Indian audio storytelling platform Pocket FM has doubled its annual revenue run rate to $500 million in the past year as it increasingly relies on artificial intelligence for content production.
AI currently powers 93% of Pocket FM’s entire catalog and is used to create 99% of new content, co-founder and CEO Rohan Nayak said in an interview.
This shift comes as generative AI penetrates deeper into content creation. But while Pocket FM, which started in 2018 as a serialized audio story platform, still relies on human creators for ideas and storytelling, it uses AI to transform those concepts into finished content at scale.
“We want to build great IP that will last 100 years, but that requires humans,” Nayak told TechCrunch.
Pocket FM’s current approach focuses on building AI tools around the creative process, rather than autonomously generating content. Vasu Sharma, a former Meta and Tesla scientist and head of AI, told TechCrunch that the company uses years of production data and signals about how listeners engage with the story to train its own models for tasks such as creative writing and text-to-speech.
Economics has played a key role in Pocket FM’s push into AI. Nayak says the technology has made content production about 80 times cheaper. He added that 100 hours of content that previously took about a year to produce can now be produced in a day.
The move to AI has also significantly increased the amount of content Pocket FM produces. According to Nayak, more than 550,000 creators currently produce approximately 2.5 million hours of AI-powered content annually. Two years ago, the startup’s entire catalog consisted of about 100,000 hours of content. Overall, the platform has built a library of over 770,000 audio series.
The influx of content has improved Pocket FM’s ability to retain listeners, Nayak said, noting that the startup’s 12-month revenue retention rate has increased to 76% from 44% two years ago. Part of the reason, Nayak believes, is that there are more stories available to suit the tastes of different listeners.
Pocket FM’s annual revenue run rate rose from about $250 million a year ago to $430 million in April and now stands at $500 million. (Rather than using contracted recurring revenue, the startup calculates this number by multiplying monthly income by 12, Nayak explained.)
This growth was driven by Pocket FM’s increased use of AI in content creation. Expanding into markets including the UK, Germany and France. User-generated content launches in the US
Approximately 96 titles on Pocket FM’s platform currently generate revenue of more than $1 million each, with 13 titles earning more than $10 million, the company said.
Pocket FM now has more than 250 million listeners in more than 20 countries, starting with its main market of India. The US market, which has grown by approximately 70% over the past year, is the largest market and accounts for approximately 70% of the annual revenue run rate.
About $85 million of Pocket FM’s annual revenue comes from advertising, with the remaining about $415 million coming from users paying to unlock individual episodes, Nayak said.
Beyond audio
Pocket Entertainment, the parent company of Pocket FM, is now looking to take its AI-driven content model beyond audio. In its first three months, the company’s microdrama app Pocket Saga has an annual revenue run rate of about $15 million, Nayak told TechCrunch.
The Pocket Saga app is currently only available in the US, and its content is produced entirely by AI, with humans remaining involved in the development of the story, unlike Pocket FM. The startup is also using its successful Pocket FM audio stories to create AI-generated videos for Pocket Saga without traditional live-action production.
Pocket Entertainment plans to expand further beyond audio and microdramas, with plans to enter at least two more entertainment formats over the next five years. The company also aims to turn success stories from its platform into books, television and movies through licensing deals.
As it grows, Bengaluru and Culver City, Calif.-based Pocket Entertainment is in talks with investors to raise fresh capital. According to recent reports, the startup is seeking $100 million to $120 million for a valuation of about $2 billion.
Nayak did not rule out talks, but said the startup was under no immediate pressure to raise funding. He declined to specify the amount raised or the valuation, but said the new round will be used primarily for further investments in AI and new forms of entertainment.
Pocket Entertainment, meanwhile, is profitable and generates positive cash flow on an adjusted basis, it said, but declined to disclose profit, cash flow or margins.
However, listing is still a long way off. Nayak told TechCrunch that Pocket Entertainment has no plans to go public within the next 24 months. However, options remain for a final listing in India or the US.
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