As expected, a crush of local startups, products from bigger tech companies and resurgent incumbents are pushing to get a slice of what’s estimated to be a 100-120 million daily active users who are up for grabs.
But risk investors are divided about backing these apps. While Nexus Venture Partners is learnt to be leading a $5-million financing round in Indian social and short video app Mitron TV, some are learnt to have seen and passed some of these newbies like Chingari among others.
While these investors want to back companies that can seize the void, they want to wait-and-watch for now, according to people who are tracking the segment. Others also talk about how monetisation is still a far cry for apps as India is still a user-led story, unlike in China.
To put things into perspective, Bytedance, as per a Reuters report, saw revenue soar more than 130% YoY to around $5.6 billion for January-March 2020, while Bloomberg reported that the company drew over $3 billion in net profit last year on revenues of over $17 billion.
Industry estimates say Bytedance’s India revenue could be $4-5 million per month. ET spoke to a few people who have closely watched the short-video and social space evolve in India and in China to understand what will emerge out of this situation.
Anu Hariharan, partner with YC Continuity Fund, is someone who knows Bytedance well. “TikTok started off by catering to teens, school kids, and then scaled its demographics. What worked for Tik-Tok is personalisation of content. Also 30% creators attracted 70-80% engagement on its platforms,” Hariharan told ET.
“India has seen an acceleration of people coming online over the last few years with Jio offering cheaper mobile data, and monthly active users (MAUs) and daily active users (DAUs) going up,” Hariharan said. “But till the GDP per capita increases, monetisation will not be exponential. It is the same story if you look at other sectors like the average order value for food-delivery in India is the smallest – even compared to its Asian peers…”
“The TikTok playbook combined all of the following to work seamlessly – easy-to-use video creation tools, deep engagement with influencers, world class AI algorithm, massive and simultaneous capital investments, and tech infrastructure that allowed for a smooth video experience,” said Tarun Davda, managing director, Matrix Partners India.
The recent ban on Chinese apps offers opportunity for developers who can match their quality. “TikTok’s brand partnerships showed that monetisation is sure to follow if someone can recreate that playbook for Bharat,” said Davda who took bets on startups like short video app Clip in 2018.
However, with larger companies like Instagram, Dailyhunt and Gaana throwing their hat in the ring, “a simple copy-TikTok strategy isn’t going to work,” he said. Several new apps are seeing rapid increase in downloads, but most in the industry feel this unhindered rise won’t be sustainable.
Some of the gainers include ShareChat’s Moj, MX Player’s TakaTak, Dailyhunt’s Josh, and InMobi’s Roposo. MX Player is owned by Times Internet, a part of the Times of India group, which also publishes this newspaper.