Advantage Instagram, YouTube in short video space

The two companies have said they are renewing their focus on short videos, while Indian startups are still acquiring users in their growth phase.

On 26 July, a tweet from Adam Mosseri, 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 at its earnings call a day later. 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 runaway global success of Bytedance-owned TikTok, but industry experts say that they will surely put Indian platforms under pressure. Not only do Instagram and YouTube have huge user bases through their traditional platforms, but they also have proven and matured monetization tools and technology that influencer marketing experts and creators prefer to grow platforms.

The big two, according to experts, are the “go-to” options for advertising. 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 get bigger,” said the head of an influencer marketing firm.

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

“If you look globally, Instagram contends with TikTok to monetize their platform. But, they do not have much 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’s assessment is backed by independent creators, investors and others in the industry. Comedian Shubham Gaur 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 340,000 followers on Instagram, and though his profile still exists on MX TakaTak, he doesn’t post content. 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 and Co., and former vice-president at Dentsu Webchutney, said, “At the moment, Reels largely serves as a very good way to establish your brand presence and identity, although we are running ads on it with increasing results.”

To be sure, Instagram’s pivot to video is not an immediate threat to Indian platforms. 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) would have the 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 the burn rate for a short-video startup could 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 it build further on its 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 the platform’s views 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.

Meta’s India head Ajit Mohan said last July that Indians uploaded 6 million short videos on Instagram every day at the time. Not only that, Zuckerberg said 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 to date, it’s a clear sign that Meta will push more resources to Reels.

A Meta spokesperson said in response to a Mint query that India is “one of the leading markets” for Reels, and that brands such as Maybelline and L’Oreal have “used Reels ads to increase brand recall among young users.”

Abhinav Jain, vice-president of InMobi-owned live videos platform Roposo, said that the platform uses live commerce to monetize its platform. The company had begun with short videos, but migrated to live video e-commerce.

Jain said that Roposo has more than 500 creators monetizing, with “over 350 brands” partnering with creators on the platform.

Moj declined to comment, while Josh did not respond to emailed queries till the time of going to press.

YouTube announced a $100 million “shorts fund” in April for creators. Phillipp Schindler, senior vice-president 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,” he added.

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