TikTok Will Lose Rs 45,000 Cr Due To Ban In India; Will TikTok Alternatives Attract Users?
The Government of India banned 59 Chinese applications on June 29 including notable apps like Shareit, Xender, Cam scanner, Tik Tok, Likee among others.
Now that TikTok and Likee is off the market in India, its clones, Trell, Bolo Indya, Roposo, Mitron and Chingari have seen an increase in the number of downloads. However, the investors say, the competition to replace them is far from over.
With this ban in place, ByteDance, the parent company of TikTok, might lose $6 billion (Rs 45,000 crore) in India.
Read on to find out more…
ByteDance To Incur A Loss 6-Times Its Investment In Indian Market!
TikTok witnessed 32.3 crore downloads in India in 2019, which accounted for 44% of total TikTok app downloads.
In 2020, Tik Tok had 14.5 crore monthly active users and a total of 20 crore users in India.
The Ministry of Electronics and IT (MeitY) made this statement on banning the 59 Chinese apps after the escalating border tensions along the Line of Actual Control (LAC).
The Chinese multinational giant, ByteDance owns 3 of the banned apps namely TikTok, Helo and Vigo Video.
A source told China-based English daily Global Times that ByteDance has invested over $1 billion in the Indian market in the past few years, and might lose as much as $6 billion once business is halted in the country. As you can see, the loss is six-times the amount invested in the three apps combined.
A report suggests that TikTok India might challenge the ban in court. In a statement on June 30, the company said it will meet the government stakeholders to submit clarifications.
Will Tik Tok’s Alternatives Replace The App?
The first step to make any app popular is gaining maximum downloaders. And these Tik Tok’s alternatives Roposo, Bolo Indya, Mitron, Trell and Chingari have achieved just that.
However the investors say, retaining users, getting them to create a digital footprint and making them addicted to the app is crucial in this cut throat market. Creating an app like TikTok will require world class engineering capability and a recommendation and personalisation engine backed by millions of dollars for marketing, user, and creator acquisition.
According to industry estimates, around 12-15% retention in the users is considered good for a short video app. So, a few million downloads just does not suffice in the cut-throat industry, they said.
Anand Lunia, founding partner at India Quotient, which has invested in ShareChat and Roposo said, “The kind of money needed for scaling won’t come into many apps. They don’t have the capability to pool money or build scalable apps. I can bet most apps seeing downloads today will lose 90% of the people within a month.”
Dev Khare, Partner at Lightspeed India,which has invested in ShareChat and RheoTV said, “You need $50-$100 million to even play in this space. Anything less than that is subscale. There is a low barrier to entry but hard to sustain. There are going to be a thousand short video apps, these core capabilities have to be scaled to win,”
Some of these Indian apps are facing bugs, server issues, as well as privacy and security concerns. Many have simply crashed, citing the sudden load of massive signups.
Amit Kumar, Partner at Ah! Ventures, which has invested in Bolo Indya said, “Reaching the level of TikTok will take time and a good amount of money will need to be pumped in. Good user experience is necessary for stickiness. Millennials are short on patience, so you cannot have technical glitches. Social media is all about addiction.”
According to the latest data, TikTok was downloaded 66 crore times in the country since its launch in India. The challenge of user retention can be seen in TikTok’s data.