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Content startups bank on technology to lure investors as new YouTube economy booms

BENGALURU: Start-ups engaged in the business of producing content are hopeful of attracting more investments this year especially if they can showcase technology that promises a massive reach.

The companies expect continuation of the trend that saw digital content platform NewsHunt recently raise $40 million (about Rs 250 crore) from New York-based hedge fund Falcon Edge Capital to fuel its growth. Culture Machine, a new age media company raised $18 million (about Rs 110 crore) from Tiger Global Management and existing investor earlier this month while ScoopWhoop raised Rs 10 crore from Bharti SoftBank in November last year. “The only reason we got funded is because we had technology and content,” said Sameer Pitalwalla, 29-year-old co-founder of Mumbai-based Culture Machine.

Not only does it produce content – its team of 60 has produced two lakh videos so far – but also it identifies trending content and advises brands on the sort of content they should create. It also has analytics and marketing capabilities to help creators, and brands reach out to their audiences at scale through channels like YouTube.

Investors are fast waking up to content version 2.0, tucked away from ecommerce and enterprise start-ups, which is expected to realise its potential as the new YouTube economy flourishes.

“For a long time the industry has ignored content,” said Amit Anand of Jungle Ventures. “We are looking at a few companies actively in India.” Rutvik Doshi, director of Inventus (India) Advisors, which has backed companies such as online bus ticketing platform, also said content is going to go big in 2015.

Ping Network, #fame and Qyuki, are a few companies in the same segment as Culture Machine. Then there are firms like Times Internet-backed Vidooly, which has signed on over 1,000 individual YouTube content creators to use its video analytics product to grow on YouTube.

Content can be sliced across print, video and audio media, and across technological capabilities – aggregation, analytics and publishing platforms.

According to Franklin Hatchett, a surge in 4G roll-outs, higher broadband penetration are all fuelling this trend. India ranks fourth in the world in content consumption, according to a report by Ernst & Young. The country has the largest box office attendance and 160 million pay TV households, and it publishes 94,000 newspapers.

To fill the gap in expertise, multi-city GSF accelerator carved out a new vertical for start-ups focused on the digital media industry in December 2014. It has received 40 applications so far from start-ups across India and is evaluating its options.

“We are experimenting, learning and creating our own expertise,” said Rajesh Sawhney, co-founder of GSF. However, most start-ups hit a wall when it comes to making money from content. Unless content goes viral, it is difficult to make money off it. According to a 2013 report titled ‘The Death of the Long Tail: The Superstar Music Economy’, the top 1% artists made 77% of the total revenue in the digital music industry.

“The content business needs to be scalable. Monetisation will come automatically when we can scale up,” said Sawhney of GSF.

Print publishers such as Aadarsh Publishing are also reaping benefits of going all out across different mediums to monetise Purple Turtle, its gender-neutral animated series for kids. “The next big leap will happen when we do a 52-episode series on You-Tube,” said director Manish Rajoria, who is optimistic about his transmedia strategy of earning revenue.

The 26-year-old company in Bhopal, which became the first Indian player to gets its cartoon licensed to 25 countries including China, has sold a million copies and is adding revenue by licensing its IP for bags, books, T-shirts and apps. On the other side of the spectrum are aggregators like two-yearold Spuul, which purchases Indian TV and film content from content providers and makes it available for streaming across platforms such as Airplay on iOS, and Chromecast on Android.

The company is adding users at a rapid pace of 20% every month in India and is eyeing $150 million (about Rs 930 crore) in revenue in the next three years. “The content producers are stoked by the fact that there is another line in the balance sheet,” said cofounder Subin Subaiah, 63, whose company earns revenue through advertisements and premium subscription model.

Read more at Economic Times

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