How Adult-Focused Platform Ullu Became India’s Largest SME IPO

Ullu app has filed for a Rs. 150 crore IPO, which will be India’s largest ever SME (Small and Medium Enterprises) IPO in terms of size. Ullu is an unlikely contender for the title. Until a few years ago, OTT (Over The Top) companies didn’t exist as a category in India. Also, companies named Ullu (colloquially meaning ‘stupid’ in Hindi) don’t usually end up getting listed on the stock markets. And perhaps most interestingly, Ullu isn’t your usual OTT company — it is best known for its adult-themed content.

It was an unusual journey that led Vibhu Agarwal, founder and CEO of Ullu, to coming up with India’s largest SME IPO. Ullu isn’t the first company that Agarwal has started. He was a software engineer, and had dabbled in all manner of businesses. He had a steel business, and also published a business paper in Uttar Pradesh. He also had run a cement plant, and most recently, started the Jaypee Group of Convent Schools. “I’m an Agarwal, business is in my blood,” he said in an interview.

But in 2012, Agarwal had his eyes set on the media industry. He was an avid movie watcher, and watched 1-2 movies in the theatres every week. He decided to enter the field himself, and decided to make a movie of his own. He collaborated with a Mumbai-based producer, hustled, and was able to release a movie named “Baat ban gayi” in 2013. Agarwal had aimed high — the movie starred Gulshan Grover and Ali Fazal, who’d later become famous with Amazon’s Mirzapur. But Baat Ban Gayi failed to make any sort of mark at the box office, and sank without a trace. Agarwal made losses in his first foray into the media businesses.

But he wasn’t deterred. “The loss strengthened our resolve. We were determined to recoup our losses from the media industry,” he says.

Agarwal says he tried to analyze why his film failed. He realized that lots of starry-eyed businessmen wanted to make movies, but found it hard to navigate the complexities of Bollywood. “People put in Rs. 2-10 crore into making a movie. But then they realize that the bigger challenge was releasing them,” he says.

Agarwal realized there would be money to be made in helping people release their movies. Around this time, there was already disruption afoot in the movie industry. “In late 2016, Jio came out with its cheap data plans. From my visits aboard, I’d realized how popular the internet could be for streaming videos. I’d also seen how popular Netflix was abroad. We then started building an OTT platform for India,” he says.

Agarwal and his team experimented for a few months, and eventually launched Ullu in 2018. He said he himself had come up with the name. “The name wasn’t popular among my team. Most people who heard it said it had a negative connotation. But I went with my gut — I thought the name was catchy and had good recall,” he says.

The Ullu name was easily understood by people in Tier 2 and 3 cities, where Ullu found most of its audience. Ullu didn’t take on Netflix or Amazon Prime, which primarily focused on urban users, but instead focused on users in smaller cities, and created content that appealed to them. One of its USPs was adult-themed content, which featured risqué themes and narratives — some of Ullu’s more popular web series have names like Halala, Ishq Kills, and Virgin Boys.

Ullu quickly found product-market fit, but its popularity really exploded during the pandemic. As Indians were confined to their homes, Ullu app saw a surge in downloads. “All manner of Indians had time on their hands, and wanted to be entertained. People like drivers and cooks, who ordinarily wouldn’t have purchased OTT subscriptions, ended up subscribing to the Ullu app,” he says.

By mid 2020, Ullu already had more than 10 million downloads, mainly from smaller Indian cities. 80 percent of its users were from India, while other users were from the Indian diaspora in places like UAE, Canada and the UK. Ullu also started creating original content, and tied up with more established players like MX player.

Agarwal still helms the creative process behind Ullu’s content. He and his team vote on and finalize scripts, allocate budgets, and get them created by production agencies. They say they’re inundated with ideas. “We receive ideas from users on Facebook Messenger, email and even Whatsapp. People want their stories to be featured on our platform, and don’t even want any payment in return. But we make sure we compensate any people whose stories we use,” he says.

Ullu has now grown into a content powerhouse. It already has 21 lakh paying subscribers, compared to the 65 lakh Indian subscribers that global behemoth Netflix has been able to garner. Its subscription plans are cleverly tailored to getting users to sign up for longer periods — a weekly plan is Rs. 90 and a monthly plan is Rs. 198. An annual plan, in comparison, costs just Rs. 450, which nudges users towards choosing it. In the half-year period of April to September last year, Ullu registered revenue of Rs. 58 crore, and profit of Rs. 12.28 crore. Its revenue had doubled over the previous year.

While the adult-themed content has brought Ullu plenty of users, it has also brought with it the attention of regulatory authorities. Last year, a complaint had been filed against Ullu app with the DGCGC, a registered self-regulatory body for OTT platforms, gravely objecting to the nudity and obscenity on its platform. The council has ordered a take-down of the content within 15 days. Ullu however had said that the viewership of its content was based on personal discretion, and had cited “freedom of speech and expression” as enshrined in the constitution to defend its content.

Ullu is now looking to go public in India’s largest ever SME IPO. Vibhu Agarwal has run several businesses, but appears to have finally hit gold with the Ullu app. The contradiction of running a chain of schools while also running an adult-focused OTT platform seems to rest easy on Agarwal — he seems to regard this as just any other business, and focuses on its numbers, metrics and its bottomlines. It remains to be seen how Ullu’s IPO performs at the stock markets, but it is already one of the more unconventional IPOs to hit the street in recent times.