After TikTok was banned in India: Internet celebrities dream shattered, local startups harvest blank market

This article was originally writen by the Chinese media Tencent DeepNet (腾讯《深网》) and translated by PandaYoo.com after it was licensed. Copyright belongs to the original author and it is forbidden to reprint without permission.

Authors: Luo Ruiyao, An Ran
Chinese editor: Xiao Kang
DeepNet, A news column presented by Tencent Xiaoman News Studio.

On the fifth day after being banned by the Indian government, TikTok was still lying quietly in Bhavana Srivastava’s mobile phone. She was reluctant to delete it.

Bhavana, 28, works as a teacher at a public primary school in the northern Indian city of Lucknow. The school is on the outskirts of Lucknow. She commutes nearly 100 kilometers to work every day. The facilities of the school are poor. She is good at painting, so she and other teachers decorate the walls with paintings. Because of her love for students, she has been doing this for almost three years, and more and more students come to school.

But thanks to the short video platform, her talent began to be seen by more people.

Bhavana started using TikTok three years ago and joined VMate app last September, to create some counterpart performances videos and DIY drawing videos. She has a total number of nearly 1 million followers on the two short video platforms, which belong to Bytedance and Alibaba, respectively. This number means that she has changed from an ordinary primary school teacher to a respectable Internet “star”.

“A lot of people around me, including my family, can recognize my face (from the video), and it feels really good.” Bhavana told Tencent Deepnet.

It all came to an abrupt end on June 29th. Shortly before 9 p.m., the Indian government announced that 59 Chinese apps, including TikTok and VMate, were blocked. From the next day, these apps began to be removed from the app store, and downloaded apps were also suspended.

Bhavana felt very lost. Luckily, she downloaded more than 2, 000 videos she had uploaded before the service stopped, opened a new account on YouTube, posted them one by one, and occasionally opened TikTok and VMate app to take a look.

“I miss them very much. But what can I do? I have no other choice. ” She said.

In addition to TikTok and VMate, a number of products such as Tencent’s Wechat, Bytedance’s Helo and Vigo Video, Kuaishou’s Kwai and U Video, Alibaba’s UC browser and VMate, JoYY’s Likee and Bigo Live, cross-border e-commerce platforms SHEIN and Club Factory, and SHAREit with 400m installation users in India are also banned.

Bytedance was quickly suspended after the ban, and apps were removed from Google and Apple’s App Store. The next day, some network operators restricted the use of Wechat and some Tencent products, and the use of Weibo was abnormal. According to Zhu Dao Capital, as of July 6, only mobile games “Clash of Kings” and ES file browsers were fully functional among the 59 banned apps, and 51 apps had been completely removed or discontinued.

UC browser officials told Tencent Deepnet that the company would make further adjustments in response to policy changes. In June 2020, UC ranked second in the market share of mobile browsers in India at 14.46 per cent, behind chrome (75.56 per cent), according to Statcounter. According to UC, at least 70 per cent of, UC Browser’s employees in India last year were local Indians and are currently on rest.

Nikhil Gandhi, head of TikTok India, once said on Twitter, “We have been invited to meet with concerned government stakeholders for an opportunity to respond and submit clarifications.” India is TikTok’s largest foreign market, with about 120 million active users, according to public data.

Indian companies and venture capitalists are harvesting the blank market in the absence of Chinese Internet applications, but whatever the outcome of the 59 Chinese App in India, the change and value they bring to Indians will never be erased.

Dream factory

Mumbai, the financial center of India’s west coast, attracts millions of young people to make a living every year, many of whom are famous dreamers in Bollywood. For millions of young people with artistic dreams, Bollywood is a “dream factory”.

Like all Indian girls who grew up watching Bollywood movies, Bhavana has a dream of becoming a star. But her “dream factory” is not Mumbai, but a short video app on her phone.

Three years ago, Bhavana downloaded TikTok as soon as it was launched in India. She saw the girls dancing in beautiful sari and matching their performances to the soundtracks of Bollywood movies. She began to try to make videos herself. Every time she finds popular background music and special effects, she will actively participate in creating videos.

“I usually don’t have much free time as a teacher, but as long as I’m free, I always make a video or two before I dress up and go out.” Bhavana said that after three years of accumulation, she has 750,000 followers on TikTok.

In addition to performing and dancing, Bhavana will also send some videos of daily life and DIY painting. Bhavana teaches language and science at school, but she also likes creative painting. She will start with a number or a letter, and a few strokes will turn it into a simple stroke, such as the popular Indian elephant god Ganesha, or some small animals to teach and have fun.

This made star scout of the short video platform notice her. Last year, an online celebrity agency contacted her, invited her to join the VMate platform to create, and promised that she would be paid for it.

She joined the VMate platform in September 2019.

In May of that year, Alibaba injected hundreds of millions of dollars into the product, which was incubated by a UC team that has been crawling and rolling in India for many years. At that time, VMate, which had just over 30 million monthly active users, began to make efforts in the creators’ ecology, taking the initiative to identify potential talent. Bhavana is good at painting and is positioned as an expert in painting. She mainly publishes DIY paintings on the VMate platform and attracts 25,000 followers in a month.

TikTok and VMate brought her not only a sense of achievement, but also tangible economic benefits.

Bhavana told Tencent Deepnet, that she receives about ten ads a month on TikTok, including products and APP ads. The average price of an advertisement is 1250 rupees ($16.70), while the higher price is 1500 rupees ($20.04).

The competition on VMate is not as fierce as that of TikTok, and her income can reach a higher level.

An industry insider familiar with VMate told Tencent Deepnet that VMate has two incentive systems for celebrity, either calculated according to the number of likes and views, or set a certain number of videos up to the standard, and as long as celebrity achieves this goal, it can get fixed income.

In general, celebrity earns a fixed income of 20, 000 rupees ($267) a month if only 10 videos are up to standard in terms of quality and viewing. This means that celebrity, which is a part-time creator like Bhavana, can also earn a considerable amount of money.

In addition, VMate has set up the reward function a long time ago, and users can reward it in virtual currency, and celebrity can withdraw cash directly to e-wallets and bank cards. Bhavana said she once had a video that earned more than 5000 rupees in a week.

“Every month, I can earn at least 30,000 rupees (about $400) on these two platforms.” According to her, primary school teachers earn 45000 rupees ($601.33) a month, and when the market is good, she earns almost the same amount of money from short videos. According to World Bank statistics in 2016, India’s per capita monthly income has just exceeded 10,000 rupees.

Return to zero

VMate also let Bhavana go out of his hometown to the capital New Delhi and the holy city of Varanasi to participate in the celebrity public welfare activities organized by the platform. At a public welfare children’s shelter in New Delhi, Bhavana taught children to draw on the spot, and the onlookers cheered with surprise. “I like to teach children, and I will be very happy.” She told Tencent Deepnet.

Under the shadow of the Covid-19 epidemic, the short video has become a channel for her to communicate with the outside world. At the end of March, because of the novel coronavirus epidemic in India, Bhavana began to have more free time. She spends four or five hours every afternoon carefully designing and shooting painting DIY videos, each of which takes 40 to 50 minutes. The school has not started for a long time, and the students also learn and amuse themselves by watching her videos.

The news that Tiktok and VMate had been banned came all of a sudden. At the end of June, people on the VMate team informed her that the platform might be blocked, and she downloaded more than 1200 videos she had uploaded overnight. She downloaded more than 2300 videos on TikTok. A few days later, she heard the news of the ban.

This was followed by a job-hopping invitation from agent. Local competitors such as Roposo, ShartChat and MICO Chat are taking advantage of the opportunity to poach online celebrities. She receives calls from different agents every day, but she is still hesitant to join any local platform except YouTube.

“These apps are different, and they don’t have a lot of features on TikTok and VMate.” Bhavana said, “even if I switch to other platforms, I will always be grateful to TikTok and VMate apps from China, which have made me an independent content creator, and I started here because they let me be seen by others,”

Wryib Khan, who works for an online celebrity agency in Gurgaon, told Tencent Deepnet, that creators on TikTok had spent money to buy fans from him to increase their influence. Now that the platform is banned, the company’s revenue has been reduced by 1/3. Now, he draws money mainly by poaching people for local platforms.

After TikTok and VMate were banned, Bhavana posted some original videos on WhatsApp. But not everyone, like her, was lucky to download the video in time.

Chetan Monga, 22, from Punjab, who has more than 5 million followers on TikTok, mainly performing dances and funny short videos, told Tencent Deepnet, he was among the top 200 celebrities on TikTok.

Every month, Chetan receives three or four ads, which bring him revenue of 22000 to 25000 rupees ($294 to $334). “This part of the income is suddenly gone.” Chetan is very helpless, “the government probably won’t care about the people who make a living on these short video platforms.”

Chetan, who runs a dance studio outside an online celebrity, has been closed for nearly four months because of the epidemic, and he relies on video income to make up for the loss of rent.

“Now I have to start from scratch.” Chetan revealed that he had more than 1100 videos on TikTok, and the ban came so suddenly that he downloaded only more than 70 of them.

Short video revolution

The advent of TikTok has sparked a revolution in short videos in India, the world’s second-largest smartphone market.

The population of India is similar to that of China, but more than half of the population is under the age of 25. The combination of cost-effective smartphones provided by Chinese mobile phone manufacturers and cheap data package by telecom operators has spawned tens of millions of first-time internet users every year. Most of these users come from small towns and villages, have a lot of free time and are hungry for Internet content.

Before the advent of short videos, the only national apps in India were Facebook and its WhatsApp, and Google-owned YouTube. Facebook and WhatsApp address social needs, and YouTube provides content.

For users who speak Indian dialects, YouTube even replaces Google’s search function. The reason is very simple, the dialect content on the Internet is very scarce, they are not used to reading text, want to see what content, go to YouTube search, there will be a bunch of Youtuber explain in their dialect.

The emergence of short videos has fundamentally deconstructed the consumer ecology of long videos on YouTube, making it an application that, like WhatsApp, can be used to kill time as long as it is available.

Archana Choudhary, 23, who works as an accountant at a private company in Bangalore, southern India, has been a loyal user since she downloaded TikTok last June. She told Tencent Deepnet, that as soon as she got up in the morning, ate lunch and went to bed at night, she would open TikTok and browse for a while as long as she had time. Suddenly it can’t be used, and she feels very unaccustomed these days.

“I watch it for at least more than an hour a day, and even for three or four hours during the holidays.” Archana said.

Last year, she found that many of her friends were using TikTok, so she downloaded APP. At first, she also tried to make some videos, but without too much playback, she stopped shooting, but she was used to watching videos every day.

The short video brings a whole new experience to Archana. “it’s very fun, the video content is rich, and as long as you like the video, it will recommend the relevant video to you, there is a lot of room for exploration.” She said.

When he saw the news that APP was blocked, such as TikTok, Archana thought it was fake news. She didn’t believe it until she received a notice from TikTok’s APP the next day. It surprised her. “I don’t know why we want to ban it. It’s just for entertainment.” Archana said.

After TikTok was blocked, YouTube became her substitute. Before, she only watched YouTube, once or twice a week, but now she has no other choice. “People have to have some fun, otherwise it will be too boring.” Archana said, “YouTube is fine, but I still miss TikTok. It’s very different.”

Archana’s cousin Swapnil Jha is a sophomore at the Maharaja Surajmal School of Engineering in Delhi. He started using SHAREit when he was still in high school. To this day, CamScanner and ES File Explorer are still in his mobile phone. When he first saw these apps blocked, he doubted that the Indian government’s online ban had always been for show, and he did not expect it to be implemented so quickly this time.

For 34-year-old Suryakanth S Jevalagi, the ban on TikTok make him lost one of his few entertainment.

He worked as an ambulance driver in the rural area of Udupi, a small town on India’s southwest coast, and was exposed to double work stress and risk of infection during the outbreak. But he still keeps the habit of browsing TikTok after work every day, and even takes time to upload videos of dancing.

A year ago, Suryakanth downloaded TikTok. Every day after work, he would spend an hour or so watching a video. The video on TikTok is only 15 seconds, but it can tells a story in a very short time, which is very much to his taste. “I like to watch positive energy videos that help people, and I’m doing the same thing.” Suryakanth said.

TikTok is an indispensable entertainment for many Indians during their quarantine. According to App Annie, TikTok became the most downloaded app in India during the quarantine, and its average daily use time increased from 39.5 minutes to 56.9 minutes, second only to Facebook.

A new round of player shuffling

The spring of 2018 is the beginning of India becoming a popular gold prospecting place for short videos.

At that time, TikTok was growing rapidly in India, and Kwai was also coming. This country, “full of young people”, attracted more than a dozen players from China, large and small. At that time, TikTok surpassed WhatsApp, in the overall list of downloads in India and became the next “national-wide app” in India. Like under JoYY and Helo, another product of ByteDance, were also in the top 10.

This is also the beginning of the reshuffle of India’s short video market.

From 2019, many small and medium-sized platforms began to face the double pressure of capital depletion and monetization difficulties, and began to seek a way out.

Some products such as Clip (India), tougtU (China) and Welike (China) are sold, some are transformed, and even exit directly. With Alibaba increasing his investment in VMate, India’s short video market is gradually occupied by three Chinese companies: Bytedance (TikTok and Helo), JoYY (Bigo Live and Like renamed Likee), and Alibaba (VMate). A small number of Indian short video companies such as ShareChat have also been invested by Chinese investors.

Although there are many local similar small platforms, some Indian entrepreneurs have spoken bluntly: “there is no point in competing with TikTok.”

The sudden ban could force India’s short video market to reshuffle again. This time, all five App owned by China’s three giants have been banned, attracting four or five local competitors to seize the market.

After the ban, the top five free Google apps in India were dominated by local short video products: Roposo, Chingari, Tik Kik, Mitron and ShareChat.

At the top of the list, Roposo is owned by advertising technology company InMobi. It has been released for five years and has not been very popular, and the ban has put it in the top place.

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InMobi CEO Naveen Tewari shared on Twitter that the number of daily active users rose from 6 million to 17 million in three days, and the number of creators on the platform increased from 500,000 to 4 million. In the past two weeks, Roposo has soared from 330 to the top of Google Play’s list of free apps.

In Twitter, Tewari has always emphasized the local feature of Roposo, with the hashtag # DigitallyAatmanirbhar. “This ban creates a huge gap in the digital landscape of India, which every Indian entrepreneur should try to fulfill & let its citizens not feel any vacuum.”

Chingari also comes from a local team in Bangalore. Since its release in November 2018, it has been downloaded only 100,000 times by June 10 this year. Since TikTok was banned, it has been downloaded more than 10 million times. Sumit Ghosh, co-founder and chief product growth officer of Chingari, is very active on Twitter, constantly sharing Chingari’s number of users, product iterations and recruitment information: 7.8 million downloads per hour, 11.26 million new users in 22 days, 148 million video views, 3.6 million likes, and hopes to surpass the 100 million user mark in July.

The rapid growth even led to the collapse of Chingari’s server. Ghosh said the team worked continuously for 48 hours and slept for only two hours, solving technical problems. It has also received capital attention and is reported to be in contact with an international venture capital firm.

Many local venture capital firms in India are also eager to find a substitute for TikTok. On June 30th, Prayank Swaroop, an Indian investor in Accel, an American venture capital fund, wrote on Twitter, “If you are building apps that replace these apps in India. You can mail me. “

Mitron, based in Bangalore, has also received financing. Two days after the ban, it announced that it had received 20 million rupees ($267000) in seed financing from 3one4 Capital and the angel investor group Letsventure, with 17 million downloads. The app, which means “friend” in Hindi, topped the Google Play download list at the end of May. At that time, the media called it “the replacement of TikTok”. Although it was later revealed that the source code was purchased from Pakistan, it also returned to the shelves after it briefly disappeared.

3one4 Capital, which invested in Mitron, denied that the investment had anything to do with TikTok’s ban.

Pranav Pai, founding partner of 3one4 Capital, told Tencent Deepnet, that they confirmed the investment as early as April and May, but announced it right now. “We have been focusing on experienced product teams, and media and content are areas that we have been focusing on.” Pranav said,”We’re all in Bangalore, so it’s easy to meet and understand Mitron’s products, which is what we’ve been looking for.”

Pranav says 3one4 Capital has been looking for products that have the potential to become “national applications.” “National applications need to be more attractive, easy to use and more democratic, and there are not many such products in India.” ‘This means that the product has to be designed in the mass way from the start, and Mitron’s team understands that,’ he said.

He also believes that even if TikTok is “resurrected”, it does not mean that small platforms like Mitron will not have a chance. “We can help it ensure data integrity and security especially from the beginning, and it can better understand the user because it speaks the same language as the user.” Pranav said.

“The ability of local teams in India to create products for their own countries has been proven over the past few decades. This innovation is continuous, and (the difference is) there will be more such companies with capital support. ” Pranav told Tencent Deepnet.

However, “being the next TikTok” is more than just copying its functionality and interface. Behind TikTok is Byteance’s artificial intelligence, user data and incentive system, while most local teams are still in the first step of improving the product.

According to Tencent Deepnet observation, the product form of local competitors such as Mitron and Roposo is still relatively simple. Roposo has a small number of filters and special effects to choose from, while Mitron only provides simple beauty features and no filters to choose from. In the comments section of App Store, some users asked it to add all the features provided by TikTok as soon as possible to completely replace TikTok. The user, Nithanya thothiyana, even listed the advantages of TikTok on the comments section: 60 seconds of video, uploading existing videos, high definition, more filters, hidden comments, more user-friendly, and better interface design.

Miss the Indian Internet dividend?

If the ban is not resolved within a short period of time, how much impact will it have on Chinese companies going to India?

Li Jian, founder of Zhu Dao Capital, who ploughed the Indian market, told Tencent Deepnet, “the loss mainly depends on the length of the ban. If it can be solved within a month, the loss is not estimated to be so great. From the perspective of input-output ratio, although Indian users have brought a huge number of users to some Chinese companies, they have not brought the income corresponding to the huge number of users. From now on, it can be seen that Chinese companies in India have not yet enjoyed India’s demographic advantage.”

Take Tiktok as an example. Most of ByteDance’s revenue in India comes from TikTok, ‘s operating income of 430 million rupees ($5.741 million) in that fiscal year, including 415 million rupees ($5.542 million) in service fees, 21.6 million rupees ($282400) in advertising and a profit of 33.8 million rupees ($451400), according to documents filed by ByteDance in fiscal year 2019.

In terms of users, TikTok has more than 120 million users in India. In other words, 120 million of users bring only more than 3 million yuan in profits, and the level of TikTok users does not quite match its revenue.

A person in charge of mobile advertising platform Mobvista India told Tencent Deepnet, “the vast majority of the 59 banned APP are our overseas advertisers, including ByteDance, Kwai, UC, bigo, Clubfactory and so on.” Because Tiktok and other companies are banned, some customers in the Indian market are unable to advertise in tiktok and other companies. Customers who have signed up have not yet terminated the contract, which belongs to a wait-and-see attitude, and some applications that have not been banned are still fulfilling the contract.

“One of the important reasons for the low input-output ratio in the Indian market is that India’s infrastructure is not perfect and its per capita GDP is low,” an industry insider who has been to India for field research told Tencent Deepnet.

According to data released by the World Bank, 1/3 of the world’s 1.2 billion poor people currently live in India, and 300 million Indians live on less than $1.25 a day. In other words, although India has more than 560 million Internet users, second only to China, because the per capita GDP is too low, it is difficult for the Indian Internet market to break out the potential and business opportunities of China’s Internet market in a short period of time.

In addition to weak infrastructure and low per capita GDP, “the Indian government’s restrictions on foreign direct investment have also restricted the development of Chinese companies in the Indian market,” the industry insider told Tencent Deepnet.

On April 18, India’s Ministry of Industry and Internal Trade Promotion revised its foreign investment policy, banning neighboring countries, including China, Nepal, Bhutan and Myanmar, from entering India without government approval. As a result, cash-strapped start-ups have to wait up to 12 months and postpone deals with Chinese investors across the board.

Li Jian, founder of Zhu Dao Capital, told Tencent Deepnet that Chinese companies have broken the old ecology after rapidly entering the Indian market with technological advantages or low-price strategies. When its market share is very small, it will not touch the original local ecological interest chain, but when the number of users is large enough, it is necessary to re-establish a new ecological interest chain.

“For example, what are the Indian local competitors for this product, which industry associations are there, what are the government departments responsible for the relevant industries, who are the upstream suppliers, and so on? these are all things that Chinese companies need to know. A new chain of ecological interests must be established, otherwise there are not too many Indian institutions or stakeholders on the side of Chinese companies, so Chinese companies will be easily affected by a bit of policy change. “

“Revising its foreign investment policy is only the tip of the iceberg in India’s business environment. The Indian government will also restrict the entry of foreign companies in various aspects, such as payment business licences. Some Chinese companies that want to enter India can only enter indirectly by investing in local Indian companies when their entry is blocked, “the industry source told Tencent Deepnet.

According to Tracxn, a Bangalore-based start-up investment analysis platform, Chinese companies invested $8 billion in India (including venture capital firms and all institutions in China) as of December 11, up from less than $200m a decade ago.

Since 2014, Chinese companies such as Tencent, Alibaba, Meituan and Didi have begun to invest in unicorn-companies in India in areas such as takeout distribution, ride-hailing services and e-commerce, according to Tencent Deepnet.

Ritesh Banglani, a partner at Stellaris Venture Partners, said on Twitter that India is a country that lacks venture capital, and some policies are still restricting the venture capital industry. This is not conducive to the development of Indian start-ups, they need more Indian capital companies.

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This article was originally writen by the Chinese media Tencent DeepNet (腾讯《深网》) and translated by PandaYoo.com after it was licensed. Copyright belongs to the original author and it is forbidden to reprint without permission.

Authors: Luo Ruiyao, An Ran
Chinese editor: Xiao Kang
DeepNet, A news column presented by Tencent Xiaoman News Studio.