In today’s Finshots, we take you through the rise and fall of MX Player.

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The Story

If you were to go back in time, maybe about a decade ago and name a widely popular media player on your phone, what would you think of?

If you asked us, we’d say MX Player. It was one of those apps that helped you play any kind of video file on your phone, whether it was a movie you downloaded or something that your friend sent you via WhatsApp. MX Player played it all by default. It was to phones what VLC Media Player was to a computer.

Sure, it was a service that sprung up in South Korea. But Indians loved it so much that by 2018, 70% of its 50 crore downloads came from the country. And with over 17 crore users per month, you bet it was a huge hit.

That’s also why Times Internet, the digital arm of media firm Times Group, lapped it up for a whopping ₹1,000 crores that same year. It wanted to make it big in the content space after a failed attempt to take off its OTT (over-the-top) venture called BoxTV.com. And MX Player, with its huge fan following, could be just the push it needed.

But now, the once far-famed MX Player is changing hands again. Times Internet is mulling over selling it off to Amazon at just about ₹500 crores ― half the price it paid for the app nearly six years ago!

So, what ate up MX Player’s valuation, you ask?

Well, let’s begin from where we left off. After Times Internet acquired MX Player, it sort of changed its DNA. It transformed the media player into a streaming service by not just licensing content from platforms like AltBalaji, The Viral Fever (TVF) and SonyLIV, but also produced its own shows.

And it made sense because by now users had switched to smartphones that had inbuilt media players equipped to play videos by default. No one needed a separate media player anymore. Not just that. Reliance had just disrupted the telecom market with Jio’s incredibly low-priced data and voice services. So almost everyone, including the folks living in rural areas had begun to discover online content.

The only way to capitalise on that though was to run on the freemium model. Or simply a free platform that would slowly push its paid premium services as users grew. It also had the confidence of Tencent Holdings, China’s internet giant which backed it up with an investment of $100 million (over ₹700 crores) in 2019.

Soon, the pandemic came swooping down, locking up people in their homes. But for OTT platforms it was like an opportunity that knocked on their doors. And MX Player was no exception. It quickly grabbed the chance and launched other verticals within its content streaming app to boost users as well as revenues.

There was MX Takatak, a short video platform that would make up for the loss of TikTok that India banned around the same time.

There was Gaana which fuelled the fun for music lovers. That decision must have probably been influenced by a 2019 study which revealed that Indians typically spent about 19 hours a week listening to music, much over the global average of 18 hours. 80% of surveyed internet users also identified themselves as “music fanatics" or “music lovers", which was also much higher than the global average of 54%.

And then there was gaming too. The streaming app tied up with gaming biggies like Nazara, Gamezop, Gamespix, Google Games Snacks and others to offer games like ludo, cricket and carrom that catered to the Indian audience. And you could see that they struck the right chord as MX Player's monthly active gaming user base had hit 25 million. Even the time that these users spent on the app's games rose. For context, over the first 4 months of the pandemic, time spent per user on games alone skyrocketed by 180% to 70 minutes per user per day.

To top it all, it also expanded across international markets like Canada, Australia, New Zealand, Bangladesh and Nepal in addition to the US and the UK.

And you could say that this strategy worked simply because MX Player became India’s top video streaming app by 2021. To put things in perspective, each MX Player user spent close to 8 hours per month on the app. That was a little over the time users present on Netflix and nearly twice the time they spent on Hotstar and Amazon Prime Video. So MX Player was second to only YouTube, where an average Indian user spent about 26 hours a month.

But here’s the thing. A growing user base that spent more time on the app didn’t mean that MX Player was actually raking in the dough.

In fact, it wasn’t even able to break even or make enough revenues that took care of its costs, because here’s what we didn’t tell you. Most of MX Player’s users came from tier 2 and tier 3 cities and towns, who couldn’t afford to buy expensive Netflix, Hotstar or Amazon Prime subscriptions. That’s exactly why they turned to MX Player, which was free. And you can imagine, that’s not the kind of user base that will be willing to upgrade to a paid subscription. So that obviously jolted revenues.

But MX Player still had ads. So it could still make money by throwing advertisements on screen. Besides, it also launched a service called MX Advantage that helped all kinds of businesses advertise across different OTT, gaming, music, live and video streaming platforms.

The thing with advertising revenues though is that it depends on how much money brands can afford to splash. And thanks to the post pandemic funding winter, startups were strapped for cash. They relied on cost cutting to stay afloat. And that meant that their marketing budgets had come down too.

The proof was in the pudding. A back of the envelope calculation by GrowthX showed that it took about ₹20 to show an advertisement 1000 times on MX Player. So yeah, that was a sign that advertisers weren’t spending enough. In FY23, the platform’s advertising revenues even dropped by 17% over the previous year. Not just that. For every ₹100 that MX Player earned, it spent ₹120 on advertising itself.

Add to that the rise of JioCinema which even began streaming the IPL (Indian Premier League) for free, and the cheaper subscription plans which competitors like Netflix, SonyLIV launched, and you’ll see why MX Player couldn’t hold ground. It wasn’t making enough money to produce better content to attract an audience that would pay to watch its shows. And that simply meant that losses widened.

That’s when Amazon came in as a prospective suitor. Last year it offered to buy the ailing streaming platform that still had a great user base for nearly half the price Times Internet had first paid for it. It would be a great fit for Amazon’s ad-based free content streaming service like MiniTV. Times Internet obviously baulked at that.

But a continued cash crunch seems to have rekindled acquisition talks. Does that mean that Amazon could pick up a great bargain this time around?

We’ll only have to wait and see. Until then…

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