A Rapidly Expanding Digital Market

India’s short-form video (SFV) market has experienced incredible growth, becoming a key player in the country’s digital ecosystem. According to a report by Redseer Strategy Consultants, daily active users on SFV platforms have surged by 3.6 times in recent years. This remarkable expansion is largely attributed to the platforms’ reach into Tier II and beyond, where over 63% of their engagement originates.

Platforms like Josh and Moj have tailored their offerings to meet the preferences of these audiences by creating localized content in regional languages. This approach has strengthened user engagement and retention in smaller cities and towns, making these platforms indispensable for their daily dose of entertainment and information.

Short-Form Video: Transforming India’s Digital Ad Landscape

On average, Indian users now spend about 30 minutes per day on Short-Form Video (SFV) platforms. High-quality content, specifically designed to cater to the tastes of users from diverse regions, plays a crucial role in maintaining this level of engagement. Despite this impressive user activity, the financial contributions of Short-Form Video platforms to India’s digital ad spend remain modest. Current revenues for FY24 are estimated at $95–$100 million, with advertising accounting for only 1%–2% of the digital ad market.

However, the broader digital advertising market in India is on a remarkable upward trajectory. It is projected to nearly double by FY29, potentially reaching $16–$17 billion. Video advertising, in particular, has emerged as the fastest-growing segment in this space, driven by Short-Form Video platforms’ popularity and accessibility.

The Four User Archetypes Fueling Growth

The Redseer report identifies four primary user groups contributing to the SFV market’s expansion:

• Value Seekers – These users primarily seek free and entertaining content to relax and pass time without a willingness to spend money.
• Digital Innovators – Content creators who leverage SFV platforms to showcase their talents and build an audience. Their innovative contributions add vibrancy and originality to the platform.
• Household Stewards – These individuals, often homemakers, use SFV platforms for creative inspiration, household tips, or a break from daily routines.
• Career Mavens – Professionals or aspirants who use these platforms for self-promotion, skill-building, and networking.

Interestingly, more than 50% of users in these groups are monetizable, meaning they are open to spending money on digital services. These services include e-commerce, OTT subscriptions, in-app purchases, and paid gaming services. This monetizable base is key to the platforms’ economic viability and future revenue streams.

Additionally, platforms are diversifying their monetization methods beyond traditional advertising. Virtual tipping, where users send small amounts of money to their favorite creators as a token of appreciation, is gaining popularity. Another growing trend is video commerce, where platforms integrate shopping experiences with video content. This combination allows users to discover and purchase products directly through engaging video formats.

Advertising and Influencer Marketing on the Rise

Advertising remains a cornerstone of the revenue strategy for SFV platforms. With their ability to engage users in specific demographics, these platforms are becoming an essential tool for brands aiming to connect with their target audiences. The digital advertising market is increasingly favoring video content, which offers a more immersive and interactive experience for users.

SFV platforms are uniquely positioned to benefit from this shift, particularly as video advertising grows to dominate the digital ad space. However, advertising is just one part of the revenue picture. Influencer marketing is another booming area, with current estimates placing the sector’s value at $3–$4 billion. This space is growing at an impressive 40%–45% annually, fueled by influencers who use their platforms to reach and influence millions of followers.

Creators have become pivotal in shaping user experiences and driving consumer behavior. Brands increasingly partner with these influencers to deliver authentic messages to their audiences, particularly in Tier II and beyond. These collaborations not only enhance brand visibility but also provide influencers with an opportunity to monetize their reach.

Short-Form Video: Pioneering New Revenue Models

In addition to advertising, Short-Form Video (SFV) platforms are exploring innovative ways to sustain their growth. Virtual tipping allows creators to earn directly from fans, fostering a closer relationship between them. Similarly, video commerce is becoming a game-changer, enabling users to shop directly while watching content. This blend of entertainment and shopping adds convenience for users while creating additional revenue streams for platforms.

India’s Short-Form Video market stands as a testament to the country’s rapidly evolving digital landscape. By combining quality content, regional focus, and innovative revenue models, SFV platforms are carving a niche in India’s burgeoning digital economy. With strong user engagement and the potential for diverse revenue streams, these platforms are reshaping how Indians consume, create, and interact with digital content.