TikTok in 2023 became the first app outside the gaming industry, whose revenues generated by user spending exceeded the barrier of 10 billion dollars. How did this happen and what awaits the platform in 2024?
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While other social media led by X and Facebook are getting more and more out of breath, TikTok has had the best year in its history. And it's likely to only get better. According to a new report from the data.ai platform, the service owned by the Chinese corporation ByteDance generated over 10 billion dollars in revenue from microtransactions alone made by users within the app in 2023.
This is only the fifth such case in history, and apart from TikTok, only mobile games could boast a similar achievement: Candy Crush Saga, Honor of Kings, Monster Strike and Supercell’s Clash of Clans. What's even more interesting, out of these five applications, TikTok has experienced the most radical growth recently. The platform increased the revenue generated by users from 5 to 10 billion dollars in just fifteen months. Other companies needed from 3 to almost 7 years for this.
– TikTok has a chance to become the highest-earning mobile app in history – predicts Lexi Sydow, head of analysis at data.ai. – In 2024, it may approach the threshold of 15 billion dollars – she adds.
The realization of these predictions would mean for the Chinese platform a growth in revenues generated by users by another 50% year on year and leaving the rest of the competition far behind – the current record, held by Candy Crush Saga, is 12 billion dollars. How can TikTok achieve this?
Karina Orzechowska
The key here are so-called tips for creators. TikTok offers the possibility to purchase packages of virtual coins, which can then be used by platform users to buy gifts for their favorite influencers. All involved parties benefit from this. Users - because they can regularly support their favorite creators, creators - because they have a chance to exchange virtual gifts for real remuneration and finally TikTok itself, which takes a 50% commission from these transactions.
According to data.ai in 2023, the package of 1321 virtual coins worth 20 dollars was the most popular. It generated a quarter of the total revenue from purchases made by TikTok users.
– Users spend over 11 million dollars a day on tips for their favorite content creators, which means that TikTok will soon be able to overtake the most profitable mobile game in the world: Candy Crush Saga – adds Lexi Sydow.
And yet, one cannot forget that TikTok earns from ads within the app and is vigorously developing its e-shopping platform launched in September 2023. Moreover, it is one of the most engaging social platforms in the world. As reported by data.ai, by the end of 2024, TikTok users will spend up to 40 hours a month in the app, which means an increase of another 22% compared to 2023.
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