Why short-form video apps need to explore new monetisation opportunities

Short video apps are estimated to create monetisation opportunity upto $19 billion by 2030, as per a report

Why short-form video apps need to explore new monetisation opportunities
The short-form video segment saw a boost after the ban on Chinese app TikTok in 2020.

Online video consumption has seen tremendous growth over the last few years, with a surge in users bolstered by prolonged stay-at-home periods during the pandemic. According to a report by Bain & Company, India’s large base of approximately 640 million Internet users, of which about 550 million are smartphone users, is rapidly growing and spending more time online. Currently, the market is occupied by a mix of global social media/video giants, such as Instagram Reels, Facebook Reels, YouTube Shorts, to homegrown companies like Moj, Josh, MX TakaTak, Roposo, among others.

Indians are increasingly following short-form videos and apps. According to recent reports, by 2030, the reach of short-form videos among total smartphone users is expected to rise from 46% to 80% in India. Industry experts believe that the reason behind the rise in consumption of short-form videos is due to audience’s desires for relevant and engaging content. “People have started paying more attention to shorter formats for three reasons. One is that consumers’ attention spans have shrunk over the last three decades, with shorter formats becoming more prevalent. The second critical factor is the constant desire for fresh and engaging content. Third is, with better access to the Internet, there is an emergence of new creators across the width and breadth of India, which has brought out the diversity of India out in the open,” Ajit Varghese, chief commercial officer, ShareChat and Moj, told BrandWagon Online.

BrandWagon Explained: The Business of Short-form Video Apps

The short-form video segment saw a boost after the ban on Chinese app TikTok in 2020. At that time, TikTok had over 200 million users in India and the sudden absence of the app created a vacuum which allowed other players to scale. For instance, short form video apps present alongside TikTok registered an average growth of 1.37 times in monthly active users (MAUs) till the end of 2021 after the ban, according to RedSeer. 

The Game of Monetisation

Last month, YouTube announced that it had seen encouraging results in its early monetisation efforts on its product called, YouTube Shorts, bringing forth the talk of monetisation for creators on a short form app in a new format. Industry stakeholders see this as a sign that the creator economy is maturing. “At the end of the day, platforms need to constantly evolve to maintain their relevance with the creators. For creators, this will add to their incentive of being more active on YouTube. This could also be a play to pacify their stakeholders on the lowering growth they had morphed during the pandemic,” Rishabh Shekhar, co-founder, Pepper Content, opined.

However, the biggest challenge with this segment is the introduction of newer monetisation models. Currently, monetisation on a short-form app takes place in two formats– brand sponsorships and advertisements. In brand sponsorships, brands tie-up with content creators and influencers to run paid promotional campaigns or videos to garner greater reach from the influencer’s community.  But industry experts hope that the rise in social e-commerce might change this. Social selling, experts claim, might be a new form of monetisation that can emerge. “Short-format is while entertaining, it also presents a greater opportunity for social commerce as the creators have a highly engaged follower base and their recommendations will have the potential to push forth sales,” Ashit Chakravarty, executive vice president, Dentsu Webchutney, said.

Backing this claim is a report by RedSeer which states that four key factors that will drive the growth of short-form video apps in India are video commerce to assist shoppers not well-versed with tech; growth of D2C brands; intimate connections with micro/nano-influencers; and local sourcing and low product average order value. 

Social selling has already been experimented with by some of the players. Last year, Moj partnered with Flipkart to launch video commerce on the platform. As per the company, while still in the pilot phase, they have seen adoption among their users and are confident that social commerce will experience rapid growth over the next two years. Moj has also experimented with newer monetisation models for their creators. “Moj provides multiple revenue-generating options to creators through influencer marketing, virtual gifting, and live and video commerce. Virtual gifting on ShareChat has already surpassed $50 million in ARR since launching in January last year,” Varghese added.

Short video apps are estimated to create monetisation opportunity upto $19 billion by 2030, as per a report RedSeer Consulting. Currently, only 1% of the overall digital advertising spends accrue to short video apps, however, going forward, the space can account for 10-20% of the overall digital advertising pie, amounting to almost $6 billion, by 2030, the consulting firm has estimated. Hence, while the industry is going at break-neck speed, are the players? Only time will tell.

Also Read: Media-tech soars high as the sector records 212.9% rise in funding to $2.1 billion in 2021

Also Read: How Voot clocked a 58% growth in revenue; is it volume versus value

Follow us on TwitterInstagramLinkedIn, Facebook

Get live Share Market updates and latest India News and business news on Financial Express. Download Financial Express App for latest business news.

Photos