Online video consumption has seen tremendous growth in recent years, with a surge in users being fueled by longer stay-at-home periods during the pandemic. According to a report by Bain & Company, India’s vast base of about 640 million internet users, of which about 550 million are smartphone users, is growing rapidly and spending more time online. Currently the market is occupied by a mix of global social media/video giants like Instagram Reels, Facebook Reels, YouTube Shorts, to domestic companies like Moj, Josh, MX TakaTak, Roposo and others.
Indians are increasingly following short videos and apps. According to recent reports, the reach of short videos among all smartphone users in India is projected to increase from 46% to 80% by 2030. Industry experts believe that the reason for the increase in consumption of short videos is viewers’ desire for relevant and engaging content. “People have started paying more attention to shorter formats for three reasons. One is that over the past three decades, consumers’ attention spans have shrunk and shorter formats have become more prevalent. The second critical factor is the constant desire for fresh and engaging content. Third, with better access to the internet, there is an emergence of new creators across India, which has brought the diversity of India to the public eye,” Ajit Varghese, Chief Commercial Officer, ShareChat and Moj, told BrandWagon Online.
The short video segment experienced a resurgence following the ban of Chinese app TikTok in 2020. Back then, TikTok had over 200 million users in India and the app’s sudden absence created a vacuum that allowed other players to scale. For example, existing short-form video apps alongside TikTok saw an average 1.37x growth in monthly active users (MAUs) through the end of 2021 after the ban, according to RedSeer.
The game of monetization
Last month, YouTube announced that it had seen encouraging results from its early monetization efforts for its product called YouTube Shorts, bringing talk of monetization for creators on a short-form app in a new format. Industry representatives see this as a sign that the creator economy is maturing. “Ultimately, platforms must constantly evolve to remain relevant to developers. For YouTubers, this will increase their incentive to be more active on YouTube. This could also be a game to reassure their stakeholders in the face of declining growth, which they had transformed during the pandemic,” opined Rishabh Shekhar, co-founder of Pepper Content.
However, the biggest challenge in this segment is the introduction of new monetization models. Currently, monetization of a short-form app takes place in two formats – brand sponsorship and advertising. Brand sponsorship is when brands partner with content creators and influencers to run paid advertising campaigns or videos to gain greater reach from the influencer community. However, industry experts are hoping that the rise of social e-commerce could change that. Experts claim that social selling could be a new form of monetization that may emerge. “While the short format is entertaining, it also offers a greater opportunity for social commerce as the developers have a very engaged follower base and their recommendations have the potential to drive sales,” said Ashit Chakravarty, executive vice president, Dentsu Webchutney .
Backing up this claim is a report by RedSeer stating that four key factors that will drive the growth of short-form video apps in India are video commerce to help non-tech savvy shoppers; growth of D2C brands; close ties to micro/nano-influencers; and local sourcing and low average order value of the product.
Some players have already experimented with social selling. Last year, Moj partnered with Flipkart to launch video trading on the platform. According to the company, which is still in the pilot phase, it has seen acceptance among its users and is confident that social commerce will experience rapid growth over the next two years. Moj has also experimented with newer monetization models for their creators. “Moj offers creatives multiple revenue-generating options through influencer marketing, virtual gifting, and live and video commerce. Virtual gifting on ShareChat has already surpassed $50 million in ARR since launching in January last year,” added Varghese.
According to a report by RedSeer Consulting, short video apps will create a monetization opportunity of up to $19 billion by 2030. Currently, short video apps account for only 1% of total digital advertising spend. Going forward, however, the sector may account for 10-20% of the total digital advertising pie, which the consultancy has estimated will be worth nearly $6 billion by 2030. As the industry moves at breakneck speed, are the players? Only time can tell.
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