TECH
16/10/2019 7:25 AM IST

From Sales To Streaming — Why Are Flipkart And Zomato Making Movies?

New Internet users in India aren’t used to buying things online. So e-commerce companies are investing in original video in order to keep users around on their apps.

Zomato Originals

AHMEDABAD, Gujarat—In late August, Flipkart announced it’s adding a video-streaming section which will host syndicated and original content on its main shopping app. A few weeks later, Zomato entered the space with its line of original shows — all of which will be available on its food discovery and ordering app for free. Further, Paytm is rumoured to be integrating an OTT platform right inside its digital payments app. 

So why are e-commerce companies trying to make their users watch videos?

Look around you—everyone is hooked to watching something on their screens now. This was driven home to me in a recent auto-rickshaw ride.

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We had just pulled up at a red light and the rickshaw’s driver, Ashok Patel, scrambled to launch the live stream of a cricket match he’d been trying to keep tabs on while steering us through Ahmedabad’s rush hour traffic. The HD-feed began playing almost immediately on Hotstar and Patel was delighted that Rohit Sharma was in form. 

Aap Hotstar dekhte ho?,” I asked him out of curiosity. 

“Hotstar?,” he responded. 

Ye jis pe aap match dekh rahe ho?” 

“Hotstar ka pata nahi bhaiya, ye sab toh Jio ki den hai,” he quipped.

Hotstar, a Disney India-owned video streaming service offers live sports content for free to subscribers of India’s leading telecom operator, Reliance Jio

Patel isn’t the only one. Auto drivers, bus passengers, taxi drivers—all hunched over holding their phones in the landscape orientation and watching everything from sports channels to original web series on any of the thirty streaming platforms available in the country. 

An Eros Now-KPMG study predicts more than 500 million Indians will be streaming videos online by 2023 — up from the current 325 million, and trailing China (at ~600 million) by just a fraction. An average user in India today spends a little over an hour streaming videos daily, the report added. 

“Video streaming in India has seen an exponential growth in the last 2-3 years on the back of democratization of access,” said Girish Menon, Partner, and Head, Media and Entertainment, KPMG in India. “With a thrust by telecom operators on 4G, high speed broadband has reached close to 570 mn screens in 2019, Further, affordable data prices and a surge in smartphone consumption has meant that customers are now consuming data on multiple screens throughout the day.”

However, of late, entertainment giants like Netflix and Hotstar aren’t the only ones trying to capitalise on this trend.

While it may seem that startups like Flipkart and Zomato simply don’t want to be left behind in the video-streaming race, the reality is that they are aren’t competing with video services at all. They have a different end-goal and it’s especially evident when you pay attention to what’s common among the trio’s announcements. 

None of them is releasing a dedicated streaming app. Instead, they are bringing a relatively narrow content collection to their primary apps. 

Why does a shopping app need to entertain its visitors?

To understand this, we have to look at what’s driving India’s soaring internet figures. Last year, the number of people online from rural regions grew by 35%. Reports say about half of India’s ~500 million Internet users reside in underdeveloped areas, and 50 million more people from these areas are expected to sign up by the end of the year. 

Shopping and spending money online are new ideas to these users. Entertainment has a cultural relevance no other Internet activity can match and that’s never been more apparent than during the country’s data boom. 

By tapping into what this set of first-time Internet browsers are comfortable with, companies such as Flipkart and Zomato hope to eventually turn them into potential customers of their core businesses. 

Stu Forster-ICC via Getty Images
Live cricket broadcasts and a freemium have helped Hotstar grow rapidly in India.

“We believe that great content, if made available to a wider base of consumers, specially to those who are new to e-commerce but not necessarily the Internet, can bring them on-board on a daily basis, helping negate any anxiety that they may have towards online shopping,” said Flipkart’s Vice President of Growth and Monetization at Flipkart, Prakash Sikaria. 

Zomato, in addition to luring new users through original content, wants to increase how often an existing customer visits its app, for how long it stays there, and offer them a way to pass their time while they wait for their order. “With the videos section, we are filling a few gaps — the gap between the moment an order is placed and the moment it is delivered — approximately 30 minutes — by keeping the user entertained,” Durga Raghunath, Senior Vice President, Growth, Zomato told HuffPost India.  

Paytm didn’t respond to our requests for a comment. 

Brands need customers to spend time on their apps

“There is a significant possibility that in Tier 3+ markets in India, consumers would experience the Internet for the first time with online video hence making it a gateway tool for a true ‘Digital India’,” mentioned the KPMG report. 

Companies also pick the content’s theme depending on what they are selling. For instance, Zomato’s originals largely centre around food. In addition, Flipkart is developing a tool that will allow a user to directly ID and shop a piece of apparel they liked in a video. 

“All utility apps like e-commerce, food delivery etc need their customers to stay on for more time and explore what is available. I think more than anything these utility services should look at capturing the time using high quality short format content that works with their brand,” says Sunil Nair, who is the CEO of Firework India, a short-form video app, and ex-COO of entertainment conglomerate, ALTBalaji

Apart from video content, a range of startups including Flipkart, Zomato, and Paytm have tried their luck with in-app games to spur engagement. Games, however, don’t have the same, widespread adoption as games. 

Beyond this handful of startups, tech companies are cashing in on the lure of videos to get people to invest in their broader ecosystems. A few weeks back, in a surprising turn of events, Apple — which has been struggling to regain its lost market share in India ― announced its new streaming platform will cost just Rs 99 (~$1.3 undercutting rivals such as Netflix and Hotstar. 

“With the growing user base and access to a plethora of content, the propensity to pay for OTT platforms is also likely to increase in the future. However, with more than 30 OTT platforms currently, not all of them are likely to have a viable business case and one could see some form of consolidation beginning to happen, once this phase of land grab is over,” anticipates KPMG’s Menon.