India’s oldest music streaming company Gaana is leaving no stone unturned to keep itself afloat.

A thriving music app until a few years ago, Times Internet Ltd-owned Gaana is currently dealing with losses, unpaid dues and an unsuccessful search for investors so far.

A possible acquisition by Bharti Airtel, which owns a competing app Wynk Music, last year rekindled its hope for some time, but the deal fell through. Airtel reportedly offered $12.6 million or about Rs 100 crore, a steep devaluation of 2.5% compared to its $580 million valuation in 2021. A search for investors is still on, sources said.

Gaana was the top music streamer with 30 percent share of streams in India’s music and audio streaming market in 2020, as per a report by Kantar and VTON.

Now, Spotify, which entered the Indian market in 2019, leads the market with a 26 per cent share of streams (ahead of Reliance's Gaana, JioSaavn, Airtel's Wynk, Apple Music, YouTube Music, Amazon Prime Music, etc.), according to a Redseer report in 2023.

Revenue, losses and fundings

Gaana amassed much of its audience in less-populated tier-II, tier-III and tier-IV cities, which the platform has keenly targeted with a combination of tiered pricing, regional Indian language content and user-friendly features such as voice-based search. It also launched a short video platform HotShots in mid-2020, following the ban on TikTok in India.

The digital music platform has raised over $242 million to date, including $40 million from Tencent Holdings in June 2021, as per Tracxn estimates. Tencent, a Chinese firm, had initially acquired a stake in Gaana via a $115m investment in the company in Feb 2018 which went up to 34.4% following the June 2021 funding.

The parent company Gamma Ganna Ltd reported Rs 126 Cr ( Approx $16 million) of annual revenue along with losses to the tune of Rs 316 Cr (Approx $35 million), as per its FY22 filings with the Registrar of Companies, obtained from Tofler. In FY21, losses were in the range of Rs 335 Cr.

Advertisement and promotional cost in FY22, one of the major expenditures, touched Rs 118 Cr even as it contracted by 24.5%.

According to the company’s LinkedIn page, it had 150 million monthly active users (MAUs). Sources said, “The company’s revenues didn’t keep pace with the rise in MAUs. While the number of paid subscriptions grew more than two-fold in the first half of 2020 compared to 2019, they accounted for a little over a third of the total income.”

“It had gone behind a paywall after the setback. However, the move is not paying the dividends it expected, as revenues, flat for the past three years previously, have remained at virtually the same level in FY22 also,” a top ad executive said.

The company has lost a few key executives over the past couple of years. While the CEO of Gaana, Prashan Agarwal, who held the post for five years, stepped down in March 2021, Director Joy Basu and Po Shu Yeung resigned in June and Sep 2022. Another director Mitesh Sampat retired in Sep 2021 without any extension.

Times Internet didn’t respond to e4m queries with regard to Gaana’s devaluation and losses.

“As of FY22, the Company’s net worth is fully eroded. These events and conditions indicate a material uncertainty related to the going concern of the Company. The Company has already taken various measures aimed at improving the financial condition of

the Company, inter-alia, proposed sale of Gaana business undertaking as a going concern on slump sale basis on a debt-free and cash-free Basis,” the company stated in its financial statement.

“The Company has undertaken various cost savings initiatives to conserve cash, which includes a complete restructuring of business i.e. moving from an advertisement-based model of revenue to a subscription-based model, re-negotiation of the terms of the agreement with all the labels, etc. Further, the Company has also signed an agreement from its Holding Company Times Internet Limited of 7,500 lakhs for subscription of optionally convertible debentures Series B1,” it further noted.

“It is becoming increasingly difficult for audio streamers to monetise their service mainly due to the rise of other digital platforms such as ecommerce and short videos. In terms of subscription, OTTA can do little as consumers are not ready to pay. A large number of consumers prefer free audio service such as YouTube AvoD, Airtel Wynk and Amazon Music which comes free with Amazon Prime membership. Subscription fee can’t go down further as platforms have to spend a lot on royalties. Perhaps that’s why Gaana could not scale up its subscription and ad revenue,” says analyst Karan Taurani.

A top executive of a global media agency said, “User preferences and consumption habits evolve rapidly, demanding constant innovation and personalized content curation. If you fail to address changing market dynamics, your growth would be hindered.”

MX Player

The video streaming platform MX Player was initially developed by Karan Bedi in 2011. Bedi is currently the CEO of the firm.

It was acquired by Times Internet Limited (TIL) in 2018 for about $140 million. Following the acquisition, MX Player raised $110 million in its Series A round from Tencent at a valuation of over $500 million, as per Tracxn.

MX Player saw significant growth in recent years, with its popularity driven by a wide range of video formats, reliability on low-cost Android smartphones, and original content offerings. It also allows its users access to live cable TV channels and news channels at no charge.

“At that point, it had an edge over its competitors as it already had a large customer base, more than double that of premium streaming services. As an A-VOD service, MX Player was able to thrive among young audiences who were keen on viewing video content on mobile phones without shelling out large subscription fees.” experts told e4m.

However, it started losing ground to other players such as Amazon Prime Video and Netflix who invested heavily in their content and at the same time launched cheaper plans to woo the Indian audience. Macroeconomic headwinds that impacted digital advertising globally in FY22 came as a further blow to the Indian OTT player.

Company’s annual losses mounted to $70 million (approx Rs 500 Cr) over the operating revenue of $36 million and expenses touched a whopping $134 million (Rs 1,000 Cr) in 2022, as per company financials, reported by Inc42.  “This suggests close to Rs 4,500 Cr have been spent in three years, yet the business went from bad to worse,” an expert said.

Like Gaana, MXP also saw exits of key people over the last few months such as COO Nikhil Gandhi and Senior Director and Head of Strategic Partnerships Aditya Jhamb.

The streaming service was put on block by TIL early this year. As per latest Comscore rankings, JioCinema’s reach has touched 29.2% compared to 22 % of MXP as they occupy the top 2 and 3 positions with YouTube being number 1.

“MX Player was an aggregator of a large variety of players, including news players but its valuation dipped due to a range of reasons. First, MX Takatak lost steam when Instagram picked up in India. It could not scale up its AVoD business the way it was supposed to. Then, other aggregators like YouTube expanded their reach. The surge of JioCinema, which offered content free of cost and later streamed IPL as well, caused a big blow to MX Player,” Taurani points out.

According to a recent ET report, MX Player has signed a content deal with DistroTV for an in-app integration. DistroTV offers more than 270 channels worldwide and 180 in India. The development raises hope that MX Player would regain its market position.

An email sent to Bedi and Times Internet received no response.