Small payments, big impact: Digital content companies adopt sachet culture

The digital landscape in India, with its vast user base of over 1.2 billion active internet users, provides a fertile ground for a diverse array of businesses. While these businesses may operate in different sectors, they often encounter a common challenge: finding a sustainable monetisation model.

In this dynamic digital environment, where platforms like Netflix and Dream11 rely heavily on net banking-initiated transactions for revenue, the payment methods different businesses employ can vary significantly.

However, the Unified Payment Interface (UPI) has gained significant traction in India, facilitating transactions worth trillions of rupees and being used by hundreds of millions of individuals and merchants.

What's particularly intriguing is that approximately half of the UPI transactions can be categorised as small or micropayments, with amounts as low as Rs 200. This growing popularity of micropayments has caught the attention of digital businesses seeking innovative monetisation strategies.

Embracing micropayments, involving frequent, smaller purchases, could be the key to propelling digital content platforms into their next phase of growth.

This approach is reminiscent of the "sachet sales model" used by fast-moving consumer goods companies to boost revenue during periods of decreased demand.

afaqs! spoke to the heads of PocketFM, Winzo, and FanCode to understand how they identified micropayments as a viable revenue stream and how they have been able to utilise the sachet model of business in the digital space.

Edited excerpts:

Yannick Colaco, co-founder, FanCode

The establishment of micropayments as a sustainable business model finds its roots in the foundational principles upon which FanCode was conceived.

FanCode's inception revolved around a product-driven approach to cater to the ever-evolving landscape of digital content and in constantly innovating to create value for sports fans in it.

For us, every facet of our platform is crafted based on deep insights into our users needs and the value we can provide to them. In our case, our user base predominantly consists of passionate sports fans.

Whether it's a tournament, a championship game, or a series, users often sought to access a singular piece of content. Yet, they were frequently confronted with rigid subscription models that compelled them to commit to annual or monthly packages, even if their interest was in just one event.

Our research illuminated a crucial aspect of consumer preferences - the desire for flexibility in selecting and paying for the events they genuinely care about. In response, we integrated this much-needed flexibility into our product.

At FanCode, we empower our users to choose the specific sports events they wish to access. This allows us to create a more personalised experience in giving sports fans the ability to follow their preferred teams or tournaments seamlessly on the platform.

One of FanCode's USP lies in offering user value through flexibility. This flexibility resonates deeply with sports fans, fostering a sense of loyalty and appreciation for our platform

Paavan Nanda, CEO, WinZO

When we embarked on our journey, the goal was clear: to establish a viable path to monetisation and create a profitable enterprise within a couple of years. Monetising content in India posed unique challenges, as substantial in-app purchases weren't favoured in this market, which limited the monetisation possibilities for Indian gaming products.

As we introduced monthly subscriptions, we observed a trend: users preferred smaller subscription options. During the initial years of WinZO, users leaned towards more modest commitments due to trust issues with online payments. India's digital payment landscape was still evolving, and people harbored hesitations when engaging with a new platform.

This trust deficit manifested on multiple fronts. Firstly, users questioned the legitimacy of the platform itself. Secondly, they pondered whether they would genuinely enjoy the product they were considering.

In response, we introduced microtransactions and micropayments, offering users the option to pay as little as Re 1 per game. This approach addressed two critical aspects.

First, it catered to users' desire to start small and cautiously, gradually building trust. Second, it acknowledged that as users' comfort and trust in the platform grew, they might be inclined to invest more over time. For example, a user initially spending Rs 50 in their first month might eventually feel confident in spending Rs 600-700 over six months. 

Microtransactions made our product accessible to a wider audience, offering flexibility that proved a significant breakthrough. Over the past two years, we've grown exponentially, with revenues increasing nearly twentyfold, a player base exceeding 15 crores, and a surge in transactions.

Nishanth S, co-founder, Pocket FM

In 2021, we introduced audio series content—a serialised fictional audio storytelling format, revolutionising audio entertainment. When strategising potential revenue models for Pocket FM, we questioned whether our listeners would be willing to pay, understanding that despite enjoying our product, they hesitated to open their wallets.

In 2022, we experimented with micropayments for content monetisation, tailoring the approach for our listeners. This proved instrumental in not only reducing entry barriers with sachet-like pricing but also enabled us to attain a broader and more extensive audience reach. 

Our approach allows individuals to purchase platform coins at varying price points, creating a versatile pricing structure. These coins can then be used to unlock single or multiple episodes from any audio series, with market-specific price tiers that cater to local preferences. In India, this journey starts from just a Rs 9 trial pack.

These trials yielded impressive results, seamlessly complementing each other in a symbiotic relationship. The cornerstone of our monetisation framework now revolves around the micropayment approach. The approach not only underscores the preferences of the Indian audience but has also resonated strongly across global markets, including the US.

We were driving almost negligible revenue before introducing this model in February 2022, and we have grown over 4000% since then. We are registering about 1.5 million monthly transactions and are going to soon surpass US$100M ARR (annualised revenue run rate), beating our own projections.