Short-form video platforms’ ad revenue hits $95-100 million mark in FY24

New Delhi: A new report from Redseer Strategy Consultants, "India SFV in 2024: From ‘Likes’ to Monetizing Millions," revealed the growth of India’s Short-Form Video (SFV) market, which now engages close to 250 million monthly users. 

Since the ban of TikTok in mid-2020, SFV platforms have seen a 3.6x increase in daily active users, establishing themselves as a mainstream entertainment format. The report outlines the growing popularity of SFV, regional reach, the monetizability of users, and its robust monetization potential.

The report examines how SFV platforms, which once operated as casual entertainment outlets, now present powerful, scalable revenue-driving solutions. Their capacity for brand engagement has broadened, offering innovative pathways for monetisation including influencer marketing, video commerce, and virtual tipping.

Widespread User Engagement Driven by Regional Growth

The report reveals that SFV platforms have quickly scaled up their user base, with daily active users growing 3.6x since 2020. This explosive growth follows India’s TikTok ban and reflects the demand for accessible, bite-sized entertainment that resonates with regional and vernacular preferences

• Extensive Reach into Tier-2+ Cities: With over 63% of SFV engagement coming from Tier-2+ regions, SFV platforms are deeply embedded in India’s digital landscape. Platforms like Josh and Moj have spearheaded this trend by tailoring content for local languages and preferences, positioning SFVs as preferred platforms for regional audiences.
• Increased Daily Engagement: On average, users now spend ~30 minutes per day on India SFVs platforms, a shift driven by high-quality, personalised content and user-friendly interfaces that cater to both metro and non-metro audiences.

Four key user archetypes powering SFV growth

The report identifies four main user archetypes driving SFV engagement: Value Seekers, Digital Innovators, Household Stewards, and Career Mavens, each interacting with SFV content in unique ways to suit their entertainment and information needs. These diverse groups offer unique pathways for monetization, underscoring SFV’s broad appeal.

More than 50% of SFV users are monetizable, and their discretionary spending is often directed toward e-commerce, OTT, in-app purchases, and paid gaming services. In addition to advertising, the study also highlights the potential for new revenue streams like virtual tipping and video commerce. With roughly 30% of monthly income earmarked for discretionary spending, SFV users are well-positioned to support these monetisation models.

High-quality content and low repetition drive positive sentiment

Indian SFV platforms have achieved a high level of content quality that rivals global counterparts. This focus on quality is a key factor in user retention, particularly among Tier-2+ regions, where users have indicated strong satisfaction and engagement. Redseer’s report identifies several key growth drivers:

• Original Content – With over 99% original content, Indian SFV platforms offer a rich array of genres that cater to varied user preferences. This is made possible by a rising base of micro-influencers and significant algorithmic advancements, which reduce content repetition and enhance relevance, thereby distinguishing Indian platforms from global peers.
• Content Relevance – Indian SFVs deliver content that resonates with users’ interests and preferences, comparable to global platforms in popular genres. Platforms are increasingly adapting content to reflect users’ current interests, fostering a highly engaging, context-sensitive experience.
• Content Quality – The quality of content on Indian SFV platforms remains exceptionally high, with an inflammatory content rate below 0.6%. Efforts such as advanced profanity filtering and active content moderation ensure a secure user environment. Notably, around 70% of SFV users report rarely or never encountering inflammatory content on these platforms.
• Platform Efforts – Indian SFV platforms are leveraging sophisticated recommendation engines that drive highly personalised content delivery, combined with a high-quality UI/UX. This user-centric approach enhances the viewing experience and promotes long-term retention.

The combined efforts in maintaining original, relevant, and high-quality content have resulted in a Net Promoter Score (NPS) of 59% for India SFV apps. This commitment to content quality underscores the unique role of SFVs in India’s digital economy, making them trusted platforms for regional content across diverse user bases.

Breakout monetisation potential: Four key revenue streams to watch

Redseer’s report highlights SFV’s immense monetisation potential, projected to increase exponentially across four primary revenue streams: advertising, influencer marketing, virtual tipping, and video commerce.

• Advertising

Generating $95–100 million in FY24, ad revenue currently represents 1-2% of India’s digital ad spend. As platforms shift towards performance marketing, advertising is expected to expand significantly.

• Influencer Marketing: Set to Reach $3-4 Billion by FY29

Estimated to grow at 40–45%, influencer marketing will likely reach $3–4 billion by FY29. The popularity of micro- and macro-influencers is a key driver, with creator marketplaces allowing brands to reach targeted audiences more effectively.

• Virtual Tipping: Expected to Reach $700-800 Million by FY29

Currently at $80-100 million and projected to reach $700–800 million by FY29, tipping has gained traction in the last 12 months, especially among audiences engaging in live streaming. With Indian users spending roughly INR 100 monthly on tips, this avenue provides accessible support for creators and influencers.

• Video Commerce: Nascent but high Potential for E-Commerce Integration

With the growing maturity of users and user-influencer connections on India SFV platforms, video commerce is expected to hit $5 billion by FY29.

Way forward for Indian SFV Platforms

Redseer’s report highlights that monetisation streams of Indian SFV platforms have come out of infancy and are well-positioned to drive further growth by enhancing ad performance tracking, strengthening user-influencer engagement with tools like virtual tipping and video commerce, and expanding their influence in Tier-2+ markets. Additionally, innovative content formats, refined performance marketing tools, and strategic influencer campaigns will support their mission to deliver value across diverse user demographics.

“India's digital advertising market is set for exponential growth, projected to nearly double by FY2029 to reach $16–17 billion, with video advertising leading the way as the fastest-growing ad format,” said Mukesh Kumar, Associate Partner at Redseer Strategy Consultants. “SFV platforms, with a massive pool of monetizable users play a critical role in reshaping digital engagement and monetization across the country, offering brands a new channel to reach India’s diverse audiences.”