Tencent Holdings, China’s internet mastodon is again making sensation in the Indian market with another colossal investment. Indeed, after investing an eye-dropping $1.1 billion in cab-hailing firm Ola, back in October last year, Tencent Holdings are spilling the cash for yet another Indian firm. Gaana, a music streaming app is raising $115 million funding from the Chinese Internet investment company. Times Internet was also participated in this round.
A branch of the Times Group, Gaana.com, wishes to utilize the funding to invest in artificial intelligence (AI). The investment in this new technology aims at personalizing customers’ musical experience. The artificial intelligence will also upgrade the service of subscription for paying users.
Gaana also aims at developing the music experience for its whole user community, according to the statement released.
Tencent Holdings is not new to the music streaming industry as they possess majority of shares in Tencent Music Entertainment, which is the biggest music streaming service in China. Joox, a South-East Asian massive music streaming platform is also operated by them. With the participation of Japanese conglomerate Softbank and others, they also invested $1.1 billion in cab-hailing firm Ola back in October of last year. The Chinese company also owns small stakes in e-commerce business Flipkart, having participated in the round of $1.4 billion with other investors, which comprised of ebay and Microsoft.
The Times Group formed Gaana seven years ago but its only been four years since the use of the mobile application have skyrocketed; with a colossal increase of 700% in the use of the company’s Internet services. A report by Statista predicts that the music streaming segment will be worth $101 million in 2018. Increasing at a rate of 3.8 percent annually, the music streaming business will hit the market volume of $117 by 2022. On average, however, a user currently spends $1.13 monthly on music streaming.
“We are happy to welcome Tencent as a partner to Gaana and benefit from their global learnings. Tencent operates the largest music streaming business in China, and we look forward to working closely with them to continue to innovate and drive the digital music market in India,” said Gautam Sinha, CEO of Times Internet.
Accoring to Prashant Agarwal, chief executive officer, Gaana, the streaming of music is the future of music interaction in the whole wide world. He also believes that the work done by Gaana so far has only reached 10% of its potential for they are now aiming at reaching out to 500 million Indians.
FICCI-KPMG Media and Entertainment Industry Report 2017 states that audio streamed online accounts for 10% of the total mobile Internet usage nationally. The year 2016 saw a huge increase in the amount of music streamed online. Indeed, 50-60 million users were using music streaming applications every month.
India has over 300 million Internet-enabled mobile phones with ever reducing tariff rates. As such, internet usage is growing in spike and the use of music streaming platforms will consequently increase very rapidly as well.
“Gaana is a leading music streaming platform in India, where millions of users stay tuned to its rich music library including its exclusive Bollywood content,” said Martin Lau, President of Tencent Holdings in a statement.
While explaining the reason for investing in Gaana, Lau said, “As more affordable mobile data plans are driving smartphone penetration in India, we believe growth in the music streaming market will accelerate. By investing in and collaborating with Gaana, we look forward to bringing more innovation and better experiences to all Indian music lovers.”
According to Jehil Thakkar, a partner at management consulting firm Deliotte India, music streaming applications have contributed to the rebirth of the Indian music industry in the last few years. The increase in data consumption is a consequence of Reliance Jio’s entry in the internet service market. Prices have deflated considerably while the amount of internet usage received have tremendously increased in all data plans across several service providers in the last year.
“India is a virgin market as far as music streaming is concerned and independent players like Gaana still have to figure out a revenue model given that subscription services are yet to play out and advertisement revenue is small,” Thakkar said, “By the time the Indian consumer learns to pay for content, there will be about two or three players entrenched in the market.”