Ep. 37: The WeChat Mini Program — The End of Apps or Not?

In episode 37 of TechBuzz China, co-hosts Ying-Ying Lu and Rui Ma dive into the world of WeChat Mini Programs. Arguably some of the biggest innovations to come out of the Chinese internet, Mini Programs have no real Western equivalent. Ever since it was launched three years ago on January 9, 2016, the Mini Programs function, which is still in an experimental stage, has been touted as a key direction for WeChat.

Rui and Ying-Ying begin by exploring the origin story of Mini Programs. They explain that, back in 2016, it was not immediately clear to the WeChat team what to do with the product after its launch. WeChat was observing that while the Official Accounts system was taking off, the main issue was that these accounts were not built to properly handle transactions. So Allen Zhang and his team began to ask themselves if there was something heavier than an Official Account but lighter than a native app that they could make to help businesses transact online, inside of WeChat. The goal was to create something “small and light, fast and beautiful.”

Listen to find out: Did the team succeed at building the above mantra into the evolving product of Mini Programs? In what ways are mini programs superior to native apps? For users, what are the various means in which individuals can access the programs within WeChat? From a small-business owner point of view, what are the benefits of launching a mini program? What about the drawbacks? What are mini games and how do they fit into the picture? What about AI — what is its role in all of this? And, finally, which other Chinese internet giants are getting into micro apps, and do our co-hosts believe their efforts will lead to the success that WeChat Mini Programs are experiencing?

As always, you can find these stories and more at pandaily.com. Do let us know what you think of the show by leaving us an iTunes review, liking our Facebook page, and tweeting at us at @techbuzzchina to win some swag! Thanks also to our listeners over at our partner, dealstreetasia.com.

Episode 37 is our final one before the Pandaily team takes off for Chinese New Year. We’ll be back in two weeks, likely kicking off with a fresh look at the New Year’s red packet feud between Baidu, Alibaba, and Tencent (BAT). Happy Year of the Pig!

Transcript

(Y: Ying-Ying Lu; R: Rui Ma;)

[00:00] R: As New Year’s celebrations are spooling up in China, there isn’t too much happening in tech these days.

Y: Well, there’s some ferocious feuding going on between the BAT with giving out red packets or hongbaos, but we figure we’ll leave that until after the New Year to give you a one-time, comprehensive recap.

R: Instead, we are going to talk about something that we have been watching closely for a while and think could be the future. Or one man’s vision of it anyway.

Y: We also think it’s still underappreciated in the West, and stands out as one area where China is really forging ahead into unknown and exciting territory.

[00:42] R: What is it, you ask? Well, it’s the WeChat Mini Program, one of the most important and innovative functions of WeChat, which had an update this past week. Ever since it was rolled out two years ago, it’s been touted as a key direction for WeChat.

Y: It’s also probably one of the few things about Tencent’s WeChat that we haven’t discussed in depth here on TechBuzz so far. I mean, we’ve done 3 episodes focused on WeChat already.

R: Very true. We’ve looked at WeChat in detail. For those of you just tuning in, you should definitely listen to Episodes 21 and 35, which was on WeChat’s new challengers, and also especially our really popular WeChat 7.0 primer, that’s Episode 34, we recorded that at the beginnig of the year.

Y: Anyway, we won’t be repeating any material from those episodes, and will assume you already know all the basics about WeChat’s history, features and vision.

R: So take a pause if you need, but if you’re ready, let’s go ahead and dive deep into the world of WeChat Mini Programs.

[2:12] Y: Hi everyone! We are TechBuzz China by Pandaily, powered by the Sinica Podcast Network!

R: We are a weekly podcast focused on giving you a peek into what’s buzzing within the tech community in China.   

Y: We uncover and contextualize unique insights, perspectives and takeaways on headline tech news that don’t always make it into English language coverage. So you can be smarter about the world of China tech.

R: TechBuzz China is a part of Pandaily.com, an English language site that tells you “everything about China’s innovation.” I’m one of your two co-hosts, Rui Ma.

Y: And I’m your other co-host, Ying-Ying Lu. We’d like to acknowledge our partners DealStreetAsia and SupChina, creator of the Sinica Podcast Network! In addition to TechBuzz, you can also find Sinica which covers current affairs, NuVoices on women, the business-oriented ChinaEconTalk, and the Caixin-Sinica Business Brief from China’s leading business magazine. Check them out!

R: Thanks to Techbuzzers Rock Zhang, Dave McClure, Jim Wang, Erika Cheung and Ofir Dor, for your feedback and support. One last thing before we get started, if you enjoy listening to us, please take the time to leave us a rating or review on iTunes, Facebook or wherever you get your podcast!

[3:40] R: So, you might be wondering, why are we doing yet another episode on WeChat? Well, because, if you ask us, Mini Programs are one of the biggest innovations to come out of Chinese internet, there is no real Western equivalent.

Y: That’s right. WeChat Mini Programs, as a concept, was conceived on January 9, 2016, and after one year of development, officially released into the wild in January 2017. That’s just two years ago! At the time, Allen predicted that within two years, Mini Programs would replace 80% of the app market. In many ways, the program is still in an experimental stage, and so lots of things are still up for debate, as we will see throughout this episode.

R: As for how the idea of Mini Programs came about, well, it wasn’t actually immediately clear to the WeChat team what to do. All they knew back in 2016 was that after five years of building up WeChat and seeing the Official Account system they created really take off, they had also inadvertently created a lot of issues. The main one being that people were trying to do all sorts of business transactions in their WeChat Official Accounts, with very low efficiency. It just wasn’t built to handle that kind of activity.

[5:02] Y: At the time, the only other alternatives would be to build your native app, or to use a web app. But those were highly ineffective as well. You see, as Allen and team saw it, the mobile internet app ecosystem actually ruined things for most businesses. Besides being costly to develop, because apps are such high friction, users grew lazier and lazier and spent most of their time on just a few apps.  

R: This means that many smaller businesses can not find their customers easily, not unless they went through the popular major apps or platforms. So Allen and team, frustrated that the majority of creative efforts were not being discovered, asked themselves if there was something heavier than an Official Account, but lighter than a native app, that they could make, to help businesses transact online, inside of WeChat.  

Y: It would also solve the problem of the marketing spam that was clogging up the WeChat ecosystem. Because it was so difficult to actually transact, businesses ended up just focusing on marketing in their Official Accounts, and in Allen’s view, this provided very little value to the user.

[6:12] R: So Mini programs were designed to allow for transactions, but with one main characteristic in mind that would distinguish it from native apps — they did not need to be downloaded and installed. The WeChat team was obsessed with the idea of creating something capable of executing complex functions but which was available whenever, and only whenever, the user wanted it.  When it was not needed, Allen decided, it should “disappear.”

Y: So the way it works is this, unlike native apps, which are large, mini programs are capped to 10Mb in size, and are stored on Tencent’s servers. They are also programmed using WeChat’s own proprietary language, and so are streamlined to load quickly within WeChat, and will look beautiful in any WeChat client.

R: Small and light, fast and beautiful.  These are the words that the WeChat team tried very hard to build into the Mini Program infrastructure, and I think for the most part they’ve been successful.  But how much do they cost to build a Mini Program?

Y: Well, according to one small business owner, the total fee for launching an Official Account and a mini program was just 20,000 RMB, or just about 3000 USD , which is far cheaper than a native app, which would take at least two months of development time. You also don’t need to make and maintain separate iOS and Android versions, nor wait for your app and various updates to be approved, which could also take days or even weeks.

[7:49] R: And that’s not counting customer acquisition costs. For one sharing economy startup, the CEO said that they were spending 30 to 45 USD to acquire each paying user for their app, but that it was much cheaper for their mini program. They learned to acquire users through the mini program first, build loyalty, then convert them to the users on the app.  

Y: Basically, it seems that small vendors who had previously relied on WeChat, or WeChat service accounts to do business, can launch a mini program at relatively little expense and also service their clients much better. But even large companies can benefit too. When Mobike launched its mini program, downloads supposedly plummeted and it had six times as many users of its mini program as compared with its app.

R: As Allens says: “Especially in times like this, when capital flows and the economy is slowing down, we should definitely be focusing on Mini programs. They can reduce the costs of app development, operations, and promotion.”  But how does one access these mini programs?

Y: Well, there are several ways to discover them, but the initial method was via scanning a QR-code offline.  It goes back to what really drove the creation of mini programs in the first place, which was to allow users and small businesses to transact.

[9:16] R: But they can now also be shared in chat, and in chat groups.  The latter can be really useful sometimes. For example, a polling mini program can remember everyone’s votes in the group, allowing for easy collaboration. You can’t share or use native apps this way.  

Y: You can also search for mini programs. By the way, WeChat search now allows you to search for keywords in Moments, articles, Official Accounts, music and stickers as well as mini programs.  

R: What many small business offline vendors are finding super helpful though is the new feature, launched last year, that allows their mini programs to be discovered using the “Mini Programs Near Me” function. Again, not to beat a dead horse, but you can’t discover apps that way.

Y: No you can’t. And don’t forget that, last but not least, you can find mini programs linked to an Official Account. That’s also an important avenue for promotion.

[10:16] R: With all these ways mini programs are superior to native apps, the initiative really seems to be paying off.  Let’s talk about some of the most important headline stats that were just disclosed earlier this month at WeChat’s annual conference.  There are now over one million mini programs in WeChat and over 1.5mm developers.  Mini programs boasts a collective DAU of 280mm users, with the average user having 20 mini programs, and spending 10 minutes per day on them.  

Y: Now that’s not to say mini programs have had smooth sailing. In fact, it’s been anything but. One month after the initiative was announced and the development platform made available, an iResearch survey showed that after the initial excitement wore off, just 9.2% of developers were still continuing to develop their mini programs.

R: If I were WeChat, I would have been freaking out, but Allen claims that he was rather Zen about it, and that he would rather people take their time to understand the platform than rush in and mess it up.  I guess he didn’t need to worry too much about the latter.

[11:25] Y: The most popular categories are gaming and ecommerce and WeChat says that over $70Bn of business value has been created, whatever that means. And although 10 minutes per day doesn’t sound like a lot, the point is that the mini programs were developed for efficiency and not session length, so a more relevant statistic might be that over two thirds of mini program users are logging in at least four times a day.

R: And all this was before the latest update, which allowed for even easier discovery of mini programs.  You see, WeChat created a sort of second home screen for your mini programs that you can access just by swiping down in the app, and you can pin and move around mini apps just like you might want to on your smartphone home screen.  

Y: This led to all sorts of headlines proclaiming that operating systems such as iOS were going to have “serious ramifications,” because you know, this was infringing upon iOS territory. While it has been noted that Apple technically does forbid apps to “simulate multi-app widget experiences,” with WeChat at one billion DAU, this is probably not non-negotiable. Personally, I think these concerns are overblown, at least in the short term.  

[12:43] R: And these concerns aren’t new, much as people like to make them out to be. WeChat’s mini programs were viewed with suspicion from the beginning. On the Android, you can bookmark the mini program directly onto your mobile desktop, which almost makes it feel like a native app. As for Apple, you’ll sometimes hear people refer to mini programs as mini apps, but the official name is mini program because WeChat and Apple had a dispute over calling them apps.

Y: So they are frenemies, like everyone else in tech. Why am I not surprised. But that doesn’t mean a war is about to break out.    

R: Yup. if anything, I hope that we are clear in explaining that mini programs are just that, mini and light, and pose very little threat, if any, to the premium experiences that the highest grossing iOS apps provide.  What I think is happening is that China, which at one point accounted for something like 40% of global iOS revenues that’s about three years ago, is now a huge sore point for Apple after this last very disappointing quarter, and so people are quick to blame everything on WeChat, because it is, after all, the dominant Chinese app.

Y: But even Apple itself has noted that one main reason for its flagging Chinese revenue was the Chinese government’s unforeseen censorship of video games for much of 2018.  That category, mobile games with significant in-app purchase opportunities, is the type of app that’s not suited to be a mini program. So suffice it to say, we think this headline is overly sensational.

[14:31] R: Hey Techbuzzers, a brief announcement here.  We want to introduce you to Pandata, Pandaily’s new database on Chinese tech companies. Pandata will give you a company’s business overview, employee count, founding date, other basic information, and of course, links to Pandaily’s existing coverage on it, including Techbuzz podcast.  So there you go, check out Pandata, your guide to China’s tech world.

[15:05] R: So, welcome back, while we have already given you some of the pros of mini programs, there are some cons.  No product is or can be perfect. In its current iteration, mini programs are still a bit unstable, and being formulated specifically to function within the WeChat ecosystem only, it’s still relatively closed off, it uses a proprietary programming language.  It’s also not yet fully extensible, meaning that integrations can be troublesome to implement if they are even possible.

Y: And just more generally, obviously mini programs only work within WeChat and require separate development, versus a web app that will work in any browser. But perhaps what’s most frustrating for operators is running up against Allen’s product ethos that the user’s free will is to be carefully protected at all costs, and anything that does not improve her productivity should be eliminated or at least minimized.

R: For mini programs, this means that there are strict rules on incentivized sharing.  There are no push notifications, and you can only share via chat, not to your Moments feed.  And of course, Tencent decides whether or not your program violates their rules, which means there is a formal submission and approval process, which lasts a few days.

[16:28] Y: And there is a measurable difference still in native app and mini program users. For JD, we can see that a higher percentage of their rural users use their mini program versus their native app. The reason is unclear, but it could be that mini programs are just easier to use and requires less resources on one’s phone, both in terms of bandwidth and processing power. That’s what I would guess, and it looks like it’s the same for fellow ecommerce players Pinduoduo, VIPShop and Meituan.

R: So I think there are four pretty frequently asked questions about mini programs that we can answer here in our deep dive.  The first one, which often comes up, is: what is the difference between mini programs and mini games?

Y: Mini games are actually just mini programs that are games! WeChat does categorize them differently within the app, however, by having two separate menu items in the Discover section of your account. But for example, searching for mini programs will also give you results for games.

R: Games, or maybe we should refer to them as mini games, were launched one year after mini programs.  Some of you might remember in December 2017 when WeChat promoted the first mini program game, the extremely viral 跳一跳 or Jump Jump. At its peak, 跳一跳 had 100mm DAU.  You’ll notice that because of WeChat’s built in social graph, leaderboards featuring your friends really helped you stay engaged with the game. Tencent’s mini game MAU, by the way, is on par with mobile games, but with a higher percentage of female players. Mini games are also enjoying far higher retention ARPUs (average revenue per user) than mini programs.  

[18:20] Y: The second question is — what’s next for mini programs?  Did Allen talk about that in his four-hour speech earlier this month on WeChat product development?

R: Actually, he did.  Or at least gave enough hints.  There are several things on the roadmap.  For one, going forward, mini programs will need to have in-program search.  That means that the data generated inside of the mini programs will need to be searchable.  Say, if I used a mini program to book a train ticket, I should be able to pull up my itinerary through regular WeChat search, and not have to open up the mini program first.

Y: It will also be easier to search for mini programs in general. In fact, the label of the search function will change from “find name” [of mini program] to “find service.”

R: There will probably also need to be some kind of review system for mini programs, because as a user, you are currently blind to which programs are going to provide you with the best experience.  I’m sure a solution to this is in the works.

[19:24] Y: And already officially announced are additional functionalities, this includes voice, more storage, and data assistance. Plus, a list of “Most Popular” mini programs.   

R: Finally, there probably needs to be some new, innovative way to engage with users.  With no push notifications, it’s difficult for mini programs to retain users. Currently, your most recently used mini programs sit at the very top of your WeChat messages screen, and can be accessed now, after this latest update, by just pulling the screen down.  You can also now pin your favorite programs, but this will still be far less effective than the traditional method of pushing notifications.

Y: Allen will never allow that though, since his whole view is that users should have more control over where they direct their attention, and that software should respond and react to a user’s needs instead of leading them.  Which leads us to our next question, what is the role of AI in all of this?

R: Well, that answer will vary depending on what you mean by AI. If you mean AI as in a recommendation engine, like the core driver of Bytedance’s business, then no. Last year, Allen explicitly said that he does not want WeChat to recommend mini programs to users. He wants them to define their own needs and to discover the services they need for themselves. Pull, versus push.

[20:52] Y: Exactly. Allen thinks that in the beginning of the internet, usage times were more evenly distributed across multiple properties, but quickly, as we know, a few services began to take up the majority of people’s time. And Allen does not want to repeat that within WeChat.

R: Although, isn’t that rather hypocritical because WeChat is precisely one of those services where people are spending lots and lots of their time?

Y: Yes, but it’s also clear that he doesn’t want to just keep people inside of WeChat and using WeChat services. He wants WeChat to be not an app, but a tool where it is just the portal to a much bigger world that’s mostly built by other people, i.e. mini programs.    

R: I am not the biggest Allen fangirl, but I have really come to appreciate more and more his vision of productivity as WeChat’s highest calling.  Again, mini programs, by design, are for doing exactly that, making you more productive. Because they are so lightweight, they really allow for you to get a task done quickly, and then leave.

[21:59] Y: The original impetus and motivation behind Mini programs, according to Allen, is again, just like with Official Accounts and the newly revamped content discovery system, to elevate creators. A story that Allen likes to tell regarding the success of Mini programs is one of blind masseuses, a group of whom got together and made a mini program for their services so that they could book clients via WeChat.  

R: That is the kind of work that Allen and team want to support — individuals or small groups who do not have the resources to make a full-blown app or maintain and market it, but would benefit greatly from being able to do business within WeChat.

Y: While WeChat could have made a lot of these functions themselves, they chose not to do so and pursue a decentralized system instead.  Of course, WeChat has plenty of its own Mini programs, such as the one for Mini games, 微信游戏圈, or WeChat Livestream, but that’s not the point.  Small, independent developers are designed to be the main beneficiaries of Mini programs, to bring value to the user, and not to live off of the “volume business,” or 流量的生意.  

R: So no, a Bytedance-like AI recommendation engine that is focused on increasing the volume of users is probably exactly the opposite of the ideal Mini program. An ideal Mini program is supposed to solve a specific problem for the user as quickly as possible and then retreats silently into the background.

[23:34] Y: And this brings us to our last question, which is, what’s going to happen with all the other mini program platforms that are cropping up left and right in China?  It seems that everyone has one, Baidu, Alipay, Xiaomi, Huawei, you name it.

R: The latest to announce their version of mini programs, which they call micro apps, is Bytedance, who has opened it up for both the Toutiao and Douyin systems.  

Y: However, it’s not clear that Bytedance is leaning on their micro apps as a main growth strategy.  As reporters noted, while hotly anticipated, the management only devoted 3 minutes of discussion to the topic during their November developer conference last year. The use case showcased was around e-commerce — for example, if you see a Xiaomi video ad on Douyin that catches your eye, you can then click through to the micro app where you can buy the Xiaomi product you wanted, without ever leaving Douyin.  

R: In Toutiao, the home of content creators, Bytedance is hoping that these micro apps become an additional source of income for the writers.  For example, you write guides about the beautiful handicrafts that you make? Now you can sell them. And there is already data to support this.  For some of the popular independent creator accounts on Toutiao, over 80% of their ecommerce sales are coming from their followers in the app.  In other words, the Toutiao follower economy is highly monetizable.

[25:04] Y: But will any of these efforts lead to the success that WeChat mini programs are experiencing? We don’t think so.  The WeChat mini program, as we explained, was born out of a real, pressing customer need. For most of these new contenders, except maybe Toutiao, the scenarios seem forced and unnatural. But who knows, maybe someone will surprise us.

R: And it’s that time again, to summarize our findings for you guys.  This is the section known as, What did we learn today? As a reminder, we were driven to do this episode because the newest WeChat update included a new home screen for mini programs, which was seen as the newest step in Allen Zhang’s attempt to create an operating system, and that’s a threat to players like Apple.

Y: We thought this threat was over-sensationalized, because mini programs, at least as they are, are not going to kill the major apps. But it is true that they might significantly reduce the need for smaller ones, particularly those that don’t need to be used very frequently. That’s, after all, what they were designed for, to help the small business owner who doesn’t have the resources to build and maintain a native app.

[26:19] R: Although plenty of big companies quickly piled on and as we can see, it has worked well for them.  If Allen’s vision comes true, mini programs are the future because apps, bulky and always needing to download updates, are inefficient, and the browser experience on mobile, too, is still less than ideal. Mini programs, on the other hand, are in the middle, not too heavy, not too light, and just right.

Y: While mini programs still have a long way to go, such as having better discoverability, reviews, and in-program search functionality, they are already very popular, and they seem to work especially well as games. Not the original intention, but that’s been the result.

R: Finally, as we see more and more companies try to create their own version of mini programs, we here are pretty bearish on their prospects, although maybe Bytedance does have a small chance.  Either way, Allen, ever the patient product visionary, says that he believes it will take another three years before the Mini program ecosystem will truly mature. Until then, it’s an evolving product and I guess we’ll all just have to wait and see what happens! Exciting!

[27:43] Y: OK, that’s all for this week folks! Thanks for listening. As a reminder, our episodes will now be available every Friday instead of Wednesdays. We really enjoyed putting this together, and we are always open to any comments or suggestions. You can find us on twitter at thepandaily, at techbuzzchina, and my personal Twitter account is GINYGINY.R: And my Twitter is spelled RUIMA. As a reminder, we’ll be taking next week off in celebration of Chinese New Year’s.  Happy Year of the Pig, everyone! TechBuzz China by Pandaily is powered by the Sinica Podcast Network. Pandaily.com is an English language site that tells you “everything about China’s innovation.” Our producers are Shaw Wan and Kaiser Kuo.