessinsider.com/the-messaging-app-report-2015-11
Enterprises Want to Join the Conversation
Are Bots the Answer?
Sometimes But Not Always
“ How are you today ”
“ Do you know tomorrow’s weather? ”
“ New York ”
“ Where are you based ”
Summary of the
weather
?
2010s
2000s
1990s
1980s
1970s
1960s
1950s
SmarterChild: Launched in 2001, this chatbot on AIM & MSN reached 30M users
Humanoid Robots: Robots capable of interacting with humans commercialized
Loebner Prize: Awarded to a bot that beats the Turing test. No winners since start in 1990.
Deep Blue: In 1997, IBM’s Deep Blue chess machine beats world chess champion Garry Kasparov.
Chinese Room: In 1980, John Searles’ paper Minds, Brains and Programs proposed the “Chinese room” experiment, arguing that just because a computer can have a conversation by recognizing symbols, it does not prove the machine can think and have consciousness as the Turing test proclaims.
Interactive Voice Response (IVR): Advances in speech recognition technology spawned the growth of IVR within the call center industry, enabling automated systems to more efficiently route callers with a simple, digital voice interface.
ELIZA: In 1966, MIT Professor Joseph Weizenbaum published ELIZA, a program applying primitive natural language processing to users’ responses to scripts. ELIZA utilized pattern matching rules to determine its replies.
Turing Test: In 1950, Alan Turing developed a test of a machine's ability to exhibit intelligent behavior equivalent to, or indistinguishable from, that of a human. The test requires a machine to convince users of its human intelligence 70% of the time after five minutes of conversation.
Where Are We in the Bot Evolution?
WeChat is Recognized as the Mobile Messaging Pioneer
So what does WeChat’s history tell us about the potential for commercialization in messaging, and what role bots may play?
Connecting 700 millionPeople with chats, calls and more
The Commercial History of WeChat
HOUSEHOLD NAME IN CHINA
MOBILE PLATFORM ENTRY TO TENCENT
SOCIAL MEDIA EMPIRE
CENTRAL COMMUNICATIONS
AND SERVICES HUB
EXTRA KEY LAYER TO DIFFERENT
TYPES OF APPS
HIGH USER STICKINESS ON
HIGHLY INTEGRATED PLATFORM
FY2012 FY2013 FY2014 FY20150
200
400
600
800
161
355
500
697WeChat MAU (mm)
WeChat – From a Messaging App to the Social Services Hub
Moments• Share articles &
pictures / write posts• Follow Official
Accounts (merchants, celebrities etc.)
WeChatStarted as a Messaging App
Multimedia content• Send pictures, stickers, files
Message• Send text, audio messages• Create group chats
Long-distance calls• Enables voice call, video call
1
GLOBAL COMPS
2
3
Find new friends• “Shake” and
“People Nearby” enables adding strangers as friends
ExampleChina Eastern Airlines Official Account on WeChat• Shown as a contact in WeChat
after users add its official account• Users can check flight info,
reserve tickets, check-in, select seats, manage membership through the airline’s WeChat account
• All subscriptions are gathered under a separate tab called “Subscriptions”
• Good for individuals or companies that provide contents as a core service
• Less efficient at collecting data from users and at providing online services than Service accounts do
Added Official Accounts for brands
Subscription accounts providing news and media articles – Content is King
Service accounts providing corporate services to customers – Service is King
China Eastern Airlines
4
4
5
5
• “App-within-an-app”: Not full scale apps but simple website-like apps using WeChat’s API
• Benefits early stage companies that do not have resources to build a fully developed app
• Requests information either by navigating through menus or sending texts (applies to simple requests such as checking flight)
• Builds automated responses → reduces customer calls for businesses
Incorporated Bots into Official Accounts
Weather update on Yellow Mountain
↓↓↓↓↓↓↓↓
Chumen Wenwen China Southern Airlines
• Google Now / Siri type of digital assistant; Supports voice recognition
• Answers requests including weather, restaurants, navigation etc.
• Connects to other third party apps such as Dianping where users can book restaurants / ordering delivery
• Investors include Google
“ Is it going to be cold in the Yellow
Mountains this weekend?
“ 4/27 To Shanghai”
“ Please enter origin”
“ Beijing ”
“ For what day? ”
“ 4/27 ” “ Sorry we don’t have tickets that match your need
yet ”
XiaoIce
“ How are you today ”
“ Do you know tomorrow’s weather? ”
“ New York ”
“ Where are you based ”
Summary of the
weather
• Developed by Microsoft; A chatbot that users can add as a friend and casually converse with. Over 20 million users.
• Able to answer questions such as weather update, restaurant suggestions etc.
• Not only responds to text messages but also identifies and reacts to pictures and voice messages
Some popular bots built upon WeChat API
6 More customized, context-based More conversational More accurate leveraging chat history Less apps to be downloaded Less 800 customer services calls
Tenpay19%
Others11%
Alipay70%
Tenpay14%
Others9%
Alipay77%
WalletWeChat Pay
Incorporated Payment that transformed WeChat into a gateway of m-commerce and enhanced user stickiness• Each individual or business account
has a unique WeChat QR code that enables users to pay and receive money by scanning the code without adding a contact
• Historical growth
2015 2016
1
8
RED ENVELOP VOLUMEDURING CHINESE NEW YAER (BN)
↑ 7x
2014 2015 2016
100
200 300 ↑ 2x
# OF BANK CARDS BUNDLED2 (MM)
~ 420mm users (90% of urban mobile users1)
Source: iResearch1 QiEZhiKu (owned by Tencent) 2 Bank cards bundled to WeChat Pay and QQ Wallet 3 Includes WeChat payment and QQ Wallet
TENCENT PAYMENT3 HAS GAINED MARKET SHARE OVER ALIPAY
1Q’15 3Q’15
MeilishuoGroup BuyMovie Tickets
SpecialRail & FlightsOrder Taxi
• Pay and receive money: card repay, utilities bills, healthcare bills
• Mobile credits top up• Link loyalty cards from multiple
merchants to one WeChat account
• Transfer money among friends • Split bills• Send out red packets, monetary
gifts given for special occasions
• Crowdfunding• Wealth management products (i.e
LiCaiTong)• Loan application
WalletWeChat Pay
GLOBAL COMPS
7
8
7
7
8 88
7
9
9
9
Incorporated Payment that transformed WeChat into a gateway of m-commerce and enhanced user stickiness
• Facilitate B2C transactions and off-platform services:
• Enhance C2C transactions:
• Provide various financial products
MeilishuoGroup BuyMovie Tickets
SpecialRail & FlightsOrder Taxi
• Access links under “WeChat Wallet” to some of the most popular third-party apps to enrich more mobile payment scenarios
• Weidian: Allow third parties to open stores and connect with consumers on WeChat
• Virtual app stores: Announced to launch “Application Account ” where users can subscribe third party services in HTML5 format
WalletWeChat Pay
Evolved into Platform that integrates O2O initiatives and third party apps
10
10
Download on the
Virtual App StoreTo come….
Order taxi on demand
Book rail / flight tickets online
Online shopping
Reserve seats / buy movies tickets
GLOBAL COMPS
Provide user reviews of local services (i.e restaurants) and group buying
(Bot Store)
MeilishuoGroup BuyMovie Tickets
SpecialRail & FlightsOrder Taxi
Online shopping guide for women
Current Search within Official Accounts,
individual / group chats, and Moments Search without leaving current dialogues Bring subscribers to Official Accounts Access to industry expert articles through
subscription accounts Available from Sogou platform both on
desktop and mobile
Challenge
Embedded Search function within chats and accounts GLOBAL
COMPS11
The
Future
Much less contents on WeChat than those on traditional search engines
How to bring traffic to other WeChat third-party services (JD.com, Didi Kuaiche etc.) besides Official Accounts?
Search through Official Accounts
Search through Moments, Chat history
Higher stickiness
Search gateway
More personal
More contextual
More traffic to third party
services
E-Coupon
Game Center
Ads on Official
Accounts
Ads on Moments
Accelerated Monetization
through diversified product offerings and cross-selling opportunities
Sticker Gallery
Content
TargetedAds
Wal
let
Future monetization on
payment transactions1
Wealth management & other financial
services offerings
1 Tencent currently still subsidizes payment transactions, which incurs an increasing burden of bank handling fees
Lessons from WeChat
Most WeChat Bots Take a Hybrid Approach• XiaoIce, Microsoft’s conversational bot, has over 20 million users. It functions reasonably well
within the Chinese internet, where conversation is more restricted and less prone to trolling.
• However, the majority of bots are conversation-centric but leverage graphical user navigation and/or human involvement
• Even as bots inch closer to Turing’s test, GUIs will be utilized in visual messaging platforms• Conversational commerce will not be text only. GUIs save 100s of keystrokes.
• As with IVR systems, some complex user requests require human engagement
ChumenWenWen
ChinaSouthern Airlines
The Power of the Platform• WeChat has over 10 million Official Accounts operated by third parties. Relatively high data
costs in China benefit WeChat, with users less prone to download apps.
• The entire app ecosystem for Android and iOS is ~2 million each, including games. The bar to create an Official Account with simple “App-within-an-app” functionality is significantly lower.
• However, WeChat’s platform dominance is similar to Android and iOS, with WeChat’s proprietary commercial features prioritized much like default apps
WalletWeChat Pay
“WeChat Wallet” channels exclusively operated by 3rd party services in Tencent’s portfolio
DESCRIPTIONSTENCENT
INVOLVEMENT KEY INVESTORS
• Tencent• Wanda Group• Southern Capital
• Online movie ticket booking platform based on WeChat, QQ and WePiao App
• 8% market share, 3rd largest• Dec 2015: Announced to merge with Gewara to
consolidate ~ 30% of the market share
• Developed by Beijing Weiying Technologies, a company owned by Tencent, Wanda Group etc.in 2012
• Tencent• Alibaba• SoftBank• DST Global• Temasek
• Added to WeChat platform in Jan 2014
• Invested in Didi Dache since Series B in 2013
• Feb 2015: Didi Dache and Kuaidi Dache merged into Didi Chuxing, forming Chinese biggest taxi-hailing platform
• 21mm cab rides were booked in the first month after integration into WeChat platformDIDI CHUXING
• Level 1 access to WeChat platform since Mar 2014 (accessed under “Discover” as well as under “Wallet”
• Purchased 15% (~ $220mm) in 2014
• Chinese largest B2C e-commerce platform that offers online direct sales in electronics and general merchandise
• Mar 2014: Merged with Tencent’s online marketplace Paipai and Yixun
• Mar 2015: WeChat and QQ together drove ~20% of JD.com’s new customers
• Tencent• Tiger Global• KPCB• Sequoia Capital
JD.COM
WEPIAO
LY.COM
• Added to WeChat platform in Apr 2014
• Tencent• Ctrip
• Chinese online travel booking services including rail and flight tickets booking
DIANPING
• Oct 2015: Dianping and Meituan merged to form a dominant player in the group-buying and local services businesses
• Jul 2014: Experienced ~ 86% y-o-y growth in MAUs one quarter after landing on WeChat
• Tencent• Alibaba
• Acquired ~ 20% of Dianping and integrated it on WeChat in Feb 2014
E-C
OM
MER
CE
TAXI
H
AIL
ING
MO
VIE
BO
OK
ING
LOC
AL
SER
VIC
ESTR
AVEL
B
OO
KIN
G
• Added to WeChat platform in Mar 2014
• Tencent• Sequoia Capital• GGV
• Provides Pinterest-like functions that enable women to find clothing and skin care products
• Jan 2016: Acquired by MojujieMEILISHUO
Investing in Exclusive Commercial Partners
CONCLUSION: Bots Are A Nascent Contributor to WeChat• Monetization at WeChat began with the introduction of Official Accounts and their lightweight,
app-within-an-app capabilities
• Payments, Platform and Exclusive 3rd Party Apps, Branding, Search, Games, Stickers and more have contributed to the commercialization of the world’s most innovative messaging platform
• Bots have immense potential but are just starting to play a role on the WeChat platform
• Broad bot functionality requires massive investment. Cash-rich companies like Amazon (Echo), Apple (Siri), Facebook (M), Google (Now), Microsoft (Cortana, XiaoIce, Tay) and SoftBank (Pepper) are in the very early days of developing bots with seamless conversational capabilities.
• At this phase, bot startups will need to focus on discreet use cases like scheduling with x.ai or weather with Poncho, or rely on some human involvement for broader use cases like Fin. There is an opportunity for cross platform bot development tools. Beyond just bots, startups can also offer a broader suite of messaging solutions for brands like Snaps.
• For enterprises looking to follow consumers into the messaging world, bots alone are not yet ready to facilitate frictionless conversational commerce. The chase for the Turing test continues.
General http://www.businessinsider.com/the-messaging-app-report-2015-11 https://www.techinasia.com/talk/5-ways-mobile-messaging-evolve http://blog.appannie.com/messaging-apps-where-theyre-popular-and-major-revenue-opportunities/ http://www.scaruffi.com/mind/ai.html
WeChat related http://techcrunch.com/2015/11/26/the-many-ways-of-wechat-how-messaging-is-eating-the-world/ https://www.techinasia.com/wechat-697-million-monthly-active-users http://techcrunch.com/2016/03/17/messaging-app-wechat-is-becoming-a-mobile-payment-giant-in-china/ http://qrcodetracking.com/qr-codes-help-wechat-become-a-social-media-platform/ https://walkthechat.com/wechat-public-accounts-difference-subscription-service-accounts/ http://dangrover.com/archive/ Apps within an app model: https://blog.passkit.com/wechat-offers-insight-into-the-future-of-apps-and-mobile-payments/
WeChat Third Party Apps JD: http://technode.com/2015/03/04/tencent-mobile-messaging-apps-drove-20-percent-of-new-customers-for-jd-in-q4-2014
/ JD: http://blogs.wsj.com/chinarealtime/2016/01/06/qa-with-jd-mall-ceo-on-balancing-shopping-and-social/ Didi: https://www.techinasia.com/wechat-21-million-taxi-rides-booked
Facebook related http://techcrunch.com/2016/03/17/facebooks-messenger-in-a-bot-store/
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