According to reports, people familiar with the matter revealed that Reddit, a 15-year-old online news aggregation community, has agreed to acquire Dubsmash, the lip-synching video app, which is currently the few remaining startups that can compete with TikTok.
The acquisition, which was originally announced on Monday, marked Reddit’s unexpected entry into the mobile video field, and it also brought opportunities to expand its user base and advertising business. Shortly after this report was published on Sunday, Reddit officially announced the acquisition on its company blog. Its CEO Steve Huffman said: “Our community-centric platform can coexist. And develop, we can learn from each other.”
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The acquisition of this lip-synching video application shows that large technology companies are eager to harvest consumers’ growing interest in short videos .
One of the people familiar with the matter said that the purchase price has not been disclosed, but it is expected that Dubsmash’s equity holders will mainly use Reddit’s privately held stock to pay. Dubsmash, backed by venture capital, raised approximately US$20 million from investors including Index Ventures, Raine Ventures, General Catalyst, and Balderton Capital.
Dubsmash was founded in Berlin in 2014. Users can perform mouth-to-mouth performances on its app with audio subtitles provided by Xiaokaxiu. The subject matter can cover movies and commercials. After the short film is recorded, it can be shared with others. Dubsmash, founded in Berlin six years ago, recently moved to the United States. According to previous reports, earlier this summer the company had conducted sale negotiations, and Facebook and Snap expressed interest. According to people familiar with the matter, Twitter recently also considered the possibility of acquiring the startup, but Twitter declined to comment.
The general background of these discussions is that companies in the entire technology industry are racing to compete with TikTok. This year, Facebook’s Instagram, Google’s YouTube and Snap have all launched TikTok competitors in their apps. Twitter recently launched a feature called Fleets, where users posted videos can be automatically deleted after 24 hours.
Reddit was originally far away from the video business. It is better known for its message boards organized according to different topics. People familiar with the Dubsmash acquisition said that at the beginning of this year, Reddit management became more and more worried about the rise of TikTok, and its senior management privately stated that they wanted to make a big splash in the video field. Last year, Reddit launched the “Reddit Public Access Network” (Reddit Public Access Network), commonly known as RPAN, which allows users to broadcast live games, listen to music, create art, or just speak to the camera.
Reddit may raise cash
A person familiar with the matter said that after Reddit raised $300 million in a deal led by Chinese social media giant Tencent last year, Reddit held financing negotiations this summer. Tencent holds a minority stake in Reddit and valued Reddit at US$3 billion after the fundraising. In terms of revenue, Reddit is insignificant compared to other social media companies. The company recently told the media that its 2019 advertising revenue was $100 million.
Through the acquisition of Dubsmash, Reddit has not only obtained an application that has not yet brought any revenue, but also has a relatively small but rapidly growing group of active users. Research firm Apptopia estimates that the app had about 500,000 daily users in early August, but the app has been downloaded hundreds of millions of times since it was first released. TikTok has approximately 100 million monthly active users in the United States and is also very popular in India and other countries.
According to Reddit, Dubsmash has 1 billion video views per month, while Reddit’s platform has 1.4 billion views per month in 2018. Dubsmash has less than 15 employees, and these employees will all join Reddit after the acquisition. The Dubsmash application will continue to run independently, but its video editing tools will be integrated into the Reddit application.
Dubsmash can help Reddit expand its user base, and Reddit’s reputation is currently under siege for allowing the spread of hate speech and racist content. In June of this year, company co-founder Alexis Ohanian (Alexis Ohanian) resigned from the then-white board of directors and called on the company to fill his seat with a black candidate. Reddit subsequently appointed Y Combinator’s CEO, black Michael Seibel (Michael Seibel) as a member of the board. Last month, the company appointed Paula Price, its second black board member.
This summer, Reddit strengthened its anti-harassment policy. In recent months, company executives have promised to take more measures to eliminate harmful posts on the site. In October, its daily active users reached 52 million, an increase of 44% over the same period last year.
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