Thus far, India’s startup IPO story has mostly remained dominated by startups in sectors like ecommerce, fintech and SaaS. But with Kuku filing its draft IPO papers, this paradigm is all set to change. Its planned listing could add a new category to that list altogether, entertainment.
Earlier this week, Bengaluru-based Kuku (parent co of Kuku FM and Kuku TV) filed for an IPO via the confidential route to raise ₹3,500 Cr. It seeks a valuation of up to ₹15,000 Cr ($1.56 Bn). With this, Kuku has emerged as the country’s biggest bet on microdramas, shorts, and mobile-first shows, which is already a multibillion-dollar business in China.
If the listing sails through as planned, i.e. before this financial year, Kuku may become the first Indian startup in the microdrama category to enter public markets.
More than its size, what makes this IPO more noticeable is the unconventional category it represents. Its listing will also test whether public markets have the appetite to support a new-age content platform.
So, can a business built around mobile-first, short-video content create a lasting shareholder value, which traditional media houses have struggled to deliver? Let’s find out, as we examine the forces driving the growth of this space and the opportunities and challenges that lie ahead for Kuku.
Kuku’s Script Changes
Microdramas is a fairly new category in India compared to China, where short-form episodic content has grown into a market worth billions of dollars, attracting investments from both technology firms and traditional media companies. In fact, a few of these companies, including COL Group, Universe, Ningmeng Films and TV, and Bilibili, are also publicly listed.
Now, India offers a similar opportunity, thanks to a growing smartphone penetration in the country, cheap data and consumers’ willingness to pay to consume content. Together, these trends have created a launchpad for formats designed for mobile screens.
Interestingly, Kuku also has the muscle to capitalise on this. Launched in late 2024, Kuku TV claims to have crossed 200 Mn downloads. It releases more than 150 original shows every month. The startup also claims to have 10 Mn+ paying subscribers across its portfolio. The Kuku FM app has more than 400 Mn app downloads across the Android and iOS platforms. It has dropped “FM” from Kuku FM, reflecting that its identity is no longer centred around audiobooks.
The startup’s scale is also reflected in its financial performance. Kuku’s revenue is said to have jumped 6X from ₹240 Cr in FY25 to ₹1,400 Cr in FY26. This places the startup among one of the fastest-growing consumer internet companies in the country.
Several investors and mutual fund managers tracking the company feel that Kuku’s positioning will be essential for the public markets. Rather than comparing Kuku with listed broadcasters or print media companies, they are more likely to benchmark it against global digital content platforms.
The reasoning is simple: the startup’s growth is tied to subscriber behaviour, recommendation algorithms and regional language consumption rather than advertising revenues alone. As per market watchers, the country’s growing internet user base, primarily in tier II and tier III towns and cities, will likely be a key tailwind for Kuku.
Then, the microdrama opportunity is also witnessing an expansion beyond India. Just last month, Pratilipi’s microdrama studio, Double Tap Films, signed a deal with TikTok to distribute 21 original Indian microdrama series across the US, Brazil, Canada, and Japan. Not to mention, the country’s microdrama content has found audiences overseas.
How AI Is Making Kuku A Lucrative Bet
Another reason why investors are likely to pay close attention to Kuku is because of how AI is shaping its business. Entertainment has traditionally been difficult to scale. Producing content takes time, predicting audience preferences is uncertain and building large content libraries often requires significant capital.
Kuku relies on AI tools for faster content production, personalised recommendations and improved marketing efficiency. In a space where the company needs to continuously launch fresh content, leveraging AI saves costs and brings efficiency. If Kuku can continue expanding while keeping production and customer acquisition low, it would prove Kuku’s value in public markets.
On the other hand, investors will gain exposure to two global investment themes that have attracted substantial capital in recent years: AI-driven consumer products and mobile-first entertainment.
What Else Is On The Cards?
The public listing comes with important questions. For brokerage firms, the key question may not be content quality, but subscriber economics.
Unlike traditional media outlets that are mostly valued based on advertising revenues, digital content businesses are judged on metrics such as average revenue per user (ARPU), paid subscribers, customer acquisition cost (CAC), retention rates and overall unit economics. These key metrics will determine whether investors view Kuku as a scalable platform business or another content company.
Then, the history of consumer internet is filled with formats that saw a sudden uptick in adoption in the early days, only to get stagnant later. Given the fact that microdramas have gained sudden traction, it needs to be stressed that this category remains at an early stage and faces competition from social media and OTT players.
Maintaining engagement is yet another challenge for Kuku. Content businesses thrive on virality. A hit show can cause a sudden uptick in subscriptions but sustaining it could prove hard.
Besides, competition is intensifying. While incumbents such as Pocket FM and Pratilipi continue to scale, new deep-pocketed players such as JioHotstar’s “Tadka” will try to make a dent in Kuku’s user base. Kuku is also in direct competition with tech giants such as YouTube, Spotify, Audible, and large OTT Platforms that have higher user attention.
Finally, and the most important factor, public market investors have become very selective about growth stories now. They will keep a close eye on Kuku, as it serves as a test case for whether Indian public markets are ready to back a new generation of entertainment startups.
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With inputs from Gargi Sarkar
Edited By Shishir Parasher
Creatives: Varshita Srivastava
The post India’s First Microdrama IPO Arrives, But Will Investors Tune In? appeared first on Inc42 Media.
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