Short-form Video To Reach Above 600M Users In India By 2025: Report

India's online video user base has scaled to more than 350 million people, growing 24% over 2018 to 2020. This is nearly twice as fast as markets such as China and Indonesia. The daily time spent per active user on online videos has grown by 60% to 70% over the same period.

“India has a large digital community, with about 640 million Internet users and 550 million smartphone users which is rapidly growing and spending more time online. Smartphone users spend about 4.8 hours on their devices daily, of which a staggering one hour on average is spent consuming videos. Despite this rapid boom, there exists massive headroom for growth—online video user penetration in India is nearly 60% of Internet users, compared with more than 90% in China,” said Arpan Sheth, partner and global leader of Bain & Company’s Vector Solutions Group.

Digital video entertainment consists of short-form videos (SFV) which are between 15 seconds and 2 minutes and long-form videos (LFV), which are more than 2 minutes long. In India, the SFV market has taken off over the past two years, growing 3.5 times in user base. More than 200 million Indians watched SFVs at least once in 2020, with daily active users spending up to 45 minutes a day.

However, rapidly growing access with cheap and ubiquitous data, easy-to-use platforms, and a high proportion of vernacular content will aid short video scale-up in India. By 2025, three in four Internet users, or 600 million to 650 million Indians, will consume short-form videos, with active users spending up to 55 to 60 minutes per day.

Shyam Unnikrishnan, partner and a leader in Bain & Company’s Consumer Products, Retail, Strategy and Digital practices in India, said, “The SFV ecosystem which essentially comprises of users, creators and advertisers are key to driving economics for the platform. Brands are increasingly using short video platforms to reach their target customers. New monetisation models, such as video commerce, livestreaming, and in-app purchases, will become increasingly commonplace in the coming years. Players need to invest in developing an advanced, tech-enabled platform to link users, creators, and advertisers and deliver a seamless experience to all.” 

India has more than 50 million users who have created and posted at least one short video. Content creators are active on multiple platforms and are increasingly monetising their follower base through brand collaborations and commerce. This is giving rise to a robust creator economy—an enabling ecosystem of players helping creators with content creation, monetisation, financing, and business management.

The Indian SFV market is now occupied by a mix of specialist SFV apps and global social media/video giants like Instagram Reels, Facebook Reels, YouTube Shorts. Amongst the specialist short video platforms- Moj, MX TakaTak, Josh, Roposo, and Zili—have more than a 100 million downloads each. The market, while at scale, is still nascent. Major players are only a little more than a year old. The market could evolve to follow one of the divergent paths of the two mature SFV markets: China and the US. 

Sriwatsan Krishnan, partner & leader in Bain & Company’s Private Equity and Alternative Investor practice in India, said “Market leaders will have to focus on three areas to develop a large, engaged community of users and creators. First and foremost, they will have to make substantial investments in technology to deliver a hyper-personalised experience to users, optimise user interface (through faster app and video load time, etc.), and expand access via vernacular interfaces. Winners will simultaneously focus on creator enablement and lock-in on one side, and creation of scalable monetisation engines on the other. Successful players will need access to large amounts of capital to achieve these goals and deliver on their potential.”

India’s short-form video (SFV) market offers tremendous potential. According to Bain & Company, the five major trends that will shape the future of the SFV market in India are; 

-Content curation and social-led engagement: Leading players will invest in a robust recommendation algorithm and a superior user interface and user experience to deliver a winning experience. 

- Monetisation: Digital advertising will be the first frontier, but platforms will increasingly experiment with alternate commerce and micro-transactions.

- Innovations to onboard the next wave of users: SFV platforms are already available in more than 15 languages in India, but a continued explosion of vernacular options is evident. 

- Emergence of a robust creator ecosystem: A robust creator economy will emerge. This enabling ecosystem will help creators with content creation tools, training, brand affiliations, financing, and business management. 

- Niche platforms within larger SFV ecosystems: Platform players will emerge, housing a suite of apps that cater to the distinct user and content niches.

Long-form videos (LFVs) are viewed by 350 million to 400 million users, almost twice as penetrated as short-form videos (SFV). Users and usage is expected to increase nearly 1.5 times from 2018 to 2020. Active users spend more than 2.5 hours per day on long-form content. LFV is poised to grow to 600 million to 650 million users in India by 2025.

More than 50 video-on-demand (LFV) platforms exist in India and there are four archetypes of players vying for consumer time. These include global giants (YouTube, Netflix, Amazon Prime Video, Disney+ Hotstar) and platforms by television broadcasters (SonyLIV, ZEE5, MX Player, Eros Now). Content drives differentiation, and it is possible for multiple platforms to co-exist in steady-state, as seen in developed markets. Players have opted for different monetisation models that reflect the platform's core consumer in the income pyramid such as subscription video on demand (SVOD) and TVOD.

Six trends will shape the LFV space going forward:

- Content explosion: Platforms will look to build deeper libraries with increasing original and regional content. 

- Value chain integration: Backward integration by over-the-top (OTT) platforms into content production and forward integration by production houses may become more commonplace

- Hyper-personalisation: Content curation will become even more sophisticated. Approximately 70% of YouTube watch time globally is already driven by recommendations. 

- Increased monetisation: Platforms will amplify the focus on monetisation as the industry matures. 

- Gamification/social engagement: Players will explore social-led engagement to keep users hooked.

- Content moderation: Platforms will look to invest in content protection tools to prevent piracy and moderate content to comply with regulations.