Meta, Google turn heat on short video apps

On July 26, a tweet from Adam Mosseri, the head of Instagram, confirmed the platform’s shift in focus to video, and the same was reaffirmed by Meta CEO Mark Zuckerberg and other top executives during its earnings call on July 27. Alphabet, the parent company of Google, also said in its earnings call earlier this week that YouTube shorts was averaging 30 billion daily views globally and that the company was “excited” about the opportunity it presents.

The moves may be motivated by the global success of Bytedance-owned TikTok, but industry experts say that they will surely put Indian platforms under duress. Not only do Instagram and YouTube have huge user bases through their traditional platforms, they also have proven and matured monetization tools and technology that influencer marketing experts and creators prefer to growing platforms.

The big two, according to experts, are still not exactly the “go-to” options for advertising through. Some influencer firms even say that they tell their clients to avoid smaller short-video platforms. “If you ask me, the removal of TikTok from India has only helped Instagram and YouTube. And now they will only get bigger,” said the head of an influencer marketing firm.

For instance, Instagram has 309 million users in India already, according to a report by Reuters earlier this month. In comparison, most Indian platforms have less than 200 million users at the moment, said industry experts.

“If you look globally, Instagram contends with TikTok to monetize their platform. But, they do not have such competition in India. In most of the smaller, homegrown platforms, there is a massive volume of cringe content — which is not favourable for brands or creators looking to monetize their work. This leaves Instagram with a clear path to monetization in a market such as India,” said Shudeep Majumdar, founder and chief executive of influencer marketing firm, Zefmo.

Mazumdar isn’t the only one either. His assessment is backed up by independent creators, investors and others in the industry. Comedian Shubham Gaur, for instance, said he was offered an interim contract by MX TakaTak (now owned by Sharechat) about a year ago, but he abandoned the partnership eventually.

“While they clearly boosted my discoverability on the platform, there was no cross-promotion on the platform, and the identity being built on it was limited to the boosted reach,” Gaur said. He has 3.4 lakh followers on Instagram, and though his profile still exists on the platform, he doesn’t post content there. He didn’t disclose the deal value, but said the financial incentive offered “was extremely small”.

G.D Prasad, founder of homegrown edible items brand VS Mani & Co., and former vice-president at Dentsu Webchutney, said, “At the moment, Reels largely serve as a very good way to establish your brand presence and identity, although we are running ads on it with increasing results,” said Prasad.

To be sure, it’s not that Instagram’s pivot to video will immediately kill or damage Indian platforms. For instance, Anurag Ramdasan, head of investments at venture capital firm 3one4Capital, noted that both Mohalla Tech (the parent firm of Sharechat, Moj and MX Taka Tak) and VerSe Innovations (Josh) will have runway to monetize their platforms and take on Reels for the next two years.

The question, however, is how the current funding winter will affect these firms. A former executive from an Indian short video firm said that burn rate for a short-video startup can run into well over $15-20 million a month. YouTube and Instagram can absorb such burn and offset some of it through existing partnerships and revenue sources.

Ramdasan noted that Instagram’s “deeper financial backing” could eventually help them build further on their 10-year monetization plan with Reels. Some Indian platforms, like Bolo Live and InMobi’s Roposo have already pivoted to live video instead of shorts, while Moj too announced the launch of live video streaming earlier this month.

Meta itself agreed in its earnings call that Reels is at a very early stage of monetization. But Zuckerberg said that the platform’s view grew by 30% sequentially and it had already crossed $1 billion in annual revenue from Reels ads globally. Reels was launched globally only in February this year, and India was among the first countries to get the platform last year.

In an interview in July last year, Meta’s India Head, Ajit Mohan told Mint that Indians uploaded 6 million short-videos on Instagram every day at the time.

Not only that, Zuckerberg said that Reels has a “higher revenue run rate” than Instagram Stories did at “identical times post-launch”. Given that Stories is one of the platform’s most successful products till date, it’s a clear sign that Meta will push more resources to Reels.

YouTube had announced a $100 million “shorts fund” in April this year, for creators from around the world, including India. Phillip Schindler, SVP and chief business officer of Google called the fund a “first step” for monetizing shorts. “We’re testing ads on Shorts with products like app install and Video action campaigns and are encouraged by early results,” he added.

“So the bottom line is I think we’re on track here and we just need to push through this one.” Zuckerberg said after talking about Reels’ revenue rates during the earning call.

First article