The $3.2Bn Bharat Opportunity: How Tier 2+ Cities Are Driving India’s Interactive Media Boom 

India’s ~700 million smartphone users are driving a digital revolution. Thanks to affordable smartphones and low data tariffs, these users are leading the expansion of a USD 440 mn interactive media market in FY2025 that’s growing at a whopping ~45% CAGR till FY2030. 

India’s GDP growth has surpassed the average growth for emerging and advanced economies on the back of increased private consumption and discretionary spending, which is up by 5 percentage points over the last decade. Combine that with a mostly young population (<30) that has one of the highest screen times in the world (5 hours), and you have a market primed for exponential growth in online leisure and entertainment. 

Along with the trajectory of this industry, what is also noteworthy is the demographic that is propelling its rise. Over 70% of India’s ~500 million social media consumers, and roughly the same number of digital transactors, come from Tier 2+ locations. This is in no small part due to the launch of Jio and UPI post 2016. Jio slashed data costs, bringing hundreds of millions of Tier-2/3 users online, while the rollout of UPI the same year simplified digital payments, together creating the rails for interactive media consumption.  

In the years since, India’s digital entertainment landscape has expanded beyond traditional music and video streaming (Netflix, Hotstar, JioSaavn etc.), audiobooks and podcasts (Audible, Storytel etc.), short form videos (Instagram Reels etc.) and online dating platforms (Tinder, Bumble, Hinge etc.), to emerging localized formats such as micro dramas (Kuku FM, Quick TV etc.), audio streaming (Pocket FM, Kuku FM etc.), vernacular short form videos (Moj, Josh, etc.), social discovery apps (FRND, Flutrr etc.), astro/devotional services (AstroTalk, Astrosage etc.) and more recently, AI companion apps (Rumik AI, Replika AI etc.). 

This evolution has been shaped by the distinct needs and traits of Bharat, i.e., India, beyond the metros. It is driven by an appetite for bite-sized, regional language, participative, mobile-first content, and connect experiences.  

Five formats are expected to dominate this growth in the future. 

1. Micro Dramas 

Micro dramas have found salience in India at the start of 2025, encouraged by the same factors that supported their growth in China, which dominates the global market. Growing appetite for video streaming, coupled with declining attention span, has contributed to the success of the micro drama format in India. The market is expected to reach USD 125 million in FY2026 and is projected to exceed USD 1 billion by FY2030. 

The opportunity: While over half of the viewership comes from metro and Tier 1 cities at present, the Tier 2+ audience base is geared to expand in the next 2-3 years. Over 80% of the revenue is subscription-led, indicating room for ad-based models to emerge. While international players stick to their IP, there is significant potential for Indian productions to differentiate with vernacular content.  

2. Audio Streaming 

Audio streaming platforms capitalise on the time that consumers spend away from their screens (cooking, commuting, etc). They have grown at a staggering rate between 2022 and 2025, and are expected to command a USD 300 million market by 2030. Listeners on non-music platforms such as Kuku FM and Pocket FM are quite discerning of engaging storylines, production quality, and vernacular content.  

The opportunity: With 14 million monthly average users, and an average listening time of 95 minutes per day (versus 30 minutes on music streaming platforms), audio streaming platforms are showing all the signs of growing into a mainstream format. As the category matures, players are foraying into global markets, focusing on reducing costs and retaining audiences. Listeners are demonstrating podcast-like “stickiness”, with a listening habit that signals a genuine product-market fit, rather than short-term novelty. 

3. AI Companions  

AI companions are next on the horizon in the interactive media space. Global funding for AI companion startups reached $500 mn cumulative global funding till Sep 2025, with Indian startups like Rumik AI, Bezu AI, and ChaiMate building Hinglish and vernacular language models. Use cases span virtual partners offering emotional support, tutoring and language learning, wellness coaching, astrology consultations, and parenting assistance.  

This growth is driven by the customisability of conversational AI, rapidly evolving LLMs that render more “human”, empathetic AI companions, and a demand for self-expression and guidance (49% of ChatGPT messages globally ask for advice; 11% seek personal reflection).  

The opportunity: Culturally adapted models are still at an early stage in India, while the LLM infrastructure is ready. There is significant headroom for such products to be integrated across sectors, replacing generic chatbots in favour of a more “natural” user experience. 

4. Astro and Devotional Tech 

Astrological and devotional tech services stand out as a primarily urban-first category, with high uptake among Gen Z, millennial, and NRI segments. These online platforms allow users to generate/match horoscopes, consult with priests/astrologers/numerologists, and offer virtual worship. Consequently, they are gaining traction with a mostly metropolitan, young adult user base.  

The opportunity: Astro and devotional tech still claim only a small share of the USD 42 billion astro and devotional products and services market. The use of these services is culturally embedded and marked by high engagement. Players in this space can claim first-mover advantage, tapping into monetisation models such as teleconsultations, virtual tipping, D2C sale of artefacts (gemstones, rudrakshas, etc), live darshan and worship, as well as sponsored content. 

5. SFV & Social Discovery  

A pandemic-induced demand for community “connect” apps and the TikTok ban in India made way for the growth of user-generated short-form content in regional languages and social discovery platforms. Social discovery platforms are growing both as an adjacent feature on homegrown short-form video apps and as standalone offerings.  

The opportunity: Platforms with social interaction at their core benefit from network effects, that is, their value increases as more people join, creating a positive feedback loop. Players such as FRND have 50 million downloads, the majority of which is attributed to Tier 2+ India. Paid subscribers make up only 4% of SFV and 12% of social discovery users, underscoring the potential for monetisation through virtual tipping, 1:1 calling, and ad-based models. 

Monetisation strategy brings all these segments together 

Interactive media-focused platforms are UPI-enabled and allow nano-transactions of $0.01-$0.10 (₹1-10) that ease Tier 2/3 users into the idea of spending on digital media. With 25% of Tier-2 users paying for a media service (against 40% of Tier-1 users), the effects of this model are tangible. 

Moreover, UPI AutoPay has proven effective for this user base, enabling frictionless recurring payments without the cognitive load of annual subscriptions. One major audio streaming platform reported “significant jumps” in UPI AutoPay penetration year-over-year. However, a few Bharat users often report low awareness and UX friction as bottlenecks. Platforms must balance growth with education to address these issues and create a seamless paid consumption experience for users. 

How to win in Interactive Media in India?

New formats and platform models are reshaping how India consumes content and forms communities. Unlocking the interactive media opportunity in Bharat demands a recognition of the fact that media consumers in Tier 2+ cities have distinct needs. To tap into this demographic, platforms and investors need to focus on the following areas:

• Redefining the target customer: Focus on depth over reach, by building regional creator ecosystems, vernacular content, and behaviour-based personalisation to drive ‘stickiness’.

• Blurring lines between content, media, and social networks: Fuse content, commerce, and community, devising engagement loops that convert time spent into transactions and retention.

• Striking a balance between IAPs and ads: Gamify user experience, pushing both rewarded ads and direct user monetisation via tips, microtransactions, gated content; build creator tools that enhance earnings and loyalty.

• Regulatory and structural shifts: Treat compliance as a strategy by embedding governance early; explore selective consolidation to build scale and defensibility.

• Profitability imperative: Drive efficient monetisation; automate content ops, rationalise creator spend, and focus on high-ARPU micro-communities.

Investors and founders who can make this pivot are well-placed to scale to $3.2 billion. How can you find your niche in this emerging market? Download our report on The Gaming and Interactive Media Opportunity in India, or speak to our new media experts today.