[Startup Bharat] Tier II India sees 25 pc jump in short-form video content usage in 2 years

The content space might be cluttered, but some categories are standing out. 

A report by consultancy firm RedSeer Consulting, Short form: Rising Amidst Cluttered Content Space, has revealed that the rising popularity of OTT and short-form content platforms is driving content consumption in Tier II India. 

The report said monthly active users (MAU) for short-form content grew 9X in less than five years, growing from 20 million users in 2016 to 180 million in 2020. 

With the number of internet users in India set to grow to 970 million from the present 600 million in the next five years, the short-form market is estimated to grow 4X on total time spent and reach 400-450 billion minutes a month from the present 110 billion minutes a month.

A significant portion of this growth has been seen in Tier II cities. 

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The diversity of options 

RedSeer said Tier II and other cities had seen growth of more than 25 percent in short-form content users in the last two years - one of the highest across the content ecosystem. 

The report said users in smaller cities in India need local content for free and at a faster rate. “Most of them feel the data consumption is heavy on OTT video platforms and hence need some lower data consumption alternative to entertain themselves.” 

Indian language offerings from these short-form apps in over 15 languages had given users more options, which had increased consumption. 

The TikTok ban led to a gap in the market, which was quickly filled by new domestic players. While 40 percent of TikTok’s market has been captured by new players, some users are still unwilling to shift due to lack of quality and slower velocity of content creation.  

 Ujjwal Chaudhry, Associate Partner, RedSeer Consulting, said, “Earlier, YouTube was the only option available for online entertainment, but in the last three to four years as data packs became cheaper, smartphone penetration and Indian language options increased, small-town users have been shifting to OTT video and short form apps. 

“Specific to local content, users started consuming news on apps like DailyHunt and shifting some of their time from YouTube and social media to short form apps like TikTok. A family consuming entertainment together on TV started moving to individual video content consumption on smartphones.”

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What were the favourites? 

The report said JOSH and MX Takatak had seen the highest growth in smaller cities due to their velocity of content creation and quality of content. 

Dailyhunt-owned JOSH has been leading growth across all tiers and especially in Tier II cities. The platform has been able to offer curated content suited to the taste of small-town users and has seen higher satisfaction on content quality and on the back of its quality influencer ecosystem and content filtration system. 

The report said continuous and faster app upgrades by JOSH had connected well with users in Tier II towns and beyond. 

MX Takatak, on the other hand, was increasing its content library and taking innovative steps like bringing all influencers under a single roof and boosting content creativity. This has been well received in Tier II cities.

Roposo, one of the oldest players in the ecosystem, has seen similar growth by offering diverse content for every segment.

It stated that short-form players like JOSH, Roposo, and MX Takatak were enhancing their tech engines, improving content quality, getting in more creators, and focusing on improving user experience. 

The genres that have seen wide adoption are comedy, dance, and romance. Secondary genres are cooking, mimicry, beauty. The report revealed that users prefer to participate in hashtag challenges as they offer a unique opportunity to display one's talent. 

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OTT video consumption rises, but will people pay?

• 15 percent opt for originals. Hindi originals dominate, followed by dubbed versions of originals produced in other languages. 
• 20 percent watch TV shows. These include Indian language shows /web series and dubbed regional shows. 
• 30 percent of these watch TV soaps in Hindi and local languages 
• 15 percent opt for movies
• 20 percent primarily go for sports streaming followed by news

While the number of users in Tier II cities has increased, the question is one: will they be willing to pay for content? Not immediately, according to RedSeer.

With the pandemic leading to a drop in income levels, willingness to pay for content is less. Many households are already paying for a cable/dish TV connection for the family. 

“Based on user feedback, there may be a propensity to spend on OTT Video. But this is only possible when platforms reduce their costs further and offer niche packs (e.g. originals only pack, weekend only pack, etc.) and more bundling,” the report said. 

The report said next year would most likely bring strong positive growth in short-video consumption, from different internet segments. 

In app, short videos on Facebook, YouTube shorts and Instagram reels will also see a rise in consumption as awareness improves and content velocity creation grows. 

Tier II and beyond will grow, but metro cities are also expected to see a rise as global players like Facebook and YouTube push short-form content. 

Speaking about the year-end and the coming year, Ujjwal says, “We expect short form to touch January 2020 levels by the end of 2020 and grow further up from there. Content will still remain king, and top players like JOSH, Roposo, and MX will further increase their content diversity and quality by offering more tools to creators and onboarding more influencers. 

“Next year might not bring a significant rise in monetisation, but we should definitely see a rise in earning potential as more users start using short form and retention grows.”