Tier 2 Cities Driving Rise of Made in India Short Video Format Platforms

Our smartphones have become an indispensable part of our lives. Nobody can deny the fact that internet penetration and mobile device proliferation have increased manifolds. This in turn has increased the consumption of all types of digital content including news (text), music (audio), or video. Gone are the days when people would watch popular TV Shows, movies, and music content. The digital audience today demands instant gratification and has thus turned to avenues such as web series, and other digital programming options.

A major rise has been witnessed in the short form video content. The lingo that we hear online has gradually permeated into our everyday conversations. Be it a viral meme, an online trend or a pop culture reference, chances are most of us either know it too well or have at-least heard of online. Today it is not just the younger generation residing in urban pockets that is driving this trend. The real opportunity lies far beyond the reaches of urban cities; in smaller tier 2 and tier 3 cities.

Everyone was well too aware about the Chinese short form video format platform, TikTok. However, following a ban on various Chinese apps by the Indian government including TikTok-which had a large user base in India there arose an opportunity. Home grown companies wasted no time and the market saw the emergence of indigenous apps such as Chingari, Josh, Rooso, Moj, and MX Takatak.

According to a RedSeer report titled "The Rise of Made in India in Digital Content," the short-form video user base has returned to nearly 100 percent of what it was before the TikTok ban. "Indian short form apps have been able to retain over 65-70 percent of TikTok users, adding 30-35 percent new users in the past year, essentially back to 97 percent of the TikTok user base” quoted the report.

The report stated that the number of Daily Active Users (DAUs) on these apps had increased to nearly 97 percent of what they were in June 2020 when the Chinese apps were banned. This is partially due to the platforms' aggressive marketing and user growth efforts. The average time spent on platforms has increased by 55 percent since June 2020.

User Growth in Tier 2 & 3 Cities

More significantly, the study claims that the majority of new users (60-62 percent) who have joined the platforms are from Tier 2 cities. The platforms' heavy emphasis on Indian content and ‘Bharat' positioning is largely responsible for this trend.

As per the report, 75 percent of current short-form video users will likely stick to domestic apps and will not return to Chinese apps even if the ban is lifted.

“In less than one year post-TikTok ban, Indian platforms have shown a strong V-shaped recovery, bouncing back to 100 percent of the pre-ban daily user base. This shows how platforms were able to design the product, execute their plans, and market it aggressively in a very short period. This is a strong indicator of how the Indian digital ecosystem has matured in the last few years,” says, Ujjwal Chaudhry, Associate Partner, RedSeer Consulting.

The report notes that, while Indian platforms have come a long way, there is still room for improvement in terms of content quality and product experience. The players must also meet global and cross-sector targets for interaction and retention, which will increase the ecosystem's monetization potential. The ecosystem's growth has been fueled by strong network effects and a rapidly increasing user base, resulting in a high monetisation opportunity for both influencers and platforms.

Market Share Breakdown

Moj has been a strong gainer across consumer and business metrics, as compared to the last quarter. Its growth has largely been driven by regional language markets, especially in the southern Indian states. Roposo on the other hand has shown strong performance in Tier 1 cities compared to the smaller ones. MX Takatak leads the market in the net promoter score (NPS) in metro cities. The platform has held challenges and hashtag events similar to TikTok, to gain market share, explains said the report.

According to the study, Josh leads both on influencer and user-end, driven by strong performance in the Hindi belt and Tier 2 cities.

Josh App scores higher on the NPS primarily due to increased satisfaction (47 percent) among Tier-II users, primarily from India's Hindi belt. Moj, does well in the Bharat belt, with the highest levels of satisfaction (51%) in Tier II+ cities and second-best (38%) in Tier I cities. In metro cities, MX Takatak achieves the highest level of satisfaction (38%) among competitors. While Roposo performs excellently in Tier I+ cities (achieving close to 30% NPS), metro users are only 11 percent satisfied.

The user base of Short-form videos like JOSH, Moj, MXTakaTak is moving from the middle of the internet funnel towards the top.

Rural areas, which are vulnerable to regular power outages, are increasingly turning to online media formats for a consistent entertainment experience. The governments’ National Optic Fibre Network will also give a boost to online content consumption in the rural areas. With their appealing service offerings, online content enablers will expand their reach into the largely untapped rural population.

While monetization is still a long way, Ujjwal explained that “In Tier-II and III cities, there is a significant growth in user base, bringing the brand attention to the segment”. Quoting the report, he adds, "Digital media is one of the fastest-growing advertising channels with $2.37 billion annual spend."

The FMCG and media and entertainment verticals spend the most money on online content, making them the most common sectors for advertising on short-form video platforms. Influencers with more than 10 million followers receive between $20,000 and $40,000 every month.

Influencers with one million followers can earn between $1,000 and $2,500, while those with less than one million can earn between $40 and $200.

Over the last few years, online media usage has skyrocketed. People are spending more time on digital media than on conventional media, and they are consuming more media on digital media. This rise can be attributed to advancements in mobile device technology and internet connectivity, which have enabled audiences to access digital media content on the go.

As we move forward this trend is only going to grow exponentially.