Short-form video sensation TikTok has become the first non-game app to smash the $10 billion consumer spending milestone, and is on its way to becoming the highest-grossing app in history this year.
That’s according to a recent analysis by data.ai (formerly App Annie).
“We knew it would be a banner year for TikTok when it became the first mobile app to generate more than $1 billion in worldwide consumer spending during a single quarter in Q1,” data.ai’s Randy Nelson said.
TikTok entered 2023 with a cumulative total of $6.2 billion in consumer spending on its platform to that point, and added $3.8 billion over the course of the year, a 15% increase over the $3.3 billion it accumulated in 2022, data.ai reported. The platform’s revenue is fueled by virtual gifts and tipping features.
In January 2020, users on TikTok spent 11 hours per month in the app. By October 2023, the time they spent tripled to 32.5 hours per month.
“We knew it would be a banner year for TikTok when it became the first mobile app to generate more than $1 billion in worldwide consumer spending during a single quarter in Q1.”
Randy Nelson, data.ai
The latest milestone places TikTok in an exclusive club of just five apps to have achieved more than $10 billion in revenue. These include Candy Crush Saga (from King/Activision Blizzard) with more than $12 billion, Honor of Kings (from Tencent) with $11 billion, Monster Strike (from XFLAG/Mixi) with $10.6 billion, and Clash of Clans (from Supercell) with $10.2 billion.
Applications that are close to reaching the $10 billion milestone include Tinder and YouTube, although they trailed TikTok by about $2 billion to $3 billion before the end of 2023.
Data.ai noted that cumulative spending in TikTok year to date in 2023 rose 70% year over year, 3.7x faster than Candy Crush Saga at 19%.
TikTok’s meteoric climb is largely attributed to its “TikTok coins” system. Users buy these coins to shower creators with virtual gifts, which then convert into real-world currency for the recipients. This scheme, driven by fans and content creators, saw its most popular $19.99 bundle for 1,321 coins account for roughly a quarter of all in-app purchase revenue, data.ai said.
“TikTok is poised to become the highest earning mobile app ever — approaching the $15 billion milestone in 2024,” said Lexi Sydow, Head of Insights at data.ai.
“TikTok is poised to become the highest earning mobile app ever — approaching the $15 billion milestone in 2024.”
Lexi Sydow, data.ai
“Consumers are spending over $11 million per day tipping their favorite content creators, propelling TikTok past the world’s most lucrative mobile game to date: the addictive and beloved Candy Crush Saga. TikTokers are poised to spend a 40-hour work week each month in the app by the end of 2024, +22% from 2023.”
At that point, the 40 hours per month spent on TikTok will outstrip time spent on YouTube by 13 hours per month, data.ai said.
Although data.ai expects TikTok to surpass Candy Crush Saga to claim the title as the highest grossing app ever, “the beloved match-3 title is slated to hit the coveted $14 billion 10 days before TikTok,” the market research firm said.
“In tandem with its consumer spend milestone, TikTok is poised to claim both our time and money,” data.ai added.
In addition to virtual gifts and tipping, the increased spending on TikTok also comes as the platform continues to deepen its move into e-commerce.
Bloomberg reported recently that TikTok is targeting a tenfold increase in its US e-commerce business to $17.5 billion in gross merchandise value this year. The goal puts TikTok squarely on the battlefield against e-commerce giant Amazon.com and fellow fast-growing Chinese players like Temu and Shein.
TikTok launched its TikTok Shop in a number of markets, including Southeast Asia and the UK, in December 2021, and in June 2023, it disclosed plans to invest billions in Southeast Asia, where it has become an e-commerce powerhouse.
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