China's Qutoutiao raises $100m for e-book app

The parent company, which launched Midu in May 2018, also took part in the round. Midu – now known as Midu Novels and Midu Novels Light – offers free literature supported by advertising. It had approximately five million daily active users (DAUs) as of December 2018 who spent an average of 150 minutes per day on the platform.

Content is primarily sourced under license from traditional PC-based online literature platforms. Much like Qutoutiao’s other products, this content is curated according to user interests, based on profile analysis and reading history. About 40,000 pieces of literature were offered on Midu at the end of last year.

“Midu continues to play a crucial part in Qutoutiao’s overall content platform strategy. We have a clear roadmap ahead for Midu, and our objectives of reaching more than 10 million DAUs by the end of the year and becoming the largest online literature platform in China by 2020 remain unchanged,” Eric Siliang Tan, chairman and CEO of Qutoutiao, said in a statement.

Midu targets people who read online but are unwilling to subscribe to traditional paid-only platforms. China Literature, a PE-backed business that listed in Hong Kong in 2017, is among these platforms. The company had 217.1 million monthly active users (MAUs) – it doesn’t give information on DAUs – as of June, of which 9.7 million were monthly paying users. It offered 11.7 million pieces of literature, including 11.1 million original works.

China Literature introduced a free-to-read model in the first quarter of 2019 through Tencent Holdings’ apps. This was followed by a native app. These services are supported by advertising.

Qutoutiao was established in 2016 and achieved unicorn status in March 2018 when Tencent led a $200 million Series B round at a valuation of $1.6 billion. CMC was among the investors, having also contributed to the Series A in 2017. In September 2018, the company raised $84 million through a US offering. The stock currently trades at an approximately 50% discount to its IPO price.

Qutoutiao operates a similar business model to ByteDance Technology’s Jinri Toutiao platform based on extracting content from blogger and media outlets and using artificial intelligence technology to create personalized news feeds. However, the company focuses on entertainment news and short-form videos – as opposed to Jinri Toutiao’s broader offering that ranges from economic analysis to celebrity news – and primarily targets third and fourth-tier cities.

The company has sought to broaden its user base and monetization avenues by introducing new content formats, such as literature, casual games, and live streaming. Combined average MAUs and DAUs were 119.3 million and 38.7 million, respectively, as of September. Average daily time spent on its platforms was 60 minutes. Revenue came to RMB3 billion ($439.5 million) in 2018, a nearly six-fold year-on-year increase, but the net loss widened from RMB94.8 million to RMB1.9 trillion.

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• Topics
• Greater China
• Technology
• Early-stage
• China
• TMT
• China Media Capital