Xiaomi, the Chinese mobile manufacturer has just made their first investment in India; and going by the looks of it, it is clear that they are into something big.
For their first ever investment, they have chosen Hungama, which provides video on demand services and aggregate content on their platform. And this investment of $25 million (Rs 170 crore) has been made to integrate Hungama’s video on demand service into their handsets.
With this, Xiaomi has picked a minority, undisclosed amount in Hungama along with other investors such as Intel Capital, Bessemer Venture Partners and Rakesh Jhunjhunwala.
Xiaomi’s Vice President, Hugo Barra said, “Xiaomi is leading an investment round of $25 million in Hungama, with existing investors.. At the same time we’re partnering for video on demand service in India and integrating it into our platform”.
But Why Video on Demand?
Video on demand service has witnessed an unprecedented jump in usage and traction in India; and Xiaomi wants to encash this phenomenon by directly integrating this service in their mobiles.
In the last few months, we have witnessed a slew of investments and launches in this sector: Last year, Singapore’s leading telecom player launched Hooq at a monthly charge of Rs 199; Netflix, the global favorite for video on demand has already launched operations in India earlier this year with Rs 500/month plan; Zee’s Ozee was launched earlier this year; Reliance Industry has launched their own video on demand platform Voot while BSNL too has ventured into this space.
Considering this heavy demand in this sector, it seems Xiaomi has made the right move to integrate the service into their handsets, and this key strategic investment in Hungama is the right step in this direction.
Hugo expects around 180 million 4G customers in India (currently, there are around 6 million); and video on demand would be differentiator which Xiaomi wants to offer.
He said, “With 4G taking off, starting this year, video on demand is unlocked because the experience gets huge upgrade when you switch from 3G to 4G,”
How Will It Work?
As per initial reports, Xiaomi will integrate Hungama’s video on demand service into their Mi platform for smartphones and TV. Although TV isn’t available in India yet, but very soon, it would be launched along with the video on demand service integrated.
Besides, there would be a mixture of paid and free content available for their customers from Hungama.
Hungama’s partnership with 7000 content creators and their massive database of 8000+ movies in English, Hindi, Punjabi, Marathi and other regional languages shall make buying a Xiaomi phone more lucrative and attractive. There are already 65 million+ active users of Hungama, and this new partnership will only help them to become bigger.
Interestingly, Xiaomi has invested in 55 Chinese companies till date, which are part of their Mi eco-system; and out of them, 7 companies have already generated sale of more than RMB 100 million RMB while two of the companies recently clocked RMB 1 billion sales last month.
Will Xiaomi’s lucky charm convert Hungama into a profit-making venture? We will keep you updated as more details come in..
