Chinese smartphone maker Xiaomi Technology Co reached an agreement with US-listed Chinese video streaming firm Youku Tudou Inc Wednesday to invest in the distribution and production of online video content, a move analysts said will be a win-win solution for the two companies.
The two companies will cooperate in online video content and technologies, according to a press release that Xiaomi e-mailed to the Global Times Wednesday. It didn't specify how much the smartphone maker would invest in the video streaming firm.
Xiaomi announced on November 4 that it would inject $1 billion to develop its Internet TV content.
"The first batch of money (of the $1 billion) has been invested in Youku Tudou… Xiaomi will join in content distribution and production with Youku Tudou to provide favorable content to Xiaomi fans. The two companies will dedicate themselves to pushing forward the online video industry in China," Xiaomi founder and CEO Lei Jun said on his personal Sina Weibo account Wednesday.
To expand its TV content business, Xiaomi hired Chen Tong, a former executive at Chinese Internet firm Sina Corp, to manage its TV business.
Chinese media also reported Tuesday that Xiaomi will invest $300 million in online video provider iQiyi, which China's biggest search engine Baidu Inc owns a 96 percent stake of.
Calls to iQiyi went unanswered by press time Wednesday while Xiaomi refused to comment on this event.
Xiaomi's moves in video content come a year after it unveiled its first 47-inch smart TV in September 2013, which has since gradually gained popularity among users.
The burgeoning TV hardware business of Xiaomi, including its TV sets and set-top boxes, "has already developed well," and further "expansion in TV content will increase its profit space further," Luo Lan, an analyst at Analysys International, a Beijing-based Internet consultancy, told the Global Times Wednesday.
Luo suggested Xiaomi and Youku Tudou focus on improving the quality of their TV content in the face of intense competition in the sector.
In addition to Xiaomi, other Internet companies also launched smart TVs to capitalize on the burgeoning market.
In September 2013, China's biggest search engine Baidu's online video provider iQiyi launched a 48-inch smart TV called "TV+" in partnership with domestic TV maker TCL Corp. In the same month, domestic e-commerce giant Alibaba launched three smart TV models in partnership with Shenzhen-based appliance firm Skyworth.
Luo noted that the cooperation between Xiaomi and Youku Tudou was "a win-win solution," as Xiaomi will enable Yuku Tudou to get more access to the huge amount of Internet and mobile users that Xiaomi has accumulated since it was set up in 2010.
Youku Tudou's expertise in the production of original content will also be helpful for improving the user experience for Xiaomi TV and smartphones, said Luo.
The total sales value of Xiaomi smartphones, TV, as well as its set-top box on Tmall, a leading Chinese e-commerce website operated by Alibaba group, hit 1.56 billion yuan ($254.28 million) on November 11, which is dubbed "Singles' Day" in China, Lei Jun disclosed on his Weibo.
Xiaomi ranked third in the global top smartphone manufacturers list due to its focus on China and adjacent markets, according to the latest report by the International Data Corporation (IDC), a global market research company.
According to IDC, the global market share of Xiaomi stood at 5.3 percent, following Samsung with 23.8 percent and Apple's 12 percent in the third quarter.