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Indian Media Platforms Will Monetize Users Directly At Scale

The idea that “Indian users don’t spend” is starting to look a bit outdated.

There's a common belief that India is just a playground for collecting users, the MAU/DAU farm of the world, where everyone's online but no one's really spending.

It’s hard to shake the thought that digital ads are the primary, if not the only, way to monetize users at scale in India. Trapped by this misconception, founders often believe that consumer apps can't really turn a profit in India.

But what if we told you that's not the whole story and recent trends suggest this belief might be selling India short?

There’s an encouraging shift happening: platforms are finding success with alternative monetization strategies beyond just ads.

Digital ads continue to be a fast-growing and substantial revenue stream for many horizontal social platforms such as Google, Meta, X and Sharechat, which command >50% of this market - an $8 billion pool growing at a 16-18% CAGR.

India’s Digital Ads Market

$8 Billion

Growing at 16-18% CAGR

Emerging consumer marketplaces and e-commerce platforms such as Amazon India, Swiggy, Nykaa and Meesho have also entered the ads business making up for 15% of the digital ads pie and see 10-15% of their revenue coming from ads.

These new age consumer destinations have massive Top of the Funnels (being high MAU, high frequency use cases) and provide measurable ROI on ad spends. As more consumer destinations pop up, companies will wrestle to get a piece of the growing digital ads pie. That's not going anywhere anytime soon.

However, more recently, social platforms in India have led the charge in expanding into newer direct forms of user monetization with three key levers underpinning this shift — subscriptions, microtransactions (virtual gifting, and digital commerce), and digital services.

Each lever has a unique value proposition and a distinct set of platforms that have pioneered their adoption in the country.

Emerging

Monetization

Avenues

Subscriptions

Microtransactions

Digital Services

Subscriptions

In a subscription-based model, users pay a recurring fee to get access to unique services or content. Popular examples include Netflix and Spotify, which have popularised this model in the West.

However, subscriptions demand high trust from users as they commit to paying upfront. To successfully navigate this category, platforms must cultivate regular usage through content assortment and personalization through differential pricing.

The value proposition for such a subscription model is two-fold: a high degree of curation and maintaining a high-quality and velocity of content pipeline.

In recent years, interesting trends have been seen with ‘Made for India’ subscription-based platforms.

300k

Monthly transacting users.

Seekho App offers short-form engaging video answers to questions about money, tech and business, specific to the Indian context. It has scaled fast to upwards of 300K monthly transacting users.

500k+

Paying Subscribers

STAGE, a regional OTT platform, offers in-house generated web series & movies in Haryanvi and Rajasthani and has 500K+ paying subscribers.

The growing ability and willingness of Tier 2 India to pay, showcases the promise that subscription-based models hold for the future.

Microtransactions

In parallel with subscription models, direct monetization through microtransactions, be it for virtual gifts, payments for digital commerce and in-app currencies/assets, has quickly gained traction.

Digital Commerce

Micropayments for digital commerce serve as an exercise in building trust in the platform, particularly among users who are not avid online transactors.

10k+

Daily transacting users.

In Sri Mandir’s case, for example, about 20-30% of the close to 10,000+ daily transacting users on their platform, are first-time internet users. These microtransactions offer users the unique opportunity to participate in religious rituals.

Virtual Gifting

Another fascinating trend is virtual gifting, which allows creators to monetize their fan base and fans to show appreciation for their favourite creators

Sending virtual gifts can enhance a user's social status and create a sense of belonging. This desire to garner social recognition from streamers they like drives this monetization model

250k+

Paying Users

FRND, with over 250,000 paying users, it caters to a unique demographic seeking social discovery of friends through chat and game rooms hosted by creators and virtual gifting-driven monetization

300M

Monthly Active Users

12 Million

Creators

Moj, India’s largest homegrown short-form video platform, with 300M MAU and 12M creators reported that it made $50 million in revenue through virtual gifting in CY23

Microtransactions also enable people from various economic backgrounds to participate in digital economies. For those who might not be able to afford large, upfront payments, the opportunity to make small, piecemeal payments is a welcome alternative.

Digital Services

Digital services, when tailored to specific needs, present another potent avenue for monetization.

Companies are increasingly positioning their services to resonate with the core human desires and emotional necessities. By addressing such intrinsic needs, the platform gains trust, translating into high ticket size and repeat purchases by consumers in this category

$70M

Annual Run Rate

AstroTalk stands out as an example. The app matches consumers with a pre-vetted list of astrologers offering services such as Tarot card reading, numerology etc. It has been able to scale profitably to over $70 Million ARR in Aug-23, at an average ticket size of $3 per new user across T1 and T2 audiences

India Paves The Way For Innovative Models

New-age social platforms and gaming experiences are uniquely positioned to capture the largest time-share of the digitally-native Gen Z/Alpha user of today.

We continue to remain excited about businesses building for this audience as newer monetization avenues, besides digital ads, emerge for platforms and creators alike.