Tencent Holdings:WeChat’s Mini Program -it’s all about payments

On January 9, 2017, Tencent (0070.HK, Buy) launched WeChat Mini Program, lookingbeyond the 12mn Official Accounts, and creating a layer between apps and websiteswithin WeChat. We believe Mini Programs will enhance Tencent’s paymentecosystem, drive more time spent with WeChat, and over time improve the userexperience as Mini Programs are download-free, have shorter loading time, andrequire fewer clicks. In our view, the low cost of developing Mini Programs shouldhelp Tencent to further expand among China’s 70mn+ SMEs and individualmerchants, and we believe that both SMEs and consumers should gain from a betteruser experience in Mini Programs compared to Official Accounts as well as asmoother payment solution compared to native apps. We expect Mini Programs tohave limited impact on app distribution revenues.

What’s in Mini Program: According to company management, n there are 2,000Mini Programs in total, including online-to-offline (Meituan), e-commerce (JD),news feed, video, OTA (Ctrip), and utility tools for chatting, transportationinformation, calendar etc. According to WeChat’s creator Xiaolong Zhang, MiniProgram is not open to games, although gaming related content and services areallowed. For example, the Mini Program Honour of Kings Event offers usersvideo, data and news about China #1grossing mobile game, Honour of Kings,which has 50mn daily active users.

What are suitable to be “Mini Program-ed”: While almost every app exceptmobile games can create a Mini Program version, we believe its suitability willdepend on the time spent per visit and the user experience. For apps that requiremore time spent per visit and have to truncate functions to migrate to MiniProgram – such as for ecommerce and OTA – we believe Mini Programs are lessappropriate substitutes for native apps. For apps that can deliver userexpectations in less time and can be performed smoothly as Mini Programs –such as O2O services and tools and utilities apps – we see Mini Programs as asuitable alternative to native apps.

How is a Mini Program created: A Mini Program is developed in JavaScript andWeChat’s own view-layer languages, WXML (Weixin Markup Language) andWXSS (Weixin Style Sheets). The company is organizing full day camps on MiniProgram “why” and “how”, including case studies. For a Rmb300verification fee,small and large businesses, government institutions and other organizations canapply to be Mini Program developers; however, individuals cannot develop MiniPrograms.

How can users use Mini Program: Users can access n Mini Program mainlythrough four channels: i) precise name search in Mini Program gateway, asshown in Exhibit 1(short keyword search will return no result); ii) scanning QRcode in offline scenarios, such as ordering and queuing in restaurants; iii) OfficialAccounts whose institutions also developed Mini Programs; iv) shared link in chatwindows, although sharing to Moments is not allowed.