New Delhi: To build its services ecosystem in India, Xiaomi Inc. has led a $25 million investment in digital media firm Hungama Digital Media Entertainment, the Chinese smartphone maker said on Monday.
This is Xiaomi’s first investment in India and marks its strategy to introduce localized Internet services and content on its smartphones in the country. Xiaomi, which raised $1.1 billion in 2014, has invested in more than 50 start-ups globally, including video content providers, mobile gaming apps and many more to increase revenue from Internet services that offer higher profit margins than handsets.
Hungama’s existing investors Intel Capital, Bessemer Venture Partners and Rakesh Jhunjhunwala participated in the round too. Hungama will use the money to further strengthen its movie and television services.
According to Xiaomi, it will start integrating Hungama’s content services, including themes and ringtones into its platforms. “We think of smartphones as a platform for us to deliver Internet services, and this includes content. As our user base in India grows and as 4G penetration in India continues picking up, we will start to see more and more consumption of digital media through Xiaomi devices," said Hugo Barra, vice-president, Xiaomi. “We have carefully selected Hungama because of what they are doing in terms of aggregating large amounts of content and delivering an amazing user experience."
Hungama has partnerships with over 700 content creators, and offers over 8,000 movies in Hindi, Tamil, Telugu, Malayalam, Bengali, Punjabi and six other Indian regional languages on its platform. The company claims to have over 65 million monthly active consumers who access Hungama across platforms for its music, video and movie services. Hungama Play will shortly add 1,500 hours of TV content in Indian languages and English, the company said in a statement.
“We are very excited to be partnering with Xiaomi, as we are extremely aligned in the way we see digital media becoming mainstream on mobile devices," said Neeraj Roy, founder and chief executive, Hungama.
Xiaomi has been in talks with several other content and software services start-ups in India for potential investments, Barra told Mint in an earlier interview in March.
In its home market China, Xiaomi not just invests in companies but also incubates several of them. Out of 50-plus companies that the firm has invested in, about 29 have been incubated by it.
“If you look at our content strategy in China, we are already the leader in content with over 400,000 hours of video content across our Mi Video app, Mi TVs and set-top boxes. We have partnered with many content providers in China and are seeking to develop further in content integration and cooperation," a company spokesperson said.
Xiaomi globally invests anything from $100,000 to millions of dollars on funding early stage start-ups. Xiaomi has made a $300 million investment in online video provider iQiyi in 2015 and has bought a stake in China’s largest video streaming site Youku Tudou.
Xiaomi sells smartphones at wafer-thin margins, but depends on other services such as gaming, music and video streaming to make money in the long term.
However, India is yet to see strong adoption of content among customers who are willing to pay for such services.
Xiaomi (pronounced as Shiao-Me) entered India in July 2014 and started local manufacturing a year later in its Andhra Pradesh. facilities. Currently, over 75% of its smartphones sold in India are made in the country.
Xiaomi, which counts India as its second largest market after China, is known for offering smartphones at competitive prices by selling directly to consumers via online marketplaces with minimal marketing spending.