Pocket FM announces US foray, crosses $25 mn in annualised revenue run rate

Audio streaming platform Pocket FM has announced its international expansion with entry into the US market. The company also exceeded an annualised revenue run rate (ARR) of $25 million as of October and is aiming to clock $100 million in ARR by next year.

“We are glad to have led this category creation with sustainable and profitable growth. As we successfully discovered the content monetisation model in the audio space, our revenue has grown 10x to $25 million ARR in just 12 months. With the continued momentum and expected growth targets, we foresee another 4x growth in our revenue during our fifth year of operations, thus entering the $100 million ARR club within five years of our operations,” said Rohan Nayak, Co-founder & CEO, Pocket FM.

According to Nayak, the $25 million ARR mark was crossed on the back of Pocket FM’s micropayment-led content monetisation and advertising solutions, with micropayment contributing over 90 per cent of revenue. 

According to Statista, audio OTT market in India is expected to be worth $2.5 billion by 2030. Players like Pocket FM, Kuku FM, Audible, Pratilipi FM among others are riding this wave now. The segment got the audience's attention during the pandemic as everyone was looking for new avenues of entertainment. 

Audio OTT much more than music

Over 80 per cent of the platform’s listeners belong to the 15-35 years age group, with a majority of them listening to romance, suspense, thrillers, and family drama. Besides these, Pocket FM has seen an encouraging consumption pattern in the fantasy segment, which has witnessed a 4x growth in listening minutes, the firm revealed in a statement.

Nayak believes that audio storytelling is imbibed in our culture, "Since childhood, we have been more inclined to listen to stories. With audio stories being consumed on the go or at leisure, audio storytelling will always be a companion for any individual act, be it driving, walking, bedtime, cooking etc,” he said.

Founded by a trio of IIT graduates, Rohan Nayak (CEO), Nishanth KS (COO), and Prateek Dixit (CTO) in 2018, Pocket FM was built with a vision to redefine the OTT space with an audio-first approach, and the idea was seeded when audio was a non-existent category, Nayak told Business Standard.

“We got the inspiration for Pocket FM from the long office drives, repetitive and irrelevant music content, and a group of YouTube creators who were putting audio dialogues with a thumbnail, generating millions of views by hacking a video-only platform. There were enough signals for them about the future of audio content,” added Nayak.

The firm operates on a freemium model and offers 3-4 episodes per audio series for free every 24 hours to its listeners. Listeners can, however, continue to binge on more episodes by paying for one or more episodes or the entire audio series.

With the introduction of micro-payment, the company has registered a 10x revenue growth in monthly revenue and is currently witnessing over 500,000 monthly transactions. 

“We have recently rolled out ad solutions and brought innovations in the audio formats for brands and advertisers to garner the audience's attention in a non-intrusive manner. We have done immense experimentation with A/B testing for our sponsored content, and we have understood the best possible access point for the advertisers without affecting the storytelling and listening experience,” Nayak added.

An audio series is long-form or serialised fiction audio storytelling like a TV series. These have been the company’s core focus and unique proposition, with this category dominating consumption on the platform registering over 90 per cent of the listener time spent.

The firm launched Pocket Creator Studio where writers with a creative bent of mind for audio series can register themselves to create audio series. The platform has 500,000 creators.

“We have pioneered the behaviour of binge-listening in the audio space, with our listeners spending an average of over 100 minutes daily. We have also made immense contributions to the creator economy, from identifying potential creative minds to nurturing them for the next level with Pocket Creator Studio and keeping them motivated financially by compensating for their creative pieces,” Nayak added.

The platform has recorded a 270 per cent year-on-year increase in its audio series catalogue, currently offering a total of 733 series.

In addition, Streaming on Pocket FM has increased by 75%, surpassing 40 billion minutes in its 4th year.

The top five cities driving demand for the audio streaming platform include Bangalore, Mumbai, Delhi, Pune, and Hyderabad.

With good traction in the Indian market the founders now want to pursue the international markets. 

Expansion mode

When asked why the firm decided to foray into global markets, Nayak said that audio series is a new entertainment category and has immense potential globally. While Pocket FM validated the huge demand for this category in India, Nayak believes that audio series will be a global entertainment category.

“As we scale up to emerge as the global audio series platform, we will continue to strengthen our content library, and nurture and grow our creator community across the world to keep our listeners entertained,” Nayak said.

To find success in the US market, the company will replicate its growth and content playbook of audio series for the US audiences and will continue to expand its creator community to create high-quality series.

Speaking about Pocket FM’s competitors, Nayak does not see anyone competing with the company due to their unique offerings with audio series. The brand is building its content library for everyone looking for audio entertainment.

“Targeting every smartphone user with an eartime, we are building one of the largest libraries of audio series,” Nayak said.

Pocket FM has raised a total of $93.5 million until now, including a $65 million series C funding round that took place in March earlier this year. However, the firm has been receiving invites from the investor community to explore possibilities due to its growth trajectory, Nayak revealed. Some of its investors include Tencent, Lightspeed, Tanglin Venture Partners, Goodwater Capital, Times Group and South Korea's Naver. 

Pocket FM is also doubling investments in its AI/ML (artificial intelligence and machine learning) capabilities and is concentrating on building an advanced personalised content recommendation engine to drive higher user engagement and retention.

It is also building cutting-edge generative AI capabilities across NLP, text2speech, and image, which will drive faster production and content testing. Further, the firm is ramping up its AI capabilities for automated content moderation and quality testing.