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Why don’t India-developed apps go viral like TikTok? Here’s why – Economic Times


NEW DELHI: China’s ByteDance developed short video app TikTok, and in nine months from its September 2018 launch it attracted more than 200 million users in India, with a monthly active user base of around 120 million. ByteDance’s Helo and Vigo apps have 25-30 million users here. Globally, ByteDance has an user base of around one billion.

The closest an user-generated, content-based Indian app has come is ShareChat, with a daily active user base of around 40 million as of January 2019, as per company estimates.

Technology investors, industry observers and entrepreneurs ET spoke to posit three basic reasons why India doesn’t create apps that lead to hyperscale mass adoption.

First, mountains of cash have to be burnt to bet on an app that may go viral. ByteDance, valued at $72 billion, is well placed to do just that, just like Facebook does for WhatsApp, India’s default national messaging platform.

“Entrepreneurs still rely on US/ foreign funding to scale ideas and the pitch deck is: what worked there will work here,” said Ashok Kumar, CEO, ScripBox, founded in 2012. “For ideas that may see hyperscale mass adoption, capital is a problem. You need venture investors to take outsized calls,” added Kumar.

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Murali Talasila, leader, innovation and startups, PwC India agreed: “B2C business is a high cash burnout business. That’s why we need large VCs to sustain it. Investment in Indian tech players is from more conservative sources who do not have an appetite for that kind of risk.”

Related to the first reason is the second: India doesn’t offer scale advantages for pure play digital apps that focus on entertainment or user generated content.

‘Tech Maturity Level Not the Same’

Money is made by owners of these apps through advertising.

These numbers say it: India’s advertising market is around $10.5 billion, according to GroupM estimates, and less than 30% of that pie is for digital ad spend, and according to eMarketer, China’s advertising pie is $80 billion, and in the US, the digital ad market alone is expected to be $130 billion in 2019.

Plus, half of India’s population is yet to go online, most users have low purchasing power. The internet story is twenty-five years old in the US and the internet story in China began seven years before it did in India, where going online is just a decade-and-a-half old experience.

Given this scale constraint, say experts, India isn’t yet a natural home for high risk/high reward apps. Padmaja Ruparel, president, Indian Angel Network said: “Technology maturity in India is not the same as other big countries.”

The third reason is that most Indian internet business ideas developed to address the country’s many problems, and many of them were clones of ideas tested successfully outside India, and therefore considered less risky by investors.

“India has bigger pain points, looking for simple, affordable solutions. Cash burn for entertainment is not uppermost on mind,” says K Ganesh, co-founder of GrowthStory, a Bengaluru-based venture building platform. “The focus in India is on need based sectors,” he adds.

That’s partly the reason why most successful Indian apps are not pure play digital but a combination of online and offline — Flipkart runs an app and also runs warehouses, logistics. Pepperfry, Urban Ladder and Lenskart all depend on strong offline play.

“In India, what works is a combination of online and offline and which can be monetised,” says Niren Shah, managing director, Norwest Venture Partners India.

Rajan Anandan, ex-chief Google India and an investor said, “India is building different, real world kind of internet businesses”.

So, what can change this? Investors and experts say TikTok-like ideas will likely emerge out of India when investors see a market large enough to bet on a risky idea, when funds don’t push entrepreneurs to break even.





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