Selfie app operator Meitu Inc said it will not exit the short video business and plans to introduce more video editing functions on its beauty enhancing photo app Meitu Xiuxiu.

Meitu is determined to further enhance its user engagement and make a breakthrough in the social media sector, said Wu Xinhong, its CEO.

He said the company's video sharing and streaming app Meipai, which targets female users aged 25 to 35, will be part of the ecosystem based on its core product Meitu Xiuxiu.

Established in 2014, Meipai was an early entrant to the video beautification and sharing market. However, competition in China's short video industry turned fiercer with new players such as Douyin and Kuaishou making aggressive inroads into the market, presenting a stiff challenge to Meipai.

"We won't consider giving up our short video business," Wu said, noting the content of Meipai is still very valuable and shows huge growth potential. "We don't think opportunities have dried up in this (short video) segment. Instead, we see the dividend will maintain for a long period of time."

Moreover, Wu said they will develop other short video apps to meet users' demands, as the video format continues to be important as a form of content.

The company reported a total revenue of 464 million yuan ($65.4 million) in the first half of this year, down 4.7 percent year-on-year, while its net loss declined 41.4 percent to 171.7 million yuan.

The revenue from internet value-added services and others decreased by 50.4 percent year-on-year to 100.2 million yuan, mainly due to a decrease in the live-streaming business of Meipai.

Wu said Meitu will launch more products with social interaction functions, such as the private album where users can store their photos securely on the cloud.

The function enables them to invite friends to manage an album together where they have the ability to upload, comment and interact with each other.

"We still see an immense growth potential for video streaming platforms, following the increasing population from the post-2000 generation growing up to become internet users in China," said Flora Tang, research analyst at Counterpoint.

"The commercial application of 5G will inject new vitality into the short video industry," said Liu Jiehao, an analyst from iiMedia Research, a market consultancy.

"In the new round of competition, the application scenarios of short videos will be continuously expanded, and the enterprises that realize monetization successfully will be more competitive," Liu said.

Meitu would do well to actively embrace technology, strengthen the construction of content ecosystem and accelerate its monetization efforts, he said.

Meitu is shifting to an asset-light business model after it stripped off its smartphone businesses. Last year, Meitu and smartphone maker Xiaomi Corp reached a strategic cooperation arrangement. Xiaomi will be responsible for the design, research and development, production, business operation, sales, and marketing of Meitu smartphones, while Meitu will provide its proprietary imaging technologies and beautification algorithms.

Founded in 2008, Meitu's apps had gathered about 308.1 million monthly active users by June. The apps help users to appear more attractive in photos and videos by slimming their faces, buffing their skin and even applying makeup.