With a ban on Chinese apps, 200 mn Indians are looking for a new social media fix. Who will come out on top?
This burst of excitement will have to come to grips with some real challenges. Building a social network requires deep pockets, an innovative workforce and substantial advertising revenue
NEW DELHI :
Over the past three months, home-grown variants of short-video social networking apps have cruised through some unusual times. Border tensions and #BoycottChina campaigns had already resulted in a steady uptick in their user base. And then came the ban on 59 Chinese apps on the evening of 29 June, which targeted TikTok, Helo, Vigo Video and Bigo Live, among others.
By 9pm that evening, merely an hour after the announcement which hadn’t even come into effect yet, hourly installations spiked, with 300,000 to 400,000 people downloading the app every hour, according to Sumit Ghosh of Chingari, one of the several India-made apps vying to be a TikTok alternative. Within days, daily active users tripled on Roposo, another Indian short-video app.
With roughly 200 million Indians waiting to be snapped up, a mad dash has ensued to build a viable Indian social network from the ground up. While the Indian government’s ban targets a slew of apps—from browsers to file-sharing platforms—only a few segments have any real “Indian" alternatives. E-commerce platforms like Shein and Club Factory were also banned, but Flipkart and Myntra, which are the supposed Indian options, already have mature user bases.
The race for “indigenization" has thus essentially fallen on the shoulders of social media firms, particularly short-video apps. The prize: the eyeballs of erstwhile users from “Bharat" who were on the banned Chinese apps, which together had nearly one-fourth the total number of users currently on Facebook, the world’s largest social platform.
Chingari’s Ghosh said he wants to reach 100 million users in three months, which is the same target that Shivank Agarwal, founder of Mitron, another short-video app, has set for himself. For comparison, it took ByteDance 200 days to develop Duyin (TikTok’s Chinese variant) and about a year to reach 100 million users.
The tearing hurry within the Indian app ecosystem is fuelled by uncertainty over how long the ban on TikTok may last. Business plans are being crafted with the assumption that it will last at least 90 days. And this brief period may be the only window of opportunity. In the social media space, it’s nearly impossible to topple a platform that has made it big. TikTok didn’t topple either Facebook or Instagram. It merely created a new niche for itself by introducing short-videos.
“It’s a phenomenal and unprecedented opportunity for startups to build something that is world-class, with content and experiences designed keeping Indian users in mind," said Arun Tadanki, lead of LetsVenture, a Bengaluru-based technology platform that connects angel investors with startups.
“The pace at which an app like Mitron is progressing right now, at the end of three or six months, they’ll probably have 100-200 million users. And then, it’s a completely different game even if those (banned) apps are allowed to come back," he added.
For now, even investors want to get a piece of the action. Mitron raised ₹2 crore in a seed round from Tadanki and 3One4 Capital. Tadanki said the deal was one of the fastest in his career. Chingari, on the other hand, is raising funds too and plans to go for a Series A round of investment, skipping the seed round altogether.
The Indian government waded in late last week with its own app innovation challenge, which seeks to incubate home-grown apps in key sectors. But this short burst of excitement will soon have to grapple with some real challenges. Building a social network requires deep pockets, a large innovative workforce, and a market where digital advertising revenue is substantial, among other factors. Even tech giants like Google have tried and failed many times.
Merely cloning the TikTok experience will not work, says technology and policy consultant Prasanto K. Roy. “Source code for lookalikes of popular apps like Zoom are available on various websites and can be bought for as little as $25. But that isn’t enough," he said. “Essentially, this vacuum in the market is an opportunity, but it’s an opportunity for very few players," he added.
Facebook’s key innovation was the news feed. TikTok’s short-video was unique in both format and audience, targeting the “next billion" internet users. Indian social media apps, meanwhile, are largely seen as “clones" of existing platforms.
Chingari’s Ghosh said he’s going to replicate TikTok’s strategy, but instead of taking two years, he wants to do it in six months. Copying a platform doesn’t have to be wrong, he said. Which is true, after all, Facebook, too, copied Snapchat’s Stories feature on Instagram and WhatsApp. Twitter has launched a similar feature called Fleets.
The Indian-ness of these platforms have to show in some way though, Ghosh said. Between Mitron and ad-tech firm InMobi-owned Roposo, the idea seems to be to create communities within the apps, which replicate how Indians watch television. Both platforms will have the usual user feed, which will show content from everywhere, but there will also be dedicated categories—like food or health—which function like television channels with specific programming. Categories seems to be an important part of the short-term strategy of these two apps.
But while the apps themselves experiment in a hurry, users remain largely sceptical. Well-known TikTok influencer Ajay Barman said he downloaded and deleted Chingari, Mitron and Roposo simply because he didn’t like the user experience and the categories feature. Barman said he found that his videos didn’t get views as fast as they did on TikTok.
The fact that these platforms are based in India and keep data in India may also make little difference to the user. Data residency is often equated with data privacy and security, but the two are unrelated, said Sanchit Vir Gogia, founder and CEO of Greyhound Research. “Data localization only allows the government to regulate the data. It doesn’t offer any additional benefits from a privacy or security point of view at all," he said.
Where we lack as Indian entrepreneurs is in growth hacking, blitz scaling and creating network effects, which is very important for social media," said Jayanth Kolla, founder of Convergence Catalyst, a global research and advisory firm. Jio did a great job in distributing SIM cards, but hasn’t yet been able to make its apps a big success story. Hike has been present for ages but lost out to competition from WhatsApp. Barring ShareChat, communications platforms in India have mostly failed to make it big.
Whether it was planned that way or not, the government has given Indian apps a watershed moment. Tadanki pointed out that every app has a moment in its lifetime when it goes viral, and this is that moment for Indian short-video platforms.
Getting the downloads organically, as they are right now, saves them a lot of money, but this is only the beginning. If TikTok returns tomorrow and these apps haven’t been able to convert the downloads into daily active users (DAUs) or monthly active users (MAUs), it all amounts to nought, say industry experts.
Industry estimates predict 12-15% of total users usually become DAUs.
Nav Agrawal, who sold his short-video platform Clip to Sharechat last year, said TikTok had 70 million DAUs against a user base of over 200 million in India. The poster boy for Indian social media, ShareChat, is considered successful because when it had 150 million-odd users, it had over 60 million MAUs. An industry executive in the know of the social media app ecosystem here said that ShareChat has crossed 100 million MAUs, thanks to the current blitz.
Converting downloads to DAUs is a huge task, and it all starts with improving the user experience (UX). Barman isn’t the only influencer who found the Indian apps lacking in terms of UX.
Chingari’s Ghosh and Mitron’s Agarwal both said they’re working on their UX right now. In fact, when Ghosh spoke to Mint on 3 July, he said the company has set a target of three weeks to completely revamp its UX with a “very modern Silicon Valley look and feel".
With the funding spree these apps are getting, they all plan to hire engineers and build bigger teams. Chingari is a 20 person operation right now, whereas Mitron has only 10 people. ShareChat and Roposo, both of which have big investors behind them, have over 300 and 200 employees, respectively. The industry executive quoted above also said that ShareChat plans to go on a hiring spree soon.
However, whether the budding Indian apps will be able to quickly rustle up an innovative pool of talent is an open question. Convergence Catalyst’s Jayanth Kolla said India definitely has tech talent but it doesn’t have talent available at scale. “You can build a kick-ass 50-member company, not a 5,000-member company (in India)," he said.
Kolla isn’t the only one who’s unsure about the possibilities in front of indigenous social media firms. “We think it’s a bit late in the day to be starting such applications all over again," said Greyhound’s Gogia.
“India just doesn’t have the talent," he added. In fact, the country’s best talent is often working in the Valley and building the greatest products in the world. According to Gogia, we don’t have the best talent in artificial intelligence (AI), machine learning (ML), UX and more, all of which are essential to make world-class apps.
The other challenge is capital. Experts say big global venture capital (VC) firms will have to come in. Scaling a social media platform requires hundreds of millions of dollars and decades of experience in the space. Agrawal said that when he was building Clip, ByteDance was spending 30 times the money that his startup could spend and it was almost impossible to compete with.
App verticals like social media and video conferencing are very “busy areas". One will have to take on billion-dollar companies like Microsoft, Zoom, Google, Cisco, Facebook, Instagram, WhatsApp, ByteDance and more.
The executive mentioned above said a social network with a 100 million MAUs could rack up at least ₹5 crore a month purely on cloud storage costs. It doesn’t work with investments in the order of a few million.
Gogia pointed out that the fact that big companies have larger and more mature user bases is a big bonus for them. It allows them to refine their product quickly. Trying to say you provide better services or more security than them is almost impossible. “Any app, especially when launched only for a specific market or country, just won’t work because you won’t have the critical mass of users to learn from and improve the project," said Gogia.
The marathon ahead
In fact, even as Indian platforms started getting downloads due to the ban, a number of big influencers moved to Instagram. In effect, China’s loss may ultimately be the US’ gain, not India’s. “People are forgetting that Facebook remains the big daddy, and regardless of controversies, it remains a great platform for content sharing. I would not be surprised if Facebook tomorrow introduces more flexibility in terms of posting video content," said Shudeep Majumdar, co-founder of Zefmo, an influencer marketing firm. Instagram, which is a fully grown platform, is in fact rushing to release Reels feature, its TikTok clone, say reports.
Amid the chaotic events of the past week comes the Indian government’s modest app innovation challenge, which was announced last week. According to Ramanan Ramanathan, mission director of the Atal Innovation Mission, the challenge isn’t only good for the apps that win. The government wants to promote others who show promise, by introducing them to VCs and more. “It’s not just one winner that we’re trying to find. If there are quite a few who merit consideration and attention, we’re going to also plug them into our ecosystem to allow them to grow over time," he said.
At the end of the day, the ban on Chinese apps has given an impetus to Indian firms to take some time off from competing against billion-dollar companies purely on the strength of their bank balance alone. While there has been no real winner from India in the social media space, there’s also never been a watershed moment like this. Analysts and experts have been repeatedly proven wrong when it comes to the realm of tech over the past decade. The next six months will be a sprint that could set them up for the marathon.