Xiaomi announced Wednesday that it had made a $300 million strategic investment in iQiyi, Baidu’s video platform. This is the second major investment in video for the company, after it announced an undisclosed investment in rival video streaming platform Youku (NYSE: YOKU) earlier this month.
Xiaomi executives said in early November that the company plans to spend $1 billion investing in online video content, and funding the creation of original content. With the launch of its line of televisions and MiBox set-top box sets earlier this year Xiaomi now needs a plan for a multi-screen ecosystem of content to span both screens.
Both iQiyi and Youkou license a wide range of both domestic and Hollywood content. In addition the two companies produce their own feature-length and episodic content for the web.
“This round investment by Xiaomi shows that Xiaomi recognises the high value and future prospects of both the online video industry as a whole and iQIYI as a company. We believe that through Baidu, Xiaomi, iQIYI‘s joint efforts, we can usher in a new stage of development for the whole Internet industry, and create a vibrant and more complete, video ecosystem,” said Gong Yu, CEO of iQIYI, in a statement.
Chinese consumption of episodic and feature-length content from the web far surpasses that of users in the west. Traditional television in China, such as what is distributed over terrestrial broadcast, cable, satellite, or IPTV overwhelmingly consists of CCTV — China’s state broadcaster. The hunger for something not as banal and boring as a state broadcaster has driven a diverse and robust ecosystem of content producers developing media for online.
However companies such as Youkou and iQIYI have encountered something of a roadblock from China’s state censors,The State Administration of Press, Publication, Radio, Film and Television. The bureau said in September that it was considering imposing a limit that would see foreign content restricted to a maximum of 30%.