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How Short-form Video Apps are Looking at Monetisation Opportunities

How Short-form Video Apps are Looking at Monetisation Opportunities

With short-format videos catching on, international and home-grown apps are looking at new monetisation and profitability opportunities

The biggest challenge for short form video apps today is to develop newer monetisation models (Illustration: Anirban Ghosh) The biggest challenge for short form video apps today is to develop newer monetisation models (Illustration: Anirban Ghosh)

During the nationwide lockdown in 2020, Prateek Bhardwaj—an MBA graduate from the small town of Garhmukteshwar in Hapur district of Uttar Pradesh—started making videos on Moj, a short-form video-sharing platform. His very first video went viral because of its relatable, family-driven comedy content and helped him gain 1 million followers in just 35 days. Back then, it was unthinkable in Bhardwaj’s hometown that creating short-form videos could be a profession; fast forward to today and the 30-year-old con tent creator has 3.4 million followers on Moj and earns between Rs 80-90 thousand a month.

Bhardwaj isn’t alone. The Moj platform showcases videos from more than 50 million creators. In fact, Moj, along with TakaTak and social media platform ShareChat (both owned by Moj’s parent Mohalla Tech), have a total monthly active user (MAU) base of 400 million. India’s short-form video space is on fire thanks to Indians’ insatiable appetite for such videos. According to Meta, which corners a lion’s share of the space with Reels on its photo-sharing platform Instagram, as many as 6 million Reels are produced daily on its platform for India.

Chinese short-video giant TikTok first introduced Indians to the format; but after it was banned in June 2020, other players saw a 1.37x surge in MAUs till the end of 2021, according to RedSeer, which tracks the space. “Post the ban, there was increasing interest among consumers and it’s fulfilling a certain need. There’s a plethora of content out there but people have started paying more attention to the shorter formats,” says Ajit Varghese, Chief Commercial Officer of ShareChat. One of the reasons for the rising popularity of short-form video, he adds, “is the shorter attention span of consumers over the last few decades”. The second reason, he adds, is that short-form video apps provide the possibility of more fresh content.

But how does one stand out in a market where there are a dozen other such apps? For Varghese, it is by providing more personalised content at scale. “There will always be competition but the power of data will differentiate us,” says Varghese, adding that the presence of many players in the space shows the heightened consumer interest. “The reason why you [a consumer] stick to a particular app is because it’s highly personalised to your interest. Just because there are more players doesn’t mean that all of them will survive.”

Speaking of competition, Meta says that the meteoric rise of short form video in India in the last two years has been led by Reels. “It is our aim to help the creator ecosystem realise the economic value of their community and fan franchises. We provide multiple models, products and programmes—be it funded programmes or initiatives that help enable creation and experimentation, acknowledging and rewarding performance, [and] connecting creators with economic opportunities like branded content,” says Paras Sharma, Director and Head of Content & Community Partnerships Entertainment, Sports, News, Music, Social, Facebook India (Meta).

The biggest challenge for short form video apps today is to develop newer monetisation models. “We are focussed on building monetisation tools on Reels, and towards that we are running several tests in various parts of the world—advertising- supported revenue opportunities, direct fan-based subscription or payments, commerce-based opportunities, and many more,” says Sharma.

Varghese, too, says they are exploring different monetisation opportunities. “Our monetisation plans are going on in full steam to make sure that there is a revenue backing. And revenue backing is not just from an advertising point of view; it is from a user to user interaction point of view, creation of a bigger ecosystem of influencers, including video commerce. Over the last one and a half years, we have grown 5-7x,” he says.
Any social business, he adds, has an initial burn, to make sure that the ecosystem develops at a product level, at an investment in AI level, cloud infrastructure, user acquisition, etc. “And once these things are in place in a reasonable way, then the monetisation starts… I think we are fully on the road to get profitable on ShareChat in 12-18 months.”

Singapore-based app Tiki says social commerce and virtual gifting are the big monetisation models for short video platforms today. “Most social media apps in India rely on the ad business. Traditional monetisation methods mainly allowed digital content creators to earn money through ad revenues and brand sponsorships. However, this required them to have amassed significant engagement numbers or achieved partner status on digital platforms—a difficult task for casual creators to undertake without significant effort,” says Tiki CEO Ian Goh. Ad revenues, he adds, are often shared with creators in a non-transparent manner. “Ad revenue benefits the platforms themselves more than the creators,” he says.

According to RedSeer, four key factors will drive the growth of short-form video apps in India: video commerce to assist shoppers not well-versed with tech; growth of D2C brands; intimate connections with mirco/nano-influencers; and local sourcing and low product average order value. It estimates that of the $4 billion total live commerce gross merchandise value by 2025, short-form live commerce will be approximately $2.5-3 billion GMV, with virtual gifting emerging as a monetisation opportunity. And a Bain & Company report says that in India, the daily time spent per active user on online videos has grown by 60-70 per cent from 2018 to 2020. “With the current growth of short video platforms, I believe India has the perfect mix of the two favourite online activities—content consumption and e-commerce. Live commerce is the next big thing that will change the way we consume content today,” says Goh.

Meta’s Sharma sums up the industry’s way forward: “Our efforts should be to ensure we’re democratising information and creative tools available to young people across the country, be it in India or in Bharat.” While these applications have surely fared well when it comes to democratising Indian content, making money is another battle yet to be won.