We know that connected consumers have definitely embraced binge drinking since the pandemic. If Pocket FM becomes a reality, it will create an immersive new streaming category for binge-listening audio series.
“I think we've found a new category of entertainment,” Pocket FM CEO Rohan Nayak told PYMNTS. “These are very early days for us, with so many things happening at once. Also, if you create a brand new category, you have to build everything from scratch, which means You have to define the delivery mechanism and the content engine instead of conforming to things. We're finding our way.”
This new category that Nayak wants to create, audio series and serial audio fiction, is different from 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 content is delivered directly to users and includes music platforms such as Spotify. Pocket FM is looking to own his OTT storytelling space, with new funding and a unique payment model to support its efforts.
On March 20, the company secured $103 million in Series D funding, increasing its total capital raised to $196.5 million. Nayak said the company aims to use the new funding to expand into the U.S. market and plans further expansion into Europe and Latin America in the second half of 2024. Additionally, it said the funding will help expand Pocket FM's exclusive content library and foster its community. Writers who tell stories or develop generative artificial intelligence (AI) applications.
In its current version, the mobile app and associated website have over 100,000 hours of content, including over 2,000 series and over 400,000 episodes across a variety of genres and languages. Nayak said the company has surpassed $150 million in annual recurring revenue (ARR) and is on pace for quarterly growth of more than 57%.
Pocket FM recorded more than 20 million transactions in 2023, with users spending an average of 115 minutes on the platform every day and totaling more than 75 billion minutes of streaming worldwide last year. There are approximately 10 million registered users in the US market alone.
From a consumer perspective, content can be accessed via a mobile app or website. Most of the audio series are based on short episodes, and while some are free, most must be unlocked by purchasing digital coins. Nayak said the company has found this model works better than a subscription and allows users to experiment more.
“What has really worked for us is microtransactions,” he said. “Suppose you have an audio series that consists of 100 episodes. So users get some episodes for free every 24 hours, but if they want to watch or listen to more, they have to pay for each episode. You only pay for what you consume. This was a turning point in our journey because this model will take us from literally no revenue in 2022 to our current ARR. Because we hit $50 million.”
Content is sourced from a global community of 250,000 creators. As a result, Pocket FM has developed some best-sellers, although its audience is small and high-quality content often lacks exposure.
“Saving Nora” made $18 million and has over 500 million streams. The synopsis is “Abandoned by her fiancé.'' The black sheep of her family. Nora accidentally becomes pregnant, and everyone shuns her and leaves town. ”
The Indian series 'Insta Millionaire' has had more than 1 billion digital spins. The plot is: “Luxman aka Lucky, a humble and kind-hearted boy, becomes a millionaire the same night his girlfriend breaks his heart for being poor.”
While these may seem overly simplistic, Nayak hinted that Pocket FM could extend the rights to these assets to other media platforms, including video streaming production deals.
It's no wonder that some of Pocket FM's funding will go toward developing generative AI. Nayak said the application of AI in content creation will mark a transformative change, increasing productivity and efficiency for creators. He expects AI to increase the effectiveness of individual stories in a number of ways and greatly streamline the audio production process, including selecting the voices that best fit the narrative. This application facilitated the creation of over 2,500 audio series in just one month.
Beyond content generation, generative AI is also being employed to improve recommendation systems to ensure users receive content tailored to their preferences.
However, its applications are not limited to that. Pocket FM is researching AI's ability to predict potential blockbusters, with the aim of identifying future hits from a large pool of titles. Nayak said this approach has the potential to redefine success metrics in entertainment, leveraging AI not only for production and curation but also for strategic predictions.
For now, Pocket FM is ahead of potential competitors, especially in India, which is a huge market for the company. Nayak has made no secret about what he will do to maintain his position in the market.
“Our focus is on content,” he says. “We are obsessed with providing the best content to our listeners, as that is a key point of differentiation. Since this is a new category, we are committed to having the largest catalog with the highest quality content. It's important. That's why we focus on content and growing our writer community so we don't have to worry about competition.”