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Are mini-programs losing their steam?

Months after their craze within the WeChat ecosystem, investors seem to be turning their back.

Jan 15, 2019 by A. Alfaro
Are mini-programs losing their steam?

“I do not want to talk about WeChat’s mini-programs,” said Li Yuanfeng, CEO of Falcon Angel Investor. Interviewed by internet portal Jiemian, he wondered why the media was still interested in mini-programs. “Very few investors are following them these days.”

Mini-programs are “sub-applications” within the WeChat ecosystem. They had a hectic year, but many investors have stopped supporting projects related to the super app’s mini-programs since the third quarter of 2018, according to Jiemian’s report. Entrepreneurs are also apparently leaving the sector. But is it that black-and-white?

Zhang Zhibin, head of Feiyu Video Games, said the company has completely given up on this channel. Photo editing tool Heika Camera is not ready to move out, but they will not allocate as many resources to it. The big names — like Xiangwushuo, a sharing platform that allows users to swap used items, and the video game Haidaolaile (The Pirates Are Coming) — are still performing well, but many other companies have withdrawn from the ecosystem.

Do mini-programs hide the real picture?

Zhao Yang, an associate partner at K2 Venture Capital, remembers how “good news kept coming every day” during the first three months of 2018. That was when venture capitalists had really started paying attention to mini-programs. During those months, many companies that had developed mini-programs secured their financing as capital kept flowing in.

K2 Venture Capital was among the first ones to invest in this sector as early as 2017 — in companies like the previously mentioned Xiangwushuo. Few months later Xiangwushuo’s valuation grew dramatically. Despite having just 200,000 users during its first financing round, Xiangwushuo’s valuation was USD 100 million. In the second round, it reached USD 250 million. By mid-2018, WeChat’s mini-programs were the hottest talk among investors and venture capitalists.

Jiang Wen, founder of Heika Camera, first became involved with WeChat’s mini-programs in October 2017. He thought this was the perfect way for its service to achieve rapid growth. He established a team dedicated to work on it. It was a lonely ecosystem initially.

They spent some money on advertising on WeChat, attracting around 5,000 users, but soon 80,000 new users registered out of nowhere. “That is the beauty of social ecosystems. One day you are not sure what you are doing and the next day you are viral,” Jiang Wen explained to Jiemian.

He was vacationing on a beach when he got a call from his team on 1 January 2018. Their servers were down because the mini-program had reached 10 million daily users. “It was like a dream,” Jiang recalls. He decided to upgrade the company’s servers that very day and received several invitations to act as a lecturer to talk on mini-programs.

Advertising was the program’s primary source of income. Companies encouraged users to share links and products with their WeChat contacts to attract more traffic. But Jiang said this is becoming less sustainable as people are not willing to click on links to mini-programs anymore. Heika Camera’s daily users have now tanked from 10 million one year ago to one million. This drainage is a constant among most mini-programs, according to Jiang.

Li Yuanfeng, CEO of Falcon Angel Investor, explained what the problem is: “In my opinion, users do not stay around for very long. Maybe you click a link to a game you see in your Moments (WeChat’s social feed), play for a bit and you become a new user. But do you really play again the next day?”

Hu Bin, an associate partner at Qiming Venture Capital, goes even further. “When I hear a mini-program company quoting their number of users, I divide that figure by 3 or even 5 to get the real picture”. He said except for a few e-commerce mini-programs, most are not valuable. “Everyone is waiting for somebody to make a move and create something new.”

‘If sub-apps don’t work, don’t create an app’

Bai Jiaming is one of the few who have decided to give mini-programs another shot. On June 2018, his team created Liwukai, a mini-program that allows users to send pictures to each other, but access to the whole picture was given after paying a small fee. In the first few hours, the company had transactions worth CNY 3,000 (USD 444). It was soon reported and banned permanently.

He is back to designing something that can work. In his opinion “it is difficult to find a traffic source as big as WeChat. If your idea does not work on WeChat, then do not even bother trying to create an app.”

Some of the most important players of the Chinese Internet, such as Baidu, Bytedance and Alipay, too have developed their own mini-programs within their ecosystems. For some time, it looked like the “super apps+mini-programs model” was what future in tech would look like. The search engine Baidu is probably the most ambitious of them, creating a CNY 1 billion innovation fund to attract developers and entrepreneurs.

Baidu hopes mini-programs can keep users of its search services within, instead of letting them leave when they find what they want. Bytedance and Alipay are also attracting their fair share of developers.

“Bytedance does not have an instant messaging service like WeChat, so content and services cannot be spread as effectively,” Jiang Wen explains. “However, Bytedance has a stable social community with its video apps, which can become a valuable traffic source.”

Zhao Yang, the associate partner at K2 Venture Capital, is sure that “super apps+ mini-programs will become the standard”. In Zhao’s opinion, every Internet company hopes to establish its own ecosystem. “If your rival has a nuclear bomb, you cannot afford not to have one.”

A. Alfaro

A. Alfaro is a Beijing-based freelance reporter. He focuses on China's politics, culture and society. He can be reached at 

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