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TikTok ban ignites boom in Indian short-video apps

Analysts project market size will grow fourfold in five years

The ban on TikTok had a strong impact on many young Indians, owing to the app's skyrocketing popularity. (Screen captures from TikTok)

TOKYO -- It is almost half a year since India banned in late June dozens of Chinese mobile apps as threats to national security, following a military skirmish along the India-China Himalayan border that led to Indian casualties.

Among those apps, the ban on TikTok -- the globally popular short-video sharing app run by Chinese decacorn ByteDance -- had a particularly strong impact on many young Indians, as TikTok's popularity among them was skyrocketing.

"Short-form videos are so easy to make, and users love it, as it is so easy to consume," said Ruhi Singh, a former Miss India, actress and fashion model who had been using TikTok for communicating with fans and had roughly 2 million followers on the Chinese app. "So, honestly, I felt very relieved when Josh came out and I found it can be a good replacement of TikTok," she said in an online event.

Josh, launched in July by Bengaluru-based media startup Dailyhunt, is now regarded as a leader among Indian short video-sharing apps. Today Singh has roughly 1 million fans on Josh -- still a long way from the level she enjoyed on TikTok.

According to consultancy RedSeer, the short video-sharing app market, in terms of the average number of monthly active users, grew ninefold from 20 million in 2016 to 180 million in the first six months of 2020.

This outpaced the growth of social media, whose monthly active users increased from 200 million to 300 million in the same period, and YouTube, which is used mainly to share long-form videos and whose monthly active users increased from 150 million to 325 million.

In June, TikTok's monthly active users reached 167 million, indicating the Chinese app was almost identical in size to the whole short video-sharing market.

Therefore the sudden exit of TikTok created a huge ready-to-be-filled vacant space in the rapidly growing short video-sharing market, and domestic startups would not miss that opportunity opening right in front of them.

Several startups launched short video-sharing apps within a month of the TikTok ban, and three out of the four most popular apps today -- Josh, MX TakaTak and Moj -- were among those new entrants.

RedSeer estimates that Josh had the largest number of monthly active users in October, 70 million to 75 million, followed by Roposo, a relatively old short-video app that had 60 million to 65 million users, MX TakaTak with 55 million to 60 million and Moj with 38 million to 42 million. These figures indicate that Indian apps, if combined, have somehow acquired a user base comparable in size to TikTok before it was banned.

However, actual usage has yet to recover to the pre-ban level.

RedSeer estimates Indians spent a total of 165 billion minutes on short video-sharing apps in June, of which TikTok accounted for 85-90%. In October, the time spent on sharing short videos totaled 80 billion minutes, less than half of the pre-ban TikTok level.

"Some people find the quality of contents on Indian alternatives unsatisfactory compared to TikTok and [are] resisting to migrate," said RedSeer analyst Ujjwal Chaudhry. "But this means there still is a large opportunity to fill the gap," he added.

RedSeer projects that the monthly time spent on short video apps will keep recovering and will average 110 billion minutes for the 12 months through March. It also projects the level of monthly time spent on short video apps will increase fourfold to 400 billion to 450 billion minutes by 2025.

All four Indian startups that are leading in the space have investors with strong global names. Dailyhunt is backed by Sequoia Capital, Goldman Sachs and ByteDance, while InMobi, which operates Roposo, is backed by Kleiner Perkins and SoftBank. Tencent Holdings is behind MX Player, which operates MX TakaTak, and Moj is backed by Twitter and Shunwei Capital of China.

Interestingly, ByteDance made its first investment in Dailyhunt in 2016 in a strategy to add content-source partners for its TikTok operation in India. Now that TikTok has been banned and Josh has been launched by Dailyhunt, the investment has turned into an indirect contingency channel to profit from the growth of the Indian short-video market.

All of these players are raising funds to accelerate the growth. ShareChat just completed a new $40 million funding round in September, while both Dailyhunt and MX Player are reportedly in the process of new fundraising.

These Indian apps have English-language interfaces, which may pave the way for tapping markets outside India. Depending on the U.S. government's treatment of TikTok and on the international community's stances on China's aggression and oppression on many fronts -- including the East China Sea, the South China Sea, Hong Kong, Tibet and Xinjiang, in addition to the India-China borders -- there may be huge opportunities around the world for those apps to replace TikTok.

The investment race among these Indian post-TikTok players looks bound to heat up further with such potential global opportunities in sight.

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