After India banned TikTok, its $20 billion market is up for grabs

India was TikTok’s biggest market.

Prateek Bhardwaj has become a social media star on TikTok’s short video platform, attracting nearly a million followers and a slew of big brand endorsements. But he is no longer on the app.

The 30-year-old man from a small Indian town has defected to Moj, one of several Google-backed TikTok clones that sprouted after New Delhi banned the ByteDance Ltd app. in China in 2020. It barely missed a beat: its fan base soared to 3.4 million and the content creator is still connecting Xiaomi phone products to Diageo whiskey.

Mr Bhardwaj’s smooth transition highlights the opportunity presented by TikTok’s banishment from the world’s fastest growing mobile arena. The world leader in short video has been swept away in a purge of Chinese apps by India after a violent border clash two years ago. This gave impetus to Google’s YouTube Shorts service as well as Moj and a host of other contenders to fill the void. Far from blunting the growth of social video, TikTok’s abrupt pullback has energized the segment.

US giants Meta Platforms Inc. and Alphabet Inc. are now battling to take the lead in what promises to be a nearly $20 billion market, recruiting content creators with incentives and increasing their investment even as they grow. they are reducing their activity elsewhere in the world.

For them, India represents the greatest growth potential for online video on the planet – and the field is wide open. Meta, which already counts India as its largest Instagram user base at around 400 million, wants to turn its short video Reels offering into a direct TikTok replacement and bolster it with comparable recommendation algorithms. Google, whose YouTube is closing in on half a billion Indian users, introduced a TikTok copycat service immediately after the ban, but its local strategy also includes funding and grooming four of the biggest local clones: Roposo from InMobi, Josh from DailyHunt, Moj from ShareChat and MX Takatak.

“What has really defined the past two years for us is the explosive growth of Reels on Instagram,” Meta’s Indian chief Ajit Mohan said in an interview at the company’s sprawling headquarters on the outskirts of New Delhi. . “Our goal is to bring a big global celebrity out of India, out of its small towns. He’s our North Star.”

The South Asian nation was TikTok’s biggest market – ByteDance offers cousin app Douyin in China – and the ban has prompted its more than 200 million Indian users to seek alternatives. Mr Bhardwaj, who had left his prized IT job to jump on the TikTok bandwagon, was welcomed on Moj and Instagram when the Chinese service was interrupted. Instagram is spending more than $1 billion globally, a significant chunk of which will be rolled out in India, on programs that help creators make money. Google is betting on the local know-how of operators like Moj.

While pursuing different backgrounds, the two US companies agree that replacing TikTok must start with recruiting and training Indian-born creators.

“One of the biggest opportunities that Google’s $10 billion Indian Digitization Fund wants to tap into is mobile and video usage in India,” YouTube Regional Director Ajay Vidyasagar said. “Storytelling is an integral part of Indian life, from ancient sound traditions to today’s many-to-many digital storytelling through channels such as YouTube and short video apps.”

The two Silicon Valley titans are aiming for the same prize: a short-video app economy that’s expected to drive sales of up to $19 billion by 2030, according to consultancy Redseer. Short-video apps could then account for up to 20% of India’s digital advertising market, the Bangalore-based consultants said, making it a sector that internet companies cannot afford to ignore.

The American duo also want to use India as a testing ground for their algorithms, influencer campaigns and content experiences that can be exported to the United States, where an unfettered TikTok is destroying their ad revenue models. YouTube Shorts made its global debut in India as a beta service in September 2020 before expanding to the United States six months later. Google is now starting to serve ads on Shorts, while Meta is still struggling to find the right ad format for Reels and may be hoping to unearth the solution in India.

“Major digital media players have clearly shifted their content to short-form video, one step away from pursuing other opportunities like live cricket,” said Vipin Gupta, managing director of Boston Consulting Group. Google and Meta “invest heavily in Bharat-focused creators – local influencers in a region, language, or culture.”

This push to support online creators and social media stars is starting to play an instrumental role in India’s wider entertainment ecosystem. Kabeer Kathpalia, known to his more than 31,000 Instagram followers by the nickname OAFF, ​​landed a job in film production after his music caught the eye of a director.

“Even in my wildest dreams, I never imagined that my videos would take me to Bollywood,” said Mr Kathpalia, 33. The music creator’s performances on Instagram paved the way for him to produce the score and songs for a headlined blockbuster by A-list actor Deepika Padukone.

Affordable devices and wireless data will fuel the growth of short-form video, which is expected to be part of the online diet of 67% of all Indian smartphone users by 2025, doubling its share from 2020, according to Redseer .

To capture this growth and keep up with Meta spending, local competitors are also investing heavily. Operator Moj ShareChat doubled its losses to $180 million in the fiscal year ending March 2021, spending more to amass its 300 million users who watch 6 billion short videos a month.

The bulk of online ad spending in India still goes to Meta and Google. Both are doing everything to protect their share of that revenue, said ShareChat co-founder Ankush Sachdeva. “When your heart is threatened, you invest whatever it takes.”

Google’s gross ad revenue in India is around 1.5 times that of Meta’s local unit, although the owner of Instagram is growing much faster in the country. Short video ad sales are still only a small part of the overall pie for both.

“Short video is not Google’s singular game,” said Mr. Sachdeva, 29. “But for Meta, the content is bread and butter.”

Instagram is currently leading the nascent short video market in India, with users spread across noisy and crowded cities as well as idyllic towns. Its teams search the platform for promising budding musicians, dancers or actors and train them in audio-video tools and social network trends. Instagram saw twice as many downloads as two versions of Moj combined on Google’s Play Store for Android devices in the first half of this year, according to app analytics firm SensorTower.

Meta’s Instagram lite for phones with slower data connections, its decision to allow certain Instagram content to be cross-posted to Facebook, and its adoption of no less than 11 local languages ​​have all helped it gain momentum. advance. Its advertising revenue in India increased 41% to 93.3 billion rupees ($1.2 billion) in the fiscal year ending March 2021, more than the combined advertising sales of two of the largest broadcasters. from the country.

When TikTok was expelled, Mr Sachdeva and two of his classmates from Indian Institute of Technology Kanpur jumped at the chance. “We charged like bulls and launched Moj in 30 hours,” Mr. Sachdeva said. Their Bangalore-based startup then raised $520 million in mid-June from investors including Google and Temasek Holdings Pte at a $5 billion valuation.

Moj was designed to serve “snackable” content in an infinitely scrolling stream, especially in Indian languages. To bring its technology to global standards like that of TikTok, the company has assembled an artificial intelligence team with engineers based in Bangalore, London and Silicon Valley.

“Unless the AI ​​is world-class, you’re out of the game,” Sachdeva said. The short video should be as ubiquitous on Indian phones as WhatsApp messaging is now, he added. Like its rivals, Moj is tackling the supply side of creator videos by assembling a large base of influencers. It has recently shifted its focus to revenue generation through channels such as virtual gifts and video commerce in addition to its traditional ad-based model.

But no matter who wins India’s short video war, an American tech company is sure to benefit.

“Diversity of content and the ability to target the right users with the right content is key to building traction in short videos. In that sense, Meta’s Instagram is far superior,” said Vishal Jacob, digital director of the media agency Wavemaker India. “But Indian apps are poised to grow, benefiting from Google’s technology as well as advertising expertise.”

(Except for the title, this story has not been edited by NDTV staff and is published from a syndicated feed.)

Lance B. Holton