What if TikTok returns? Indian alternatives may only have so much time to replicate its success

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August 05, 2020 11:27 PM

While it is possible for Indian startups to match up to the technical proficiency of Chinese apps, it will be difficult to be as effective at marketing, to begin with.

Apps like TikTok may find it relatively easier to sway consumer behaviour back towards them provided none of its challengers has a deep enough moat, or if their tech stack isn’t as rich.

June 29, 2020, perhaps for many in the startup ecosystem particularly was marked as the D-Day that gave an opening to relatively weak Indian competitors of the mighty Chinese apps like TikTok to fire on all cylinders. While the 59 Chinese apps, banned by the government, operated across areas such as digital entertainment, gaming, file sharing, e-commerce, document scanning, social media, mobile browser, etc., TikTok, owned by one of the world’s most valuable startups ByteDance, hogged the maximum unfortunate spotlight. That’s because of its sheer size in India. The country was the biggest driver of TikTok installs with 611 million ‘lifetime’ downloads as on April 29 this year or a staggering 30.3 per cent of its more than 2 billion downloads globally — far higher than its home country China, as per mobile app market intelligence firm Sensor Tower.

Matching up

Post ban, around a dozen or even more TikTok alternatives like Chingari, Roposo, Rizzle, etc. sprang into action to tap into the vast opportunity and benefit from the anti-China sentiments. While Chingari crossed 1 crore downloads on Google Play Store, other fast-growing apps like Rizzle and Bolo Indya also grew with over 10 lakh downloads in a short period. The older players like Roposo are sitting pretty with more than 5 crore downloads since its launch in 2014.

However, experts are somewhat critical of this hypergrowth by new entrants if they would be able to hold their ground amid TikTok’s possible comeback provided it first fulfills regulatory compliances and wins the Indian government’s trust. While it is possible for Indian startups to match up to the technical proficiency of these apps, it will be difficult to be as effective at marketing, to begin with.

“Chinese apps have both offline and online presence and undertake branding regularly. With strong customer acquisition capabilities, they are quick in piquing the interest of customers and readily offer incentives such as cash benefits to entice users. All this requires huge capital investment. Indian companies are likely to face challenges in acquiring and retaining customers,” Prabir Chetia, Head – Business Research and Advisory at global research firm Aranca told Financial Express Online. This would mean having the financial muscle by way of investments and regular cash flows to be able to offer incentives.

While traction can be a huge factor in creating and sustaining entrenchment, irrespective of the return of Chinese apps, but this is very domain-specific. “It is hard to argue with the engineering might that ByteDance puts behind its TikTok platform, for example. But for simpler use cases, like file-sharing and installations, etc. it is conceivable – even likely – that a homegrown alternative could sustain any gains even if the Chinese apps return, provided the app has crossed a certain adoption threshold,” Utkarsh Sinha, Managing Director, Bexley Advisors told Financial Express Online.

Cracking Engagement

Startups, however, are betting on developing high user engagement and ensuring a stable platform that doesn’t go on and off like Chinese apps. For instance, in 2017, the Defence Ministry had asked Indian armed forces to uninstall over 42 Chinese apps including WeChat, Shareit, UC News and more to avoid risk of spyware or malware. Moreover, in April last year, the Madras High Court had ordered the TikTok ban for allegedly putting the lives of children in danger.

“This isn’t the first time that Chinese apps are getting banned, it has happened in the past as well. The user sentiment right now is that they need a stable local platform, and they have realized that it’s important to put energy and efforts on the right channel, hence users would not jump back immediately to the Chinese apps, even if it comes back. The trend we see at Chingari is that, the users are here to stay,” Sumit Ghosh, CEO & Co-Founder, Chingari told Financial Express Online.

Varun Saxena, Founder of another TikTok alternative Bolo Indya said that the race for Indian apps is not to get a higher number of users, but it is to keep the users engaged highly even at scale so that return of Chinese apps does not impact negatively. If this could not be achieved “then yes there will be a reduction in growth rates of Indian apps.”

Apps like TikTok may find it relatively easier to sway consumer behaviour back towards them provided none of its challengers has a deep enough moat, or if their tech stack isn’t as rich. However, if Indian apps could develop high-engagement, consumer switch to these apps could be permanent and difficult to reverse back to TikTok. Nonetheless, measuring the impact of TikTok and other apps, if they return, would depend on the form in which they are allowed to return. “Will there be any restrictions on their features or functionalities? Will they be allowed to continue their business as before? Will they have to partner with an Indian entity to make a comeback? The actual impact can only be decided once we have the answer to these questions,” added Chetia.

Moreover, it is also important to note that Chinese app companies have years of experience and learning, while some enjoy a first-mover advantage. Also, the target audience is used to the app and might easily adapt to it again. Therefore, if they do return, competition would increase significantly for Indian startups. On the contrary, “the impact has already happened. Creators have had a wakeup call about relying on one platform to becoming a star. What creators are looking for is a quality platform that cares about them and makes creation and interactions delightful,” Vidya Narayanan, CEO & Co-founder Rizzle App told Financial Express Online.

The narrative around the impact is also about trust. Ghosh said that the size of the impact wouldn’t be much as it would take a lot of time and effort for any outsider to win back the trust of the users in India where people don’t trust outsiders easily. TikTok India in its last tweet on June 30 had stated that it hasn’t shared any information of its users in India with any foreign government, including the Chinese government and it would not do so even if it is requested for the same.

Walled Garden

Beyond fulfilling all required formalities and ensuring the safety of user data, Chinese apps, if return, will have to be for India this time instead of in India for China. Therefore, Chinese apps might have to don an Indian avatar. “This means their ownership will need to change and they must become more localized. Their data centers, codes, processing offices, all should be present within the Indian borders to ensure the country’s sovereignty is not compromised,” said Chetia.

The opportunity in the absence of TikTok has consequently attracted investors to back Indian apps. Chingari, Mitron, Bolo Indya have already raised funding post-TikTok ban while Chingari is already reportedly in talks with investors to raise around $10 million in Series A funding. The investment, henceforth, would hinge on giving similar or better user experience that Chinese apps provided. “This is going to be a challenge: TikTok, for example, employs over 50,000 engineers actively engaged towards engineering greater engagement and time spent on the app. But there is a real opportunity: this ban has created a walled garden for Indian apps and provided the walls stay up for a while, there is enough demand in India for VCs and other investors to warrant spending on making Indian apps get to the scale of the Chinese incumbents,” said Sinha.

If not in a few weeks, Indian apps may be able to give similar user experience to users in a few months or possibly in a year or two ahead. “Chinese apps didn’t build that experience in a month; they took 7-10 years as well. However, with a lot of learnings and references out there, Indian apps should be able to replicate this lot sooner,” added Saxena. The government had sought responses to questions from the banned apps over their operations and treatment of user data in India to which apps had to respond by July 22. Until the government is confident of the businesses of these apps, their return is unlikely. India’s digital video market size is likely to be $4 billion by 2025 including subscription services share of over $1.5 billion and advertising’s contributing of $2.5 billion, according to India Brand Equity Foundation.

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