On November 12, Chen Tong, former chief editor at Sina and now vice president of media content at Xiaomi, announced Xiaomi’s partnership with Youku Tudou over content, at the press conference of Youku Tudou’s “multi-screen strategy” in Shanghai.
Xiaomi will invest millions of dollars in Youku Tudou by buying its shares in the secondary market. The exact amount has not been disclosed. Xiaomi’s devices will be “deeply integrated” with Youku Tudou’s content. In future, Youku Tudou’s self-made shows will be streamed across Xiaomi’s televisions, smartphones as well as tablets. Xiaomi will also be involved in the production and distribution of content.
Just a week later, on November 19, Xiaomi announced to invest 1.8 billion yuan ($294m) in iQiyi to become the second largest stakeholder of the video-streaming site. Xiaomi will assign one executive on iQiyi’s board of directors. And Baidu, iQiyi’s parent company, will follow suit by increasing its investment in iQiyi by about the same amount of money. According to a source on WeChat’s public platforms, Baidu is going to invest over $1 billion in Xiaomi.
Two weeks ago, at the press conference of Chen Tong’s joining Xiaomi, Lei Jun expressed Xiaomi’s emphasis on media content, saying that “the situation is extremely urgent and any failure can be fatal.” From his perspective, after building up a platform based on its smartphones, tablets, televisions and boxes, Xiaomi now needs to fill it with content. Wang Chuan, who is in charge of Xiaomi TV, claimed that Xiaomi will not produce but buy most of the content and support content providers.
Lei Jun said Xiaomi has prepared $1 billion to invest in media content. If it does use up all of this money, every media company in China would be more or less controlled by Xiaomi.
For Xiaomi, buying stakes in iQiyi and Youku Tudou is the fastest way for an outsider to obtain access to massive amounts of content. Since 2014, iQiyi has launched an ambitious plan in online TV, making self-made shows and buying copyrighted content. It plans to produce 30 shows of 500 episodes, or 15000 minutes.
To air on the internet in China, it is required to obtain licenses from the regulator, the State Administration of Press, Publication, Radio, Film and Television. In this regard, iQiyi and Youku Tudou both have partnerships with internet companies that have official backgrounds. Their ties with these companies can reduce their risks or losses, should the regulator launch another campaign to “purify the web”. In buying stakes in these two websites that might have the regulator’s blessing, Xiaomi should feel secured about its plans for internet TV.
In its rapid growth, Xiaomi’s businesses have started to coincide with those of Alibaba and Tencent. Coupled with Xiaomi’s exclusive sales on Alibaba’s Tmall, Xiaomi’s investment in Youku Tudou, in which Alibaba owns 18.5% of stakes, might be considered a gesture of kindness.
Tencent hopes to build an ecosystem of web apps based on its “public platforms” on WeChat, which will be a rival to Xiaomi’s ecosystem of native apps. It is expected that these two companies would confront each other in the near future.