1.8 billion stake in iQIYI millet content layout acceleration

On November 19th, Xiaomi deputy president Chen Hao announced that Xiaomi Heshun Capital (a subsidiary of Lei Jun) had invested RMB 1.8 billion (US$300 million) in the shareholding of iQiyi, becoming the second largest shareholder of iQiyi. The additional investment of Baidu will still be the largest shareholder of iQiyi.
A week ago, Xiaomi spent tens of millions of dollars to purchase Youku potatoes from the secondary market. On the first day of November 4th when Chen Hao took office, Xiaomi announced the first phase of US$1 billion in content investment. Chen Hao said that there are still more than six billion US dollars left to invest in video content production companies.

Accelerate content layout

The primary task of the former Sina editor-in-chief Chen Wei joining Xiaomi is to strengthen the video content of Xiaomi TV and Xiaomi Box. On the afternoon of November 12, Chen Hao announced that Millet invested US$10 million in Youku potatoes. Xiaomi will purchase Youku potatoes in the secondary market of the United States and have a strategic cooperation with Youku potatoes. In the future, the homemade content of Youku potatoes will be available in Xiaomi’s box and TV. And even mobile phones and other content carrier terminals play.

One week later, Xiaomi once again shot, obviously the investment in the love of Fantastic Art is even greater. IGI CEO Gong Yu said that the iQIYI fundraising will mainly focus on original content and procurement. It is reported that after the completion of this round of investment, Iqiyi will intensify cooperation with strategic shareholders Baidu and Xiaomi in the areas of content, technology, and products, especially mobile Internet.

Regarding the use of the remaining funds in the first phase of the one billion US dollar investment plan, Chen Hao explicitly stated that he will invest in content producers. Prior to this, Huace Film and Television (300133, stocks) issued additional funds, and Beijing Whale Culture Communication Co., Ltd. recognized the fund. The latter was established in May this year. The legal representative is Lei Jun and is mainly engaged in the operation, operation, and investment of cultural industry projects.

Millet model is "hardware + software + services", Xiaomi's hardware products include mobile phones, boxes, TVs, flat-panel and other business, MIUI system also has a lot of active users, right now need to upgrade services. Lei Jun also said that when Xiaomi's platform reaches a stage, it needs to enhance its content operation capabilities. Therefore, how to distribute the content of investment to various platforms may be the focus of Xiaomi's future. Chen Hao introduced that through the analysis of data, users of different platforms will be distributed differentiating content.

Re-draw the video industry map

"From the amount of investment, Xiaomi can see the importance attached to iQiyi." Gong Yu pointed out that Xiaomi's investment in iQiyi is much higher than Youku Tudou, and Xiaomi's layout on hardware can help him increase market share.

According to the latest report from market research organization IDC, in the third quarter, Xiaomi’s smartphone shipments reached 17.3 million units, up 211.3% from the 5.6 million units in the same period last year. The company's global market share also rose from 2.1% in the same period last year to 5.3%. Millet TV is also rapidly expanding. In the past, Twin 11 and Xiaomi TV 2 have become the first of Tmall's dual 11 single-player TVs with a sales volume of 37,000 units. Millet also has other flat-panel, box and other services.

Analysts pointed out that if iQIYI's application can be implanted into Xiaomi's hardware, its market share will increase significantly. At present, the competition in the video industry is fierce, and many video companies such as iQiyi, Sohu, Tencent, and Youku Tudou are all making efforts, but none have achieved profitability, and the secondary market's valuation is also low. This means that video companies need more competitive chips.

The market once rumors that iQiyi will be listed this year, but Gong Yu pointed out that internal and external factors are not available, giving up this year's listing. As to whether this financing is to prepare for the listing next year, Gong Yu also refused to respond. However, analysts pointed out that Xiaomi will escort him as the second largest shareholder.

Millet's joining or culminating in the creation of network content. At present, online video has been over-loaded with network-made content, which is an important factor for Xiaomi’s investment in online video companies. Chen Hao once said that the future will not be limited to investing in film and television production companies such as Huace Television.

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