Three trends suggest India is adding short to its video-first market

Three trends are making short video apps the YouTube of internet

Pavan Rathod loves making rangolis, the art form that makes colourful patterns on the floor or tabletop. Gods and goddesses, flowers, the letters of someone’s name — he can make a rangoli of anything. “Shauk hai (it is a hobby),” he says.

By the time Rathod was 18, he was being invited to homes, clubs, and hotels to make rangolis. Soon he could make a living from it.

Then came TikTok. Starting with his first post on the short-video app in 2018, Rathod quickly gained 1.2 million followers. By the time India banned TikTok in June 2020, Rathod was familiar with the format. He quickly swit¬ch¬ed to Josh, where he now has 20 million followers. With more followers came more work. From about 20 to 30 orders a month in 2020, he now gets 80 to 90.

Rathod’s experience reflects one of the three things happening in short video. “Offshoots of creative commerce are coming alive,” says Umang Bedi, co-founder, VerSe Innovation, which owns DailyHunt and Josh. Just like Rathod, mehendi artists are getting work, popular musicians or influencers are creating their own brands, others are signing on members to their feeds.

Josh was launched in August 2020, soon after TikTok shut down in India. It is at 153 million monthly active users and raring to monetise its reach. “Two years ago, short-video feeds were dominated by curated programming. Now user-generated content is breaking through and seeing engagement and scale,” says Bedi. Analysts point to the $4 billion that TikTok, with a billion users worldwide, made in advertising revenues in 2021. The game, then, is one of scale.
 

“India has always been a video-first market; increasingly, it is a short-form-video first market,” says Ajit Mohan, vice-president and managing director, Meta (formerly Facebook), India. With more than 300 million monthly active users, Meta’s short-video app, Reels, is one of the biggest growth levers for the Rs 9,236 crore Meta India.

That brings us to the second thing that is happening. As usage and time spent go through the roof, short video is becoming the YouTube of the internet. Much of what Reels, Josh, Taka Tak or others go through is what YouTube, which came in 2008, has experienced.

For years, Google’s YouTube has been the default entry point for anyone experiencing the internet for the first time. Out of the 485 million Indians online every month, more than 450 million view or visit YouTube, says Comscore data. 

For an entire generation of Indians, it is a search engine; they think everything that has to be consumed online is on video.

Thanks to the ease of access, devices, and the context that YouTube has created, short-video apps will hit those numbers in three to four years. ShareChat, which also owns Moj, acquired a third short-video app, MX Player’s Taka Tak, in February this year.

“If you put together ShareChat, Moj, and Taka Tak, we have 300 million monthly active users; that is two-thirds of YouTube,” points out Ajit Varghese, chief commercial officer, ShareChat and Moj. He expects this to double in five years.

Meta is working on a discovery engine across Facebook, Instagram, and Reels that will use artificial intelligence to drive and surface the most interesting content, essentially short video, across its platforms even if it wasn’t posted by a friend or someone you follow. “We are making a bet on a video-powered discovery engine not dependent on just the social engine,” says Mohan.

Much of this sounds a bit fantastic. YouTube is not just the biggest over-the-top (OTT) streaming platform in India; at almost Rs 7,000 crore in revenue (2021), it is also a money-making machine that is part of the $258 billion Alphabet Media that owns Google, the first port of call for more than 4.3 billion people globally. It can outstay and outspend any competitor.

Of the Rs 30,300 crore that advertisers spent on digital media in 2021, roughly half went to Google and a third to Meta, though how much of this goes to their short-video brands is moot. As a rule of thumb, the bigger the audience the more the advertising. The challenge for Josh, ShareChat and others will be to get a sizable share of the Rs 30,300 crore digital ad pie growing at 20 per cent. “Every new product or format that has had engagement has sooner or later translated into being an effective tool for marketers and advertisers as well. It was true for FB Watch and Feed, and will be true for Reels as well once it is opened up for ads,” reckons Mohan.

That brings us to the third point. Over the last two years, investors have poured close to $2 billion into the space creating many popular alternatives to TikTok. But if you exclude Meta and YouTube, where are the revenues? Varghese of ShareChat points to the 8-10 per cent that short-video players earn from gross merchandise value in China. “In India, it has just started and can move in a few billions,” he says.

According to the 2022 report on the media and entertainment sector by the Federation of Indian Chambers of Commerce and Industry and consultancy and audit firm EY, social commerce in India could hit upwards of $50 billion in gross merchandise value. Ten per cent of that would be Rs 40,000 crore.

“The movement from content to commerce has begun,” reckons Bedi. That is why those ‘creative commerce offshoots’ matter.

The long and the short of it

• Short video is seeing usage and time spent explode
• Becoming the YouTube of the internet, or its default entry point
• Except for YouTube and Meta, most short apps still struggle to monetise their reach
• Seeing the beginnings of creative commerce