Investing in Headfone
Building audio OTT for India
‘Video killed the Radio Star’ was the first music video to be aired on MTV in 1981, an aptly named song, considering that in the decades since, video content has completely taken over. However, does that mean that there is no place for radio / audio in our lives today? We, at Elevation, don't think so and resonate with what Hallie Flanagan, an American playwright and author, once said, “The power of radio is not that it speaks to millions, but that it speaks intimately and privately to each one of those millions.”
Content consumption has increased at an unparalleled pace over the last decade with the average Indian internet user consuming 2+ hrs of digital content daily. This consumption is spread across various formats including Short Video, OTT, Music, etc. and several destinations have been built for most of them. However, there are many occasions (think: while doing chores, to wind down before going to sleep, during the morning run/ walk, a shopkeeper while running the store, while commuting or driving) when people want content that is highly engaging, but can be played in the background. Unlike video and written formats that require active consumption and undivided attention, audio / radio can be consumed passively and fills this gap very well.
Globally, despite the proliferation of video, audio consumption has continued to grow at a decent pace over the last few years. The global Audiobooks market has grown 2.5x and the Music Streaming market 2x between 2017 and 2021. In the US in particular, audiobook sales are higher than e-book sales and podcast consumption is on the rise with nearly 40% of the people listening to podcasts monthly. But the needs of the Indian user are different.
In the age of radio, while music and news were definitely popular, the most awaited shows included fictional dramas such as ‘Hawa Mahal’ and ‘Modi ke Matwale Rahi’ which were episodic audio fiction dramas. While a small number of Indian users (who mimic the US consumer) are already consuming podcasts with the primary intent of gaining knowledge, our belief has been that the audio destination for Bharat (that serves the masses) will be built around entertainment use-cases and stories.
Relatability and intimacy are key for these listening occasions, and fiction (often difficult to produce in video format) particularly appeals to listeners due to the ability of this genre to ignite the sense of imagination. Audio content also requires significantly less production resources v/s video, and therefore a platform built in this space has the potential to democratize storytelling at scale.
We had been on the lookout for a team that had the same shared belief for the last few years. We had met the Headfone team - Pratham and Yogesh for the first time in 2018, and have been in awe of their customer obsession and product-first thinking since then. As we continued to stay in touch over the last few years, we realized that Headfone was able to create professional quality content at the pace of user generated content on the back of the tech infrastructure that they have created. The evolution of this product was translating into clear user delight and our conviction kept going up. This approach was starkly different from many of the other teams we met in this space. While they had engaging and high quality content formats, almost all of them lacked a systematic approach to content scalability and mostly depended on high budget production setups to create a content library.
Our belief is that solving for content scalability through tech is extremely important, since creating high quality audio content is non-trivial. In the journey of discovering what works, and doubling down on the same, the winner will be someone who is able to seed a large content pipeline, iterate quickly, and rapidly scale up the winners, while maintaining a low cost of production. Headfone has achieved this through their virtual creation studios that democratize storytelling and enable collaboration between multiple creators. As a consequence, Headfone today releases 30k+ new content pieces every month, and serves 3 Mn+ users (growing 10-15% MoM) who spend 52 minutes on an average on the app every day. Their app is also the highest rated among the peer set on Google Play store. The fact that all of this happens with a team of just 9 people (yes, 9 people only) blows our mind away.
What cemented our thesis was that Headfone is also giving rise to a new generation of creators, who are deepening their art on the platform - voice actors, writers, sound engineers, and such. Listeners are developing affinity for these creators, identifying with their favorite writers and voice artists particularly. In our user calls, listeners spoke passionately about their favorites and even asked that the platform avoid casting their favorite hero’s voice in a negative role in other shows. From the creators’ perspective, this user love, alongside the greater control on content, mentorship, and the power of virtual studio, becomes an amazing source of everyday delight.
We couldn’t be more thrilled to partner with Headfone by leading the $10 Mn Series B round in the company. Headfone has perfected the playbook for scaling content creation on an audio platform which gives them the ability to scale the product globally in the years to come. With its focus on bringing new life into an old medium and creating it as the most loved audio content destination, Headfone is also democratizing story-telling and empowering thousands of creators to collaborate, create and distribute their content on the Headfone app. The potential of this flywheel, we believe will make Headfone one of the most iconic companies in the content space.
Our New Fund: All In on India
Elevation Capital announces Fund VIII of $670 million, to accelerate partnering with category defining early stage companies in India