The Battle for Your Attention (and Wallet)

Checking in on the social media and entertainment platform saga

I’m beginning to groan at the sight of any media coverage regarding drama in the tech sector, particularly social media platforms, with the antics surrounding Twitter’s new ownership, Meta’s one-sided affair with the Metaverse, and TikTok’s ongoing scandal around data privacy and security.

And I know I’m not alone, so I’m sorry that I’ll be adding to that pile with this piece.

Then, sprinkle in the tech layoff contagion that we’ve been seeing as monetary levers enacted by central banks last year (in the form of continued rate hikes) have rippled into the real economy.

Inflationary pressures appear to be easing, but the knock-on effect of this policy change has increased the cost of borrowing and generally dims the prospect of future economic growth. This leads to businesses adopting a bleaker outlook and imposing measures like cost-cutting, which obviously can and has impacted the labor market.

And as the tech sector usually leads the way, these are certainly darker times.

While the verdict is still out on where we could end up this year, I am digressing, as that is an entirely different topic. Instead, we’ll be taking a look at some of the more "meta" trends (sorry, but it is the right word in this context) in the ongoing journey for dominance by consumer tech giants with their massive platforms.

Whether we like it or not, many of us are impacted by what happens in this space. Either directly in our own lives with the incessant amount of notification popups on our phones, or indirectly in terms of how these platforms inform and shape our family and friends, and whomever we surround ourselves with.

The state of social media and entertainment

I thought it would be a good starting point to get some context on the sheer size of the categories in which these platforms operate.

Now, I should also note that the extent of the data in this article is not meant to be exhaustive or absolute. It’s just to paint a picture that we can set a backdrop against; as different data sources have different methodologies, discrepancies are to be expected.

Statista estimates that there were over five billion Internet users in 2022, with Asia and Europe leading the way in terms of the largest regional markets at over 50% and 13%, respectively. We tend to focus a lot on the US, as the world’s largest economy, but from a regional population size perspective, this makes a lot of sense. (For anyone curious, North America’s share was estimated at around 6%.)

And as you can imagine, the inception of smartphones has made it easier than ever before to be online. It is estimated that over 90% of Internet users access the web with their phones. Comparatively, only two-thirds are using their laptops and desktops.

With smartphones leading the way, what was the damage done in 2022?

According to a report by Data.AI (formerly AppAnnie) on the state of mobile globally in 2022, over 4.1 trillion hours and $167 billion were spent on apps. This works out to users spending about five hours a day on their phones and spending up to $75 throughout the year.

And while I’m too afraid to check how much I spent on my credit card, a quick glance at my own phone shows a range of around three to five hours per day. It’s nuts when you think about it.

And where and how are we spending all of this time and money exactly?

Well, you guessed it, the entertainment and social media categories dominated. 

In terms of the time we spent on our phones, social media and entertainment apps had a near-70% share, with communication apps, like WeChat and WhatsApp, and short video apps, like TikTok, leading the way.

Meanwhile, over half of what we spent from our wallets went to entertainment and social media. Here, entertainment apps had a much larger share, with “Over-The-Top” (OTT) services like Disney+ and Netflix at the head of the pack. Interestingly, consumer spending on social media wasn’t as big outside of dating services like Tinder.

Looking past the numbers, one of the more interesting aspects of the report showed that despite all the negative press we’ve seen and heard about Meta in the news with its obsession with “ushering” us into the metaverse and the decline in its stock price due to disappointing business performance, their consumer apps appear to be as strong as ever.

Meta’s suite of consumer-facing apps (Facebook, Instagram, WhatsApp, and Messenger) were among the top five apps in terms of downloads and “Monthly Active Users” (MAU), dethroning TikTok, which had been at or near the top spot for the past couple of years.

One could argue that TikTok (and its owner, ByteDance) may have seen some of their momentum impeded by the criticism and backlash they’ve experienced around shady advertising and data privacy practices. However, we also know that tech giants tend to copy one another whenever a new product or service breaks through and goes viral.

While Vine may have been the original short-form video platform, it really wasn’t until TikTok came along that short-form videos really took off. This led to Instagram Reels and YouTube Shorts being developed to compete, and it may just look like it’s working.

Anecdotally, I never quite bought into the short video craze, but I do dabble and have noticed that the content across all of these platforms has become increasingly similar as of late.

TikTok may have capitalized on the short video craze and is now immensely popular with young consumers (and the fact that kids probably don’t want to be on the same apps as their parents), but it still looks like they’ve struggled with monetizing their platform in a way that incentivizes content creators appropriately. This may have likely contributed to their competitors' bouncing back.

This is not to say that Meta is out of the woods either. Investors are right to be concerned about the business. Its leadership is continuing to sink a ton of money into the supposed future of the Internet and how we interact with it.

Furthermore, its revenues have been impacted by not only the current economic downturn but also the continued disruption to online advertising from increased data privacy and protection efforts by both the public and private sectors in recent years.

Taking a deeper look

While reports like that from Data.AI do an amazing job at providing a snapshot of an industry that allows you to compare like-for-like and draw some analysis and conclusions, they're also somewhat constrained as the data points need to be categorized so that things can be measured.

The reality is that many of the platforms we’ve been talking about are nearly impossible to put into a single category. The lines are blurred.

Over time, they’ve evolved to meet the needs of their users and in response to market trends, leading them to be present in multiple sub-categories across entertainment and social media.

YouTube may be a video-sharing service, but as the home to some of the biggest content creators out there, the platform has evolved to include tons of social media and community features. 

Similarly, Instagram and Facebook, as social media and media sharing networks, have since incorporated longer-form video content, amongst many other things.

As TikTok and short videos became the next big thing, very quickly, many others followed suit and incorporated similar features. The same happened with Snapchat and ephemeral content (media that disappears after a certain amount of time) before that.

It is, and always has been, a war on multiple fronts.

A lot of this has to do with their business model—advertising. The use of their platforms is largely free, but it comes at an expense on your part. The majority of their revenue is generated from brands paying them to target you with ads.

They’re incentivized to develop services and features that keep you on their platforms for as long as possible. Both to elicit more data points about your behavior and preferences in order to improve targeting and, obviously, to throw ads at you in order to help their customers meet their sales and marketing objectives.

On the other hand, there are apps in these categories that are less reliant on advertising. These include services like video streaming or online dating, which tend to have a more transparent business model, usually in the form of subscriptions. (I took a look at the subscription business model in a previous article here.)

While some of them may also advertise and utilize other business models, like microtransactions, there is less correlation between how much users use their platform and the revenue they generate. That is, you generally pay the same subscription amount whether you use the service every day or once a month.

Final thoughts

So who’s going to come out on top?

Just like the state of the labor market and the economy, and whether things are beginning to turn around, it’s still too early to tell. But I do want to leave you with a couple of interesting charts from Chartr on the state of social media platforms.

The first one below shows the “peak buzz” in terms of when they’ve been most searched on Google during their existence.

You can see Facebook peaking as we got closer to 2015 before its grand decline. Twitter was similar but has experienced a resurgence in recent years. What’s impressive here is that while interest in Facebook is at an all-time low, the app’s reach and user base are so large that it’s still able to retain a top-3 position in terms of downloads and MAU.

Meanwhile, Instagram is arguably at its peak, and a shoutout to Reddit, which has really come into its own.

But obviously, we want to talk about TikTok, which saw meteoric growth during the pandemic and won the battle for attention in one key arena—the next generation of consumers.

On top of being one of the most widely used apps, the chart below shows how TikTok soared ahead of Instagram and Snapchat as the preferred app for teens throughout the course of the pandemic.

So in a sense, TikTok is a frontrunner as it has captured the hearts and minds of young consumers. But so did Snapchat before Instagram willed its way back into the game.

The challenge here is that finding the next big thing isn’t enough anymore in the face of tech giants who’ve shown time and again that they’re agile enough to keep up.

However, Facebook’s and Instagram’s parent company, Meta, is heavily distracted with its focus on the metaverse and a business in decline. And TikTok’s momentum appears to have been dampened by the ongoing scrutiny surrounding its parent company, ByteDance, and its continued struggle to refine its business model.

The outcome on either of these fronts could very well be game changers to the benefit or detriment of the other.

See you in the next one!