Mainland Chinese behemoth Tencent’s investment into India’s MX Player ratchets up an already frenzied streaming environment. It also marks a warming in the relationship between two gigantic markets with radically different media environments. Vanita Kohli-Khandekar looks at who’s hoping for what in this new alliance.
Can an investment from a Chinese firm, help an Indian OTT player beat its American and Indian competitors?
In October this year, mainland Chinese giant Tencent Holdings paid US$110 million for an undisclosed stake in MX Player, an OTT brand owned by the Times Group, one of India’s largest media firms with estimated annual revenues of US$1.5 billion. The investment, says MX Player’s chief executive Karan Bedi, will “give us more power to compete with peers”.
At approximately 120 million users, MX Player is one of the three largest OTT players in India, behind Disney’s Hotstar (300 million monthly active users) and YouTube India (275 million, according to Comscore).
Before it began streaming more than 100,000 hours of content in October 2018, MX Player was just a video player. The Times Group bought the platform in June 2018 from Korea’s J2 Interactive for US$140 million, primarily because 175 million of its total 350 million users were from India. This makes it the default video player on most Android phones, which dominate India’s billion-plus mobile user market.
The challenge was migrating an audience that used the player as a piece of software to download content to using it as a streaming app to watch video entertainment. While the Times Group’s empire spans newspapers, magazines, radio, outdoor, streaming music and some of the biggest internet properties, it is not a video entertainment force in the mould of Hotstar parent Star or Zee5 parent Zee. There was some lifestyle, cinema and news content from sister firm, Times Broadcasting, but that was about it. In February 2019, MX Player added originals. By November this year, 15 new originals, ranging from Hello Mini to Flames (now in its second season), had premiered.
So far, about 120 million users have migrated to the ad-supported streaming service. MX Player still serves ads to users of both the streaming video and the original tool. “The first challenge we managed to overcome was to get tool-users to become video users,” Bedi says.
The next challenge, which is where Tencent’s investment comes so in handy, is scaling up in one of the world’s fastest growing streaming video markets.
The estimated US$1.2-billion OTT market in India is awash with apps – 35 compete for about 600 million broadband users.
Tencent brings in not just capital to invest in content but also an understanding of young consumers, video and the internet.
The content ramp up has already begun. Twenty more originals are in the pipeline. This will take MX Player’s tally to 35 by March 2020.
And user growth continues. About 200 million people now use the MX tool. The next drive involves nudging them onto the streaming service.
“There are 500 million people with smartphones in India. So in the short-to-medium term there is huge headroom to grow in the entertainment economy. India is a single-TV home market and demand for streaming continues to grow,” Bedi adds.
Then there are the beta steps in the U.S., Canada, Australia and New Zealand, where MX Player is looking beyond the Indian diaspora service option to partner with local firms for local content.
”In two years, we should be live in 20-30 countries,” Bedi says, adding that MX has “a real shot at being a large global player in entertainment”.
There is a third subliminal factor at play.
Hong Kong mogul Richard Li launched Star TV using AsiaSat-1, the only satellite broadcasting over 38 Asian countries, including India and China, in 1991. In the summer of 1992 he tried to lease out satellite capacity to several Indian media firms; The Times of India was one among many that refused to pay US$5 million a year for a transponder. Zee founder Subhash Chandra did, using it to launch Zee TV and changing the course of media history. Zee Group and Star are today India’s largest media firms.
More importantly, the power equation changed. In 1993, when Li sold Star TV to Rupert Murdoch’s News Corporation, print’s share in India’s total ad pie was 60%. In 2018, this dropped to 18.3% – albeit on a much bigger base. The Times Group clearly missed the broadcasting bus. MX Player is, arguably, its attempt not to be left behind again. – Vanita Kohli-Khandekar