More entertaining times ahead as home grown apps' popularity, user base surge

India is a major opportunity for domestic and foreign digital companies as a growth driver and profit, with the world's second largest internet user base and the highest data consumption. In addition to consuming content on these sites, millennials in the country regularly produce content across genres such as comedy, dance and education, among others.

People turned to digital channels for their dose of entertainment with the pandemic and the resulting lockdown limiting movements. They binged on Netflix and Amazon Prime Video web series and signed on to sites such as YouTube to learn new recipes and develop new skills such as guitar playing.

 

Traffic increased and sites such as Twitter, Netflix, and Facebook had to work to mitigate congestion on mobile and broadband networks. The Indian government banned 59 apps with Chinese connections around mid-year, including TikTok and UC Browser, saying they were harmful to sovereignty, integrity and security. The remarks came in the midst of a border standoff with China, referred to by many as a 'digital strike'. In September, another collection of 118 apps were banned, while in November, 43 more apps were added to this list.

A number of popular apps, including Alibaba Group Holding's e-commerce app AliExpress, WeChat, PUBG, Baidu and Tencent Weiyun, were included in the list of banned apps.

The growth attracted mixed responses from individuals in the nation, particularly given the popularity of TikTok and PUBG. Though foreign investments and technologies are welcome, security of user data and the protection of the interests of Indian mobile and internet users will be essential, the government has been categorical.

For domestic startups like Moj, Chingari and Kaagaz Scanner that saw downloads and zoom use almost overnight, the blocking of these apps came as a boon. This fast rate of growth has helped to collect funds for many of them.

VerSe Innovation collected US$ 100 million in funding from the Alpha Wave Incubation of Google, Microsoft and Falcon Edge, while ShareChat vernacular language social networking site generated US$ 40 million from Pawan Munjal of Hero MotoCorp.

Bolo Indya secured US$ 400,000, and Chingari earned US$ 1.3 million in seed funding. Kaagaz Scanner secured US$ 575,000.

According to a study by ShareChat, >750 million user-generated content were uploaded to its website this year, , with Hindi users accounting for a contribution of 26%.

More than 160 million users of the Twitter-backed site saw more than 700 million hours of video content being watched on the platform in 2020, with 30,000 hours of videos posted daily to ShareChat. With a base of over 28 lakh-creators, Bolo Indya focuses on helping them deliver peer-to-peer trade services.

Even companies such as Google and Facebook embarked with 'Shorts' (Google) and 'Reels' on the bandwagon (by Facebook-owned Instagram). In India, these services have been piloted, providing creators with creative tools to create short videos and share them with not only friends, but also the general public.

In 2020, the two firms have also made major investments in the country. Facebook purchased a 9.99% stake in the Jio Platforms of Reliance Industries at Rs. 43,574 crore (US$ 5.7 billion) in April 2020.

In July 2020, Google announced a 'Google for India Digitisation Fund' of US$ 10 billion (Rs. 75,000 crore) to be invested for 5-7 years. Of this, for a 7.7% stake, Rs 33,737 crore (US$ 4.60 billion) was invested in Jio Platforms. Two Indian startups have also obtained investment from this fund, namely Glance and VerSe Innovation (Dailyhunt).

Another gainer was the mobile gaming market in 2020. Although PUBG's ban disappointed many, it gave other games like 'Garena Free Fire' and 'Call of Duty Mobile' a major boost. Bengaluru-based nCore Games planned to launch FAU:G, a multi-player action game developed under the mentorship of Bollywood actor Akshay Kumar, to cash in on the potential in space.

Maple Capital Advisors Managing Director Mr. Pankaj Karna, said, “the gaming industry in India grew at a CAGR (Compound Annual Growth Rate) of ~21% in the lockdown period with annualised growth estimated to be in the region of 30-40%.”

He said, “Some of the leading gaming corporations have seen a growth of more than 100% in their user base. The industry saw private equity and venture capital investments worth US$ 355 million from March to December 2020, with Dream 11 investing US$ 225 million in main transactions.”

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.