Chinese internet giant Tencent Holdings has just led a $100 million funding round in MX Player, marking its foray into on-demand video streaming in India.
Originally launched as a video playback app in 2011, MX Player has since grown to be India’s second-largest over-the-top (OTT) service. The South Korean firm, bought by Times Internet for Rs1,000 crore ($143 million) in June 2018, boasts of a loyal viewership.
Over the last year, it has churned out scores of original content across various regional languages. Just this month, it announced 20 original shows for release by March 2020, taking the tally for the financial year to 35. Plus, it has over 100,000 hours of licensed content from platforms like AltBalaji, The Viral Fever (TVF), Arre, and SonyLIV.
“We’re happy to welcome our new partners, whose investment is a glowing endorsement of our stellar growth and huge future potential,” Karan Bedi, CEO of MX Player, said today (Oct. 30) in a press release announcing the fund infusion.
After this latest round, MX Player will be valued at $500 million, TechCrunch reported. Although that pales in comparison to Netflix’s $140 billion and Amazon, which hovers around the $1 trillion-mark, it is a sign that competition is heating up.
Yet, MX Player has one strong advantage over rivals in price-sensitive India: it’s free.
“The market is fairly big and given MX Player’s model of not charging users, but earning from advertising, it can add to this market rather than cannibalise from established players,” Yugal Joshi, vice-president at Texas-based consultancy Everest Group, told Quartz.
India’s online video-streaming market is poised to breach the $823 million-mark by 2022 but, for Tencent, this is bigger than just a video bet. It’s an India bet.
Prior to MX Player, its investments in India have been vast and varied, data from startup analytics firm Tracxn show.
“It is a good sign for the Indian startup ecosystem as Tencent’s association with any startup is indeed a big thing given the deep pockets and experience of Tencent in almost every disruptive trend in China,” said Joshi. The same goes for rival Alibaba and other Chinese names like Shunwei Capital, Fosun Tencent and Xiaomi, who are all actively investing in India’s budding businesses.
However, “these investments aren’t for RoI (return on investment), as none of these companies are making money, but for market domination and creating a brand that people can relate to,” Joshi explains.
Startups are Tencent’s biggest and perhaps only bet in the country now, considering its attempts to launch WeChat in India failed miserably. (Interestingly, Hike, one of its Indian investees, tried to go the WeChat-way and bundle its apps, but it has since changed its strategy and split up the apps again.)
For the most part, to cement its position in the ecosystem, Tencent’s bets in India have been measured with other marquee investors also participating in its rounds. When it pumped money into leading Indian e-commerce marketplace Flipkart (now owned by Walmart) in 2017, Microsoft and eBay also funnelled in funds. The same year, it pumped money into ride-hailing startup Ola alongside Japanese investing behemoth Softbank. Next year, it joined South Africa’s Naspers to back Bengaluru-based foodtech firm Swiggy.
Further, the startups have mostly been at the forefront of their sectors. Of the 19 unicorns (private startups worth over $1 billion) in India, Tencent has backed at least five.