Upcountry consumers fuel 63% of India's short format video engagement: Redseer

India’s short-form video (SFV) category has been recording substantial growth in consumer adoption and revenues, according to the latest research report, ‘India SFV in 2024: From ‘Likes’ to Monetizing Millions’, released by Redseer Strategy Consultants.

Even as India banned TikTok in mid-2020, the SFV category, which today consists of platforms such as YouTube Shorts, Instagram, Snapchat, Twitch, Moj, Josh, etc., has clocked a 3.6x increase in daily active users, establishing itself as a mainstream entertainment category. SFV platforms today engage close to 25 crore users and rake in $200+ million in revenues (INR 1,688 crores, approximately) every month, notes the Redseer report.

Of this, the ad revenues stand at $95-100 million (between INR 800 crores and INR 844 crores) and virtual tipping (donations for content creators) at $80-100 million (between INR 675 crores and INR 844 crores). Redseer predicts that virtual tipping will grow at a 45-55% rate year-on-year, indicating a massive growth in India’s SFV market.

According to Redseer, the SFV platforms, which once operated as casual entertainment outlets, now present powerful, scalable revenue-driving opportunities by creating broadened and innovative pathways for monetisation including influencer marketing, video commerce, and virtual tipping.

The report finds that on average, users now spend ~30 minutes per day on India’s SFVs platforms, a shift driven by high-quality, personalised content and user-friendly interfaces that cater to both metro and non-metro audiences.

The report observes that with over 63% of SFV engagement coming from tier-2 and smaller towns, SFV platforms are 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,” it mentions.

Stating that the explosive growth reflects the demand for accessible, bite-sized entertainment that resonates with regional and vernacular preferences, the report anticipates a growing engagement, improvements in content quality, and the emergence of diverse monetisation pathways in this category.

The report identifies four main user archetypes driving SFV engagement. These are value seekers, digital innovators, household stewards, and career mavens, each interacting uniquely with SFV content to suit their entertainment and information needs. Redseer estimates more than 50% of these users to be monetisable, with their discretionary spending often directed towards e-commerce, OTT, in-app purchases, and paid gaming services. With roughly 30% of monthly income earmarked for discretionary spending, SFV users are well-positioned to support these monetisation models, according to Redseer.

The growth drivers

Listing out the growth drivers, Redseer’s report identifies several key factors. With over 99% original content, Indian SFV platforms offer a rich array of genres catering to diverse user preferences, fostering a highly engaging, context-sensitive experience. Powered by a rising base of micro-influencers and algorithmic advancements minimising content repetition and improving relevance, Indian platforms can distinguish themselves from their global peers.

The SFV platforms in India have achieved a high level of content quality that rivals global counterparts according to the report. This focus on quality is a key factor in user retention, particularly among small towns, where users have indicated strong satisfaction and engagement.

While the quality of content on Indian SFV platforms is exceptionally high the inflammatory content rate is as low as 0.6%, assisted by strong profanity filtering and active content moderation to assure a secure user environment. Incidentally, nearly 70% of SFV users report rarely or never encountering inflammatory content on these platforms.

Indian SFV platform players can be seen deploying advanced recommendation engines along with intuitive UI/UX to achieve personalised content delivery. This user-centric approach enhances the viewing experience, promoting long-term retention.

Strong monetisation opportunities

According to Redseer, the category offers four key revenue streams including advertising, influencer marketing, virtual tipping, and video commerce.

Generating $95–100 million in FY-2024, SFV ad revenues currently represent 1-2% of India’s total digital ad spending. As platforms shift towards performance marketing, advertising is expected to expand. The influencer marketing revenues are also expected to reach $3-4 billion by FY-2029, growing at 40–45% year-on-year.

Another important monetisation stream for SFV content creators and influencers, virtual tipping, has gained traction during the last 12 months, especially due to active live-streaming viewer engagements. Virtual tipping revenues are expected to touch $700-800 million (approximately INR 5,904 crores to INR 6,748 crores, approximately) by FY2029.

With the growing maturity of users and user-influencer connections on India’s SFV platforms, video commerce, although at a nascent stage, has also been making steady inroads. Redseer report expects video commerce to hit $5 billion in revenues for SFV platforms in India by FY-2029. Redseer expects monetisation growth to be propelled by innovative content formats, improved user-influencer engagement with the help of tools like virtual tipping, a rise in video commerce, investments in ad performance tracking, and a widening of influence in small towns (tier-2+ cities).

“India’s digital advertising market is set for exponential growth, projected to nearly double by FY-2029 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.”