Pocket FM Looks to Create — and Own — a New Digital Entertainment Category
We know that the connected consumer has certainly embraced binge watching since the pandemic. If Pocket FM gets its way, there will be a new streaming category to obsess about: Binge-listening to audio series.
“I think we’ve stumbled on a new entertainment category,” Pocket FM CEO Rohan Nayak told PYMNTS. “These are very early days for us, and there’s so many things happening all at once. And when you’re creating a whole new category, you need to build everything from scratch. That’s means you need to define the delivery mechanisms and the content engines rather than conforming to what already exists. We’re finding our own way.”
This new category that Nayak wants to create — audio series and serialized audio fiction — is different than podcasts. Founded in 2018, Pocket FM was built with a vision to redefine the audio “over the top” (OTT) space, of which podcasting is a subset. OTT simply means that the content is delivered directly to the user and includes music platforms like Spotify. Pocket FM is trying to own the OTT storytelling space, and it has new funding and a unique payment model to support that effort.
On March 20 it secured $103 million in Series D financing, boosting its total capital raised to $196.5 million. Nayak said the company aims to use this new funding to make inroads into the U.S. market, with plans for further expansion into Europe and Latin America later in 2024. Additionally, the funds will aid in expanding Pocket FM’s exclusive content library, fostering a community for writers to showcase stories and in developing generative artificial intelligence (AI) applications.
In its current iteration, the mobile app and correlating website has more than 100,000 hours of content, including 2,000-plus series and more than 400,000 episodes across various genres and languages. Nayak says the company is on pace to top $150 million in annual recurring revenue (ARR) and a quarterly growth rate of 57%.
Pocket FM recorded over 20 million transactions in 2023, with users spending an average of 115 minutes daily on the platform, adding up to over 75 billion streaming minutes worldwide last year. The U.S. market alone has around 10 million registered users.
From a consumer perspective, the content can be accessed via a mobile app or website. Most of the audio series are based around short episodes, some of which are free, but most need to be unlocked by purchasing digital coins. Nayak said the company has found the model works better than subscriptions and allows for more experimentation by users.
“What has really worked well for us is microtransactions,” he said. “Let’s say you have an audio series of 100 episodes. So, as a user, you will get a few episodes for free every 24 hours, but then if you want to consume or listen more, then you must pay per episode and that is a lower barrier to entry. You pay only for what you consume. That was an inflection point in our journey, because with that model we’ve gone from literally no revenue in 2022 in the U.S., to our current ARR of $50 million.”
The content comes from a community of 250,000 global creators. And while that can often translate into a lack of exposure for high-quality content with small audiences, Pocket FM has developed several best-sellers.
“Saving Nora” has accounted for $18 million with over 500 million streams. It’s plot: “Dumped by her fiancé. Black sheep of her family. Nora is shunned by all after accidentally getting pregnant, and leaves town.”
“Insta Millionaire,” an Indian series, has had more than a billion digital spins. Its plot: “A humble and sweet boy, Laxman, aka Lucky, becomes a billionaire the same night his heart is broken by his girlfriend for being poor.”
These may seem to be overly simple, but Nayak hinted that Pocket FM may expand the rights to these properties to other media platforms, including video streaming production deals.
No surprise that some of Pocket FM’s funding is going toward developing generative AI. Nayak says the application of AI within content creation marks a transformative shift, enhancing productivity and efficiency for creators. He expects AI to increase the effectiveness of individual stories in many ways, including the selection of voices that best match the narrative, which can significantly streamline the audio production process. This application has already facilitated the creation of over 2,500 audio series in just one month.
Beyond content generation, generative AI is also employed in refining recommendation systems, ensuring that users receive content tailored to their preferences.
However, its application doesn’t stop there; Pocket FM is exploring AI’s capacity to predict potential blockbusters, aiming to identify future hits among a plethora of productions. Nayak said this approach could redefine success metrics in entertainment, leveraging AI not just for creation and curation but also for strategic forecasting.
For now, Pocket FM is ahead of any potential competitors, especially in India, which is a huge market for the company. Nayak makes no secret about what he will do to maintain his market position.
“The focus for us is content,” he said. “We’re obsessed about delivering the best content to offer our listeners, because that’s the key differentiation point. And because this is a new category, it’s important for us to have the largest catalogue of content of the highest quality. So, we focus on content, expand the writer community, and with that we won’t have to worry about competition.”
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