ByteDance Ltd’s TikTok is testing introducing a subscription service that would offer users an almost ad-free experience, as revealed by a code within the app reported by Android Authority.
For a monthly fee of $4.99, subscribers could enjoy their favorite short-form videos without the interruption of ads.
However, this ad-free experience is limited to ads served directly by TikTok, meaning users will still encounter influencer marketing and brand sponsorships on the platform, TechCrunch reports.
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The social media giant confirmed the test but clarified that it’s being conducted in a single English-speaking market, not including the U.S.
TikTok’s revenue primarily stems from ads, and it has managed to sustain its ad revenue even with the general decline in online ad spending.
A study by Cowen highlighted that 60% of ad buyers preferred TikTok for short-form video content.
Moreover, ByteDance secured 11% of big agency spending on social media, attracting top spenders like PepsiCo, Inc (NASDAQ: PEP), DoorDash, Inc (NASDAQ: DASH), Amazon.Com Inc (NASDAQ: AMZN), and Apple Inc (NASDAQ: AAPL).
TikTok is willing to explore this avenue, echoing similar moves by other social media platforms like X (formerly Twitter) and Alphabet Inc (NASDAQ:GOOGL) YouTube.
ByteDance has reported an operating profit of nearly $6 billion in Q1 2023, almost double the profit earned during the same period in 2022.
The company’s financial resurgence is notable, especially considering its $7 billion operating loss in 2021. The rebound reflects a combination of increased revenue and reduced expenses.
Despite the profit, ByteDance experienced a slowdown in its revenue growth.
In 2022, the company’s revenue surged by over 38% to reach $85.2 billion. However, this growth rate is modest compared to the nearly 80% increase the previous year.
The tech giant has offered to buy back shares from its current employees at $160 each. This move comes amidst a reported 26% drop in the company’s valuation, now at $223.5 billion, down from $300 billion a year ago.
Despite the financial gains, ByteDance faces political uncertainty and intensified competition from U.S. social media giants. The ongoing scrutiny of TikTok by U.S. authorities and regulators worldwide casts a shadow over the company’s prospects.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
