The short-form video space is set to become the second-largest segment in terms of time spent after Facebook and Google, says a report by Bengaluru-based management consulting firm, RedSeer Consulting. The report—titled Entertainment and Advertising Riding the Digital wave—which came out on Wednesday argues that short-form platforms, such as Instagram Reels, YouTube Shorts, Josh, etc., are expected to grow by more than 2X to reach around 650 million by 2025. In comparison, in terms of short-form video consumption, China already reached a monthly active user base of 725 million last year and is at 75% smartphone penetration.
The reasons for this phenomenal growth, according to ReedSeer, are many. A significant portion of the growth is expected to be driven by the 300 million new Internet users that will be added by 2025. Secondly, short-form creators have grown 2x (from the TikTok days in June 2020) and now stand at 40-45 million, mostly from smaller towns and cities. The Indian short-form apps have also surged ahead in terms of creator experience. Consequently, there is an increase in user base and engagement on these platforms, the report argues.
“The market is set to grow exponentially over the next decade and some of the new age content platforms are best positioned to capture this growth,” says Ujjwal Chadhury, associate partner at RedSeer.
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According to the report, short-form content has emerged as the biggest winner at an aggregate level, and is likely to overtake OTT video content in the coming year. “Most of the platforms have ensured stringent content compliance standards and monetisation opportunities. After the TikTok ban in June 2020, Indian short-form apps have come a long way,” Chadhury points out.
Another reason short-form apps are doing well in India is due to their robust and improved technology. The apps have improved its performance significantly on personalisation, real-time feed change, feed change by language, follower base, feed change by search, etc.
When it comes to digital advertising, in India, the short-form market too has seen a massive growth. The segment grew 44% from 2019-2022 and has the potential to consume 20% of the digital advertising pie. Similarly, in China, over 30%-35% of digital ads are spent on short-form apps.
The report further argues that the major growth drivers for this will be the increasing digital consumption in India, and the rise of direct to consumer brands. “Digital penetration in Tier 2+ cities has created a new market. India is still at a nascent stage in terms of monetisation on short-form apps but is showing early adoption. Digital ad revenue structure is expected to change significantly in the coming years,” the report says.