BEIJING--Xiaomi Inc. and an affiliated fund plan to invest $300
million with Baidu Inc.'s online video arm, in its second move in a
week to tap shows and movies to stream over its devices.
Xiaomi, which is China's largest smartphone brand by market
share, said on Wednesday it would team with Shunwei Capital, which
was set up by Xiaomi Chairman and Chief Executive Lei Jun, to make
the investment in video portal iQiyi.com. It declined to disclose
financial details of the stakes.
iQiyi said the investment makes Xiaomi the second-largest
shareholder of the portal behind Baidu, a search giant often
referred to as the Google of China. Baidu said it also increased
its stake in iQiyi, without disclosing specifics.
"The investment is mainly for content, "said Chen Tong, who
joined Xiaomi earlier this month in the newly created position of
vice president, content investment and content operation.
In addition to its smartphones, Xiaomi also makes set-top boxes
and smart TVs. Beijing-based Xiaomi said earlier this month it
would invest $1 billion in video content.
"Just like Xiaomi, iQiyi has a large number of young users,"
said Gong Yu, chief executive of iQiyi.com."We will produce
original content including animation, TV drama and variety shows
for Xiaomi's users."
Xiaomi said last week it would acquire an unspecified stake in
Youku Tudou Inc., another major video-streaming company in China,
in which China's e-commerce giant Alibaba Group Holding Ltd.
already owns a minority stake.
The moves come after China's media regulators increased scrutiny
on providers of set-top boxes, which challenge the traditional
dominance of cable and satellite TV in China. Regulators focused on
whether providers were using licensed content.
Wang Chuan, a Xiaomi vice president who is in charge of smart
TVs, said the company's TV content complies with regulations and
that iQiyi's content would be used on all future products,
including TVs.
China's video streaming sites have been ramping up their own
content production to grab market share and to cope with the rising
cost of licensing existing shows and movies. iQiyi set up a film
studio in July that aims to make seven domestic films and one
foreign film by next year.
"It is really about market share," said Mr. Gong on the
sidelines of the media briefing. "When you reach a big market
share, you can make as much money as you want."
--Lilian Lin
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