How does the Internet Short Video Business Model Realize Value Creation? A Comparative Case Study of Douyin and Kuaishou

Abstract

The Internet short video is booming in recently years, but its business model architecture and corresponding mechanism of value creation remain obscure. This study aims at answering the question of “how does the Internet short video business model realize value creation”.Specifically, based on the perspective of factors’ architecture and the theoretical foundation of network effects, and following the business model’s logic among the dimensions of value proposition, value creation and value capture, this study compares Douyin and Kuaishou to investigate the theoretical architecture of the Internet short video business model and analyzes its mechanism of value creation. The findings suggest that the Internet short video business model consists of four key factors, namely, content, flow, operation, and monetization. Content belongs to value proposition dimension, including media oriented content and social oriented content; flow and operation belong to value creation dimension, flow including public flow and private flow, and operation including centralized operation and decentralized operation; monetization belongs to value capture dimension, including deal-promoting monetization and emotion-tied monetization. According to the logic among the business model’s dimensions, these factors are integrated as three theoretical architectures, which are labelled as “content-dominant business model”, “socialization-dominant business model” and “two-wheel driving business model”. These three kinds of Internet short video business model are respectively supported by cross-side network effect, same-side network effect and two-side network effect in the mechanism of value creation. Furthermore, “two-wheel driving business model” reaches the organic combination between “content-dominant business model” and “socialization-dominant business model”, which is more crucial for Internet short video platforms to gain sustainable competitive advantages.Compared with the extant literature, this study makes three main contributions: First, it supplements the research on the Internet short video business model by depicting its key factors and theoretical architectures. Second, it enriches the research on the architecture drivers of business model value creation by adopting the paradigm of “factor-architecture-value”. Third, it strengthens the research on the mechanism of value creation for the platform business model under network effects by combining the concepts of strategy management and economics such as positioning, resource, capability and rent. Overall, this study not only opens the “black box” of value creation in the Internet short video business model, but also sheds light on the business model innovation of Internet short video both theoretically and practically.