VerSe Innovation’s Josh Is Fizzling Out

VerSe Innovation is struggling to keep its Josh going.

After bagging $805 Mn in 2022 — the biggest cheque that year — and raising nearly $1.5 Bn in its lifetime, the Josh and DailyHunt parent company is still stuck on the one question that most startups go through even one day one i.e. monetisation.

The revenue challenge is particularly hard on Josh, VerSe’s short video app that had all the momentum on its side just two years ago. The startup raised the money and acquired users to take short video platform Josh to the top of the pile of Indian short video apps over the past few years.

But Josh is now yet another example of an Indian short video app falling short of the mark.

The optimism around short video apps, which boomed in 2021 and fizzled out soon after, has proven to be misplaced. We have seen the situation at Sharechat’s Moj, Trell, Roposo, Mitron, Chingari and half a dozen other short video apps, all of which faced massive monetisation challenges. 

But Verse was bullish about Josh even through this downturn. In February 2023, VerSe’s cofounder Umang Bedi said the company is aiming to take Josh to the public markets in the next few quarters saying that the platform has started making money.

However, Inc42 learnt from sources that Josh has considerably scaled down its operations, letting go of 50-70 employees in the last two months even as monetisation continues to pose a challenge. 

While VerSe Innovation did not respond to our questions, sources close to management said these were a part of a routine performance review, with various employees asked to put down their papers. 

As per sources, the layoffs impacted senior employees who were drawing higher salaries than others. We were also told that team leaders often spoke about VerSe’s soaring losses, as a result of various initiatives that were shunted. 

“However, amidst this restructuring the company continued to hire freshers and others at junior positions,” one source told us. 

The retrenchments occurred after VerSe announced the acquisition of US-based magazine subscription platform Magzter in April 2024, as it looked to strengthen the content delivery business of Dailyhunt and One India. But none of these verticals are profitable, and therein lies the big problem for VerSe. 

Josh, which requires the most marketing dollars, is the heaviest weight around the company’s shoulders. 

In FY23, VerSe Innovation managed to cut its losses by 25% to INR 1,909 Cr from INR 2,563 Cr even as the startup’s operating revenue zoomed 51% to INR 1,456.5 Cr in FY23 from INR 964.7 Cr in FY22. Dailyhunt contributed more than 70% to this revenue, while Josh’s standalone revenue was INR 300 Cr. 

Given that VerSe raised more than $800 Mn (INR 6,700 Cr) Mn just over two years ago, these revenue figures make for lacklustre reading. It’s unclear whether VerSe has managed to scale up its revenue and profitability in FY24. 

So the question is will Josh also join the long list of dead short video apps in India or is there some life left in VerSe’s short video bet? 

How Josh Lost The Game Of Algorithms 

Most Indian short video apps — including Sharechat-backed Moj, Trell, MX TakaTak, Chingari and others — fizzled out due to their inability to retain advertisers and users for a long period. Advertiser attrition hurts the only source of revenue i.e ads, while de-growth on the user side means the virtuous cycle of engagement and content was broken. 

Sources say Josh has gone through all of these challenges in the past year. In addition, some key initiatives and customer acquisition strategies did not work out for the parent company. 

As per data sourced from Data.ai, Josh’s monthly downloads have fallen by nearly 80% — from around 6 Lakh in July 2023 to 1.1 Lakh in June 2024. Similarly, the monthly active user (MAU) base has also fallen by more than 50% from 20 Mn in July 2023 to 9.4 Mn in July this year.

Sources alleged the quality of content on Josh, as well as content moderation was substandard. Secondly, due to poor recommendation algorithms, engagement was always an issue, particularly on trending topics where Instagram, and Youtube Shorts have the edge.

“The user experience on Josh has deteriorated considerably since 2022 with algorithms no match to Instagram, Youtube which have better AI/ML algorithms and such platforms have almost captured all the viral, trending themes. Sometimes such organic trend content shows up on Josh days later,” another source claimed, adding that daily and monthly active users have seen a consistent slide in the past two years.

Another source well versed with Josh’s operational execution alleged that the platform was home to numerous bots (automated accounts) following some of the more popular creators and influencers. This resulted in some reputational damage for Josh among creators as well. The tactic attracted brands for some time, but most caught on eventually. 

“The inherent problem with such platforms is that old content is being pushed consistently to engage audiences from tier 2, 3 towns and this was combined with fake followers and fake views. But this is bound to flop as everyone will find out soon enough,” according to Pranav Panpalia, founder of Delhi-based influencer marketing agency Opraahfx. 

Brijesh Awasthi, founder & CEO of another homegrown social network platform Netclan Explorer, believes that building social media platforms has proven to be a capital intensive exercise which can only be sustained for some time, and organic user acquisition is key for the long run.

Cost Cutting Squeezes Out Creators

Besides the alleged fake followers, creators were also not seeing a revenue upside with Josh.

Nearly a year ago, Josh launched Creator Pro programme in a strategic shift to pay creators based on the engagement they can drive, instead of a fixed sum per month, which was roughly around INR 10,000 for smaller creators. 

“The shift to engagement-linked payouts turned out to be a disaster because the payouts were negligible. Creators could collect diamonds for a certain number of likes, but this was only equivalent to 1 paise or 1/100th of a rupee. So the creators were paid a meagre amount for the work they put in to get the likes and followers,” another person who was until recently a part of the community engagement at Josh, told Inc42. 

When it comes to brand campaigns, micro-creators (between 1K to 10K followers) are paid between INR 10,000 and INR 30,000 per video post, whereas those with higher follower counts were paid INR 50,000 per post. 

“In these campaigns, brands allocate some budget to pay creators and platforms get their commission too. Right now, Josh has around 3,000-5,000 micro creators who don’t charge much for content,” said another source who is well versed with the content management at Josh.

The person quoted above claimed that influencers with huge following Sameesksha Sud (60 Mn+ followers), Vishal Pandey (43 Mn+ followers) are paid up to INR 30 Lakh per year by Josh as a retention strategy. 

Influencer agency founder Panpalia said other platforms don’t have to pay such hefty retainer fees. YouTube, for instance, only shares revenues with creators that can get good engagement and the rest of the income that the creators draw is from brands or minimal ad-sharing from YouTube.

“However, there is a huge difference in the payouts between some of these Indian platforms and YouTube which has also led to influencer exodus from these short video apps,” he added.

No Country For Short Video Apps

This is a far cry from how VerSe Innovation catered to creators after it had raised funds in 2022. Many were given perks such as travel expenses, verified accounts and fixed pay to get them glued to the platform. All these have vanished slowly.

Josh also tried on-ground activation activities to draw in more creators and users in different states of the country.  The Josh Ambassador programme also saw VerSe Innovation splurge to retain creators and get them to refer other creators for bonus payouts. Both on-ground events and Josh Ambassador programmes have now been wound down to cut costs.

With many of these creator-centric activities now shelved, Josh is back to square one in many ways. Revenue is still heavily dependent on ads. And while Josh does get its fair share of regional language ads and political ads (for the 2024 General Elections), these are unlikely to go a long way in solving the revenue problem. 

“For instance,  a popular FMCG brand may want to target the Bihar market and Josh will provide them with a structured advertising campaign deal to target audiences in the region, saying that they have a fixed number of creators and influencers in Bihar for content creation,” another source at Josh told us. 

Our sources added that revenue from regional language ads has so far kept Josh running, but the revenue upside for campaigns in niche markets is low. To build on this scale, the company needs to crack other avenues of monetisation. 

User revenue is sorely missing for Josh and other apps of its kind. 

Ultimately, the demise of the Indian short video space is largely due to the fact that these platforms do not have the luxury of a long road to monetisation like early platforms such as Facebook or Twitter. 

For instance, neither Facebook nor Twitter had major sources of monetisation for a long time after their inception, but that was a different era, where a category was being created. The likes of Josh do not have the same luxury, and as such had to crack monetisation much faster than their western counterparts. 

We have not seen stickiness to any of the gamification features or subscription products launched by many of these platforms. And almost all of them are plagued by below-par experience for both users and creators, so is it any surprise that India’s short video ocean is littered with sunken ships? 

[Edited By Nikhil Subramaniam]