Why is Amazon buying MX player at 75% discount?

From ₹1,000 Cr to ₹350 Cr points to the money insight in OTTs.

May 17, 2023

Welcome to the 150th edition of the GrowthX Newsletter. Every Tuesday & Thursday I write a piece on startups & business growth. Today’s piece is going to 95,300+ operators & leaders from startups like Google, Stripe, Swiggy, Razorpay, CRED & more

Times Internet bought MX Player for ₹1,000 Cr 💸
3 years in - Times is selling MX Player to Amazon 🥹
Here's why MX player is having a fire sale at ~₹350 Cr ⬇️

Go back to 2018 🗓️

MX player reached over 175 million monthly active users. Times Internet took a bet & acquired the company at ₹1,000 Cr & MX player switched the game from that point onward.

'SD card' to 'Content led growth'⚡️
Hugely popular in India as a way to play media files from an SD card on a smartphone, MX player wanted to introduce 20+ original shows and 50,000 content pieces in 2018.

The freemium content game 🕹️
It wanted to launch an alternative to television in India. First, it wanted to build habit of consuming streamed content on smartphones & then scale subscription business.

Why is MX player being sold at 75% discount? ⬇️

First/ MX player did grow it's user base 💙
It went from 175 million in 2018 to 350 million monthly users - banking on series like "Aashram" that record 100 million views in just 32 hours. Massive!

Second/ Paid subscriber hasn't grown much 💔
The jump in free subscribers on ad-based viewer model hasn't really created a massive jump in paid subscribers (ad-free) experience, generating ~$2mil from subscriptions last year.

Third/ the advertising revenue isn't great 🪙
MX player generated $34.7 million from ad revenue last year on a monthly active base of 350 million users. It really low compared to it's massive user base.

Fourth/ the napkin math shows an insight ⚡️
Napkin math shows it takes ~₹20 to show an ad 1000 times on MX player, meaning advertisers aren't paying as much to show ads to the 350 million user base.

Sixth/ content creation is expensive 📊
MX player spent a bomb amount of money building the original web series & hasn't recouped it with 'ad + subscription' revenue. It limited the ability to build newer content that can drive more revenue. It's a continuous growth loop.

What does it mean for India's OTT players? ⌛️

Paying for content is still an alien concept for most Indians. Guess how many people pay for YouTube premium in India? 0.8 million, compare that to YouTube active base of 468 million.

Monetisation is insanely hard for OTTs 🥹
Especially with Jio like players giving away IPL streaming for free and destroying the concept of paying for content - even highly watched content like IPL.

What could solve this at scale? 🙇🏻‍♂️
Short answer - value of time. An avg. Indian don't value their time as much as they value money. That's also because the upper limit to their earnings per hour is limited & until that gets solved (per capital income grows), value of content will always be ~ ₹0.

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