In Ajmer, 21-year old engineering student Meenal Soni, spends seven-eight hours a week watching videos on the Moto G3 phone her parents gifted her three months ago. She has to control herself from binge-watching whenever she has access to high speed internet.

“If I have free data or unlimited Wi-Fi then I can go for it the whole day. I restrict myself. Otherwise I’ll be doing this only,” says Soni, who mostly watches comedy, a genre which is on fire on the Indian internet. She is among a growing class of Indian consumers — young, first time smartphone users with an insatiable appetite for online videos.

Soni doesn’t know it but technology giants such as Google, Facebook and Microsoft are hunkering down for a long battle for her attention. After all, there are about 450 million people between the age of 15 and 35 years in India — the highest of any country.

That’s only one side of the story. Affordable high speed internet is a scarce commodity in most parts of the country. With an average connection speed of 2.8 Mbps, India is ranked at 115th position worldwide.

At Alphabet Inc’s headquarters in Mountain View, California, Jay Akkad has been watching all this closely. He is a product manager at YouTube whose job is to ship products for emerging markets. In September last year, he pitched a radically new proposition to his boss: let’s build a new Youtube app for India. (Alphabet is the holding company that controls Google, YouTube, X, and Google Ventures in the Google universe.)

“The motivation for the team was the focus on the new internet user,” Akkad tells FactorDaily on a call from Mountain View earlier this month. It was a first for YouTube, which has never launched anything like this specifically for a country. YouTube, the video network of Alphabet, has over a billion viewers worldwide, at least 60 million of who are in India, according to an industry watcher.

Doubling Down on India

India, the world’s second largest smartphone market, is at the heart of several new initiatives at search giant Google aimed at getting the next billion users online. A smartphone market that in the coming years will be No. 1 in the world (ergo, the battle with Facebook and Microsoft). So, with the blessings of YouTube product boss Neal Mohan, Akkad, who has spent over seven years as a product manager at Google, set out to do something new.

“We really focused on users who wouldn’t have traditionally used YouTube. And then we wanted to blow their minds by giving them access to the billions of videos on YouTube,” said Akkad, 33, who has a US patent on monetising videos to his name.

Meet YouTube Go.

On Tuesday, at an upscale hotel in New Delhi, Alphabet announced the new product. YouTube Go, which has been in the making for many months, will be available on Google’s Play Store in 2017. (FactorDaily was given access to Alphabet executives 10 days ahead of the launch in return for an embargo on publishing this story; no other conditions.)

YouTube Go is likely to become Alphabet’s next big bet in India, a market which it covets for its openness and potential for high growth. The Google universe can claim a lot more familiarity with India compared to its rivals. Google CEO Sundar Pichai and YouTube product head Mohan are India-born. As are Amit Singhal, who until earlier this year headed search at Google, former chief business officer Nikesh Arora, and Vic Gundotra, formerly senior VP of social — three key executives who were instrumental in shaping  Alphabet’s and Google’s growth into the $74.5 billion group it is today.

At YouTube, while it is still mostly about growing its user base and increasing average watch time on the network, there is also a business case to launch something new. In March this year, YouTube said that the company is seeing “breakneck growth” in Bollywood and cricket-crazed India with over 80% year on year increase in watch time and over 55% viewership on mobile. The company did not disclose actual watch time but whatever that number is, it doesn’t seem to be enough to make serious money off the market yet.

One analyst pegged YouTube’s global revenue at $9 billion in 2015. In India, it’s roughly estimated to be about a tiny $130 million, according to a source, who works closely with YouTube in India. To grow that, YouTube will have to break into India in a big way and it is a no-brainer that growth will not come from its metropolitan and large cities. To that end, the company has rolled out a few new initiatives including YouTube offline in June and YouTube gaming in April.

Youtube, It’s a Go

YouTube Go aims to push the envelope. Sitting in San Francisco, the mecca of technology, it isn’t easy to build products for India. Which is why in the last 12 months, the team has been spending a lot of time traveling across the country to 15 cities including Mysore, Nagpur, Aurangabad, and Nashik.

For them, building the app from scratch also meant challenging their biases. “We have very different environment here,” Nibha Jain, who works on user experience strategy at Google tells FactorDaily. High speed internet, electricity and reliable networks can be taken for granted in the Silicon Valley.

Not in India.

As the team understood more about its Indian users, a realisation was setting in — YouTube in its current avatar just didn’t cut it if the ambition was to grow video consumption in a market with anaemic data access and a propensity to share widely. For Jain, it was about getting back to the foundations and watching how users consume media in India. That meant asking some basic questions: who is the product for, why are we building it, what’s the product we want to build, and what’s the optimal path to get there.

“It was a big decision for us to move away from making improvements to existing products,” said Jain, a graduate of National Institute of Design in Ahmedabad and Georgia Tech in Atlanta, Georgia.

The YouTube Go app packs features that are a direct result of insights gleaned from research over months. While it may be tempting to dismiss it as a “lite” version of YouTube — Facebook and LinkedIn in the past introduced apps that consumed less data — YouTube Go seeks to stretches its ambitions much further. It is built on four key ideas:

1. Make the user feel in control of the bandwidth she or he consumes because data isn’t cheap,
2. It should work no matter what quality of data access you have because networks are patchy,
3. It should be social so users can watch and share videos with friends, and
4. It should have a local language interface and locally relevant content. The app currently supports 10 languages including Hindi, Tamil, Gujarati and Bengali.

Share on the GO

The current version of YouTube Go seen by FactorDaily, has a home screen where you get 10 videos every day that are locally stored so the app works even when there’s no connectivity. Clicking on a video will give you a preview so that you know what the video is like before you spend data on it. It allows you to choose the quality of video they want to play or download. It also lets you access all of YouTube content.

What’s really big on this app is the sharing feature. In India, peer to peer sharing is a big deal. Which explains why the most popular apps in the country are ShareIt (eighth most popular on Play Store) and Xender (No. 19), according to App Annie which tracks app store statistics.

YouTube Go app allows users to share content across phones just by swiping it over. As simple as that. The recipient needs to have the YouTube Go app. Videos are transferred using a locally created wi-fi hotspot, without any data charges.

“The big thing in video is discovery. If they can add some other way way of discovery and not rely on cookies, it will change the game,” says Subrat Kar, co-founder of video analytics platform Vidooly. There are over 20,000 active video channels in India that upload content regularly to the site, which peer-to-peer sharing helps by making accurate recommendations. Soni, the Ajmer girl, for instance, started watching BBKiVines, a popular YouTube channel after her friends told her about it — a use case that YouTube Go’s social features aims to address.

Desi Streets to Mountain View

Arvind Srinivasan was the first engineer to join the YouTube Go team. Srinivasan, an engineering director at YouTube, travelled to India many times over the last few months and set up a new engineering team in Mountain View to work on the project. Another team at Google set up a network in Mountain View that mimicked conditions like call drops and weak networks in a typical Indian city. (To be sure, setting up an environment where the product will live is a common practice.)

“India is shaping the way the world develops products,” said Srinivasan who previously worked on Google News and Maps, both important products for the company. For YouTube Go, the research team led by Jain would come back with concepts, the engineering team (about 20 engineers) led by Srinivasan would implement it, and then it was taken back to trial users in Indian cities. The first engineering team on this project landed in Mumbai in December 2015.

“We would report back on network conditions and bugs and fix them as we built the product,” Srinivasan said. “The influence of what my team is doing is starting to make its way into every other team in YouTube in little ways.” Over 100 people were involved in the project from various teams at Google. The engineering team has had to build systems that could handle copyrights (when videos are being shared), low bandwidth, and stay secure.

It has taken long for YouTube to become the biggest online video platform, especially in the developed world. But the battle now lies elsewhere in countries — like India that has over 220 million smartphone users — that will have the next billion users come online.

“All social networks so far have been built for the English speaking audience. There’s potential to build for the wider audience and you start with the youth, especially the ones in their early 20s who set the trend for everyone,” says Aprameya Radhakrishna, angel investor and founder of Taxiforsure, a ride-hailing startup that was acquired by Ola in March, 2015.

The problem with India though is that only a fraction of its smartphone users have access to fast internet suitable to stream or download videos. With the launch of Reliance Jio, a $20 billion countrywide 4G telecom rollout led by the country’s richest man, things are expected to get better.

Show me the money

YouTube CEO Susan Wojcicki considers television as her biggest competition and is on a mission to reinvent television for the new generation of viewers. These viewers, like Soni, root for on-demand content. “On YouTube I can select the videos myself. Television doesn’t show me what I want to watch,” Soni says.

But in India, big production houses clearly don’t see things the way Wojcicki would want them to. “Some production houses are building their own platforms,” says Kar. The numbers are not officially released by YouTube but an industry source says that more than 70% of India’s YouTube viewership comes from content owned by production houses like T-Series, Zee TV, Eros Now, and SET India. This source wants to stay off the record. These established production houses also nurse ambitions of building their own video-on-demand (VOD) platforms and selling content to the highest bidder.

Many of them are starting to move content out of YouTube, in fact. Colors, one of the largest YouTube channels, as well as The Viral Fever have built their own platforms for video. Star TV, another media heavyweight, has launched Hotstar and moved most of its content to the app. Balaji Telefilms is launching a new service. Reliance itself is getting into the video content game.

To be sure, it can be argued that YouTube can woo such publishers to allow its users view their productions and keep a small cut of the revenues.  Separately, YouTube has been getting more and more creators on to its platform. In December 2015, it launched India’s first YouTube Space in Mumbai. These spaces are created by YouTube to help content creators produce better videos.

For YouTube, the Indian market is still small in revenue terms. It is also a function of the digital media market in India which is yet to take off in a big way. According to media buying agency GroupM, advertising spend is expected to grow 15.9% in 2016 to reach an estimated Rs 57,666 crores. Much of that will still go to television advertising (47.1%) and print (29.7%). Digital media, expected to grow 50% this year, is likely to attract Rs 6,525 crore of advertising spend.

Most of this digital spend is soaked up by Google and Facebook but YouTube is eyeing the exploding video genre. “2016 will see VOD services gaining popularity in India. The Asia Pacific region is expected to overtake Western Europe as the second largest market for VOD services by 2020, fuelled by rapid growth of smartphones in China and India,” said the GroupM report.

India’s online video industry is expected to grow at a compound rate of 40% annually between 2016 and 2021, and generate about $1.2 billion (nearly Rs 8,000 crore) in revenues, according to Media Partners Asia, a media advisory and consulting firm.

The YouTube Go bet will play out in the years ahead and it is likely to be more a long bet that a short one. Importantly, it will be watched closely in the Google universe coming as it does behind disasters such as Google Wave, Buzz, Google Glass and Google+. Its success in India will also have ripples elsewhere. “Our app needs to function in Indonesia, Philippines, Africa and so on,” says Srinivasan, the engineering director.

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