Video streaming services like Netflix, Amazon and local player Hotstar are thriving in India. The entry of MX Player, with more than 350 million users in India and more than 500 million users worldwide, into the fray has thrown the competition wide open.
Music streaming app Gaana is also making ripples in the audio space. With the arrival of Amazon, Spotify and ByteDance, the sector is teeming with new players.
In 2019, fantasy sports platform Dream 11 became India's first unicorn in the gaming space. Players such as Mobile Premier League (MPL) and MyTeam11 have emerged in the meantime. In addition, PUBG and other players are seeing the monetisation potential improving significantly. The gaming sector is attracting a lot of VC interest as well.
TVentures is an important investor in all the three areas. It belongs to Times Internet, an Indian media group, and invests in consumer Internet, education technology, fintech, media, games and other fields. Its portfolio includes India's unicorns Delhivery and Byju's. TVentures has also invested in Uber and Airbnb.
In the content space, TVentures is backing three major players: MX Player, Gaana and MPL. Interestingly, Tencent is also an investor in all the three.
In an exclusive interview, The Passage spoke to Miten Sampat, Chief Strategy Officer of Times Internet, who handles Times Internet investment, mergers and acquisitions and strategic cooperation for the past five years.
The Passage: What has changed in the last few years in Indian startup ecosystem from your point of view?
Miten Sampat: When you think about the big picture of India, it's probably one of the last big tech markets out there after the US and China, where you will find companies of significant scale gets created locally. India will also be a large market for many global companies.
Times Internet is part of the Times of India group. Last July, I realised we had five different products within our portfolio that had over 100 million monthly active users.
Maybe for China these numbers are still small, but what that does give you is a sense of how big the opportunity is going to be, as more and more of the Indian internet user base comes online. The five products that have done well for us is Times of India news app, Gaana, MX Player, Cricbuzz and our language news product set.
The underlying reasons why this is happening, is basically 4 points.
First, Reliance Jio made data cheap and available for everyone; The second is, thanks to many Chinese companies including Xiaomi, and vivo and OPPO, buying a smartphone is now a necessity for almost everyone. Now you have about 400 million smartphones, growing at about 15 to 20% per year.
The third thing is payments. With UPI, mobile payments are now widespread. The fourth, the first generation of Indian internet companies have taught a large base of users how to use the internet, so you've got a very vibrant market.
The Passage: What is the next big opportunity you see in India?
Miten Sampat: In India, the 400-450 million monthly active users, are divided into two buckets; one is the tier 1 or India one, which is urban affluent people with household income of 5-7 lakhs and above. That user base is now close to about 120-150 million. This user base has access and exposure to all the best products in the world.
The tier 2 to tier 4, which is the next generation of Indian users is very different from India one. Some products built for them have done pretty well, like the file sharing app SHAREit. That's a great example of a utility product that's gotten scale in India.
MX player is another one which has got a fairly broad user base. The users are looking for simple products that give them basic entertainment, basic payments among other things.
I think the opportunity here is massive. Basic utilities, information products, payment, basic e-commerce, basic kind of entertainment products can all do well. There's a large opportunity around vernacular content.
The Passage: What sectors do you think will serve up new opportunities in the coming year?
Miten Sampat: One is education. Indian family has a high propensity to spend for the education of their children. We have a large ecosystem of users willing to pay for good education products.
There are also a lot of very India specific innovations in this sector. For example, there are already a few companies that have started to do income share agreements for professional education where the users don't have to pay anything up front. They pay later once they start getting income.
The second sector in my view is companies that use fintech as a feature to achieve something bigger in the consumers’ life. I think we've got a large underlying ecosystem ready for new forms of credit and B2B services. The wealth management, everything from savings to taxation to investing in public markets, is seeing a lot of innovation.
The last thing is what I would broadly call new forms of e-commerce or social commerce. In general, this is for the first time internet users. You'll see new models of distribution, like video-lead commerce, peer to peer commerce etc.
The Passage: What are the trends you have noticed in content sector in 2019?
Miten Sampat: Last year was quite exciting in many ways. We saw a lot of innovation on new products. Last year was the rise of Tik Tok. Short form led to a lot of new creativity, from both consumption and a production perspective.
We saw a lot of new product creation in the audio space. We invested in a company called Pocket FM. It's more focused on India and designed for the local audience. I think users are adopting spoken content as a more mainstream platform.
We saw some meaningful growth on the monetisation side. In any media kind of content play, you first have users and usage growth, and it takes a little bit more time for your monetisation to happen. So last year, we saw a meaningful amount of monetisation growth. A lot of it had to also do with money moving from TV to digital as a platform.
We have a number of companies around the student life cycle. We invested in an edutech company called Classplus, we also invested in a company called Oxfordcaps, which is in student housing.
The Passage: How did the consumption habit of users change in the last few years?
Miten Sampat: I think that for the Indian user, it's still early days in terms of moving to short form content. It is obviously new in all markets. In long form content, initial move is coming primarily on TV type programming, which is GEC (general entertainment content) becoming available through streaming platforms.
In addition, there's obviously a lot of innovation, a lot of creative growth on the production side, where you're seeing a lot of content, which is developed exclusively for OTT platforms. I think there's been an evolution in storytelling.
The last thing is, there's a degree of new creators that are coming into the market, which is also very exciting to see. So the content space last year was super exciting.
The Passage: Times Internet just acquired MX Player. The OTT streaming services already is really crowded India. How would you cope?
Miten Sampat: From a user perspective, MX player is playing a total different game. While others are into a subscription model, MX is playing a free content plus advertisement model.
MX is an aggregator. Most players are doing their own content as the primary thing. We are also doing the original content. But we are basically getting content from all types of content sources, for example, we offer Turkish content on MX player. There's a lot of third party content, and we've licensed over 100,000 hours of content.
Also, we are free. So given the scale of MX Player, we can run an ads business model in a freemium context in a lot better and scalable manner.
It also brings music experience with MX player. MX is becoming an entertainment hub, more than just video OTT.
The Passage: How’s the original content shaping the OTT segment?
Miten Sampat: It is very important in the competition. I think there has to be some level of differentiated content which make people come to you. It's visible within your ecosystem. So I think most players will invest in their own original content.
The subscription-based market is going to be very competitive. I think a lot rides on what people will do with their respective pricing.
The Passage: As Dream11 has become the first unicorn in the gaming sector, what is the space and opportunities left for other players like MPL?
Miten Sampat: In MPL, we are seeing the engagement numbers are crazy. I think the competition mechanism works, it's very exciting.
I think gaming is a meaningful part of entertainment on smartphones. MPL provides a variety of gameplay experiences. It's not just a one type experience.
If I was looking at just about fantasy, I can do that on MPL, if I play casual game, I can do that, if I want to compete with others in something more competitive, like a chess game, I can do that.
I think being a platform in an arcade where a lot of first and third party games are published, MPL has a significant advantage, what with being able to cater to the different modes and interests of users.
The Passage: What’s the monetisation outlook for MPL? Why motivated you to explore SEA market at such an early stage?
Miten Sampat: From an investor's perspective, there are many ways that MPL can and will monetize. I think given the level and depth of engagement, there's a lot of ways you can make money.
For SEA market, I think they saw opportunity and they found that they could bring the product to that market. In general, we are seeing a clear trend of Indian companies going to Southeast Asia market, and that would happen more and more.
The Passage: What are your suggestions for Chinese entrepreneurs looking at the India market?
Miten Sampat: Over the last two and half to three years, I've had the opportunity to interact a fair bit with entrepreneurs, executives, investors in the China ecosystem. Through that interaction and through the last couple of years as we built our team in China of Times Internet, I really got to appreciate Chinese technical talent, Chinese product talent, and the imagination of investors and entrepreneurs in China.
I think the level of hustle and innovation that I've seen there, applied to India can be phenomenal. Chinese entrepreneurs have that advantage of having seen stuff work in a different ecosystem and play out, in terms of scale, monetization, competition and investor interest. So, you are already a few steps ahead, when it comes to understanding some sectors that the Indian entrepreneur may not know yet.
The second thing is, India is an open market. There are very few barriers for entrepreneurs from overseas, especially from China to come into India to set up companies access the local market and build products for consumers here. The Indian user will always choose the best product, they don't care about the nationality or the background of the founders. And you've seen a number of Chinese companies become very successful in India with their products. Xiaomi and and Bytedance's Tik Tok, Helo are great examples.
I would really encourage you to consider building for India, going back and forth is also pretty easy. I would also like to interact with Chinese entrepreneurs and share my perspective on what you're building, consider investing and also consider opportunities to other ways to work together.