Chinese smartphone maker Xiaomi has participated in a $25 million USD financing round in Hungama Digital Media Entertainment, an Indian online publisher and aggregator of entertainment content.
This is Xiaomi’s first investment in India and the reason behind the deal is self-evident. As domestic competition in China is stiffening and India is becoming a strategic focus for Xiaomi as they seek to maintain sustainable growth.
Other participants of the round include Hungama’s existing investors Intel Capital, Bessemer Venture Partners and Rakesh Jhunjhunwala, a top investor and billionaire in India. The consortium will pick up a minority, but undisclosed, stake in the Mumbai-based company.
Hungama Digital Media Entertainment is Indian’s leading aggregator, developer, publisher and distributor of Bollywood and South-Asian entertainment content. 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 add 1,500 hours of TV content in Indian languages and English, the company said in a statement.
The new capital is earmarked for content development and improving technological support for Hungama Music and Hungama Play on mobile terminals.
The tie-up will help Xiaomi to integrate Hungama’s content services, including themes and ringtones, into the company’s Mi platform. “We consider smartphones as a platform for us to deliver internet services, and it 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 Xiaomi vice president Hugo Barra.
Chinese internet companies like Alibaba and Tencent, have made aggressive moves to tap the content market and Xiaomi is no exception. The firm made its first major move into digital content sector in 2014 with a 1 billion USD investment. Of the capital, the firm has invested $300 million in online video provider iQiyi and bought a stake in China’s largest video streaming site Youku Tudou.
Xiaomi entered the Indian market in July 2014 and started to manufacturing locally since last year. Over 75% of its smartphones sold in India are made in the country.
India has over 1.2 billion people as the world’s second largest country in terms of population. However, its internet penetration is comparatively low with 400 million netizens and an estimated 220 million smartphone users. The country is wildly recognized as an emerging market for internet startups as China’s market is reaching saturation.