Xiaomi is now planning to take on the likes of Netflix, Amazon Prime, Spotify, Paytm and Google Pay by monetising internet services in the Indian market.
The Chinese firm, counted amongst the top five most valuable technology startups, wants to generate revenue and profit from streaming of movies and videos, music, digital payment and applications, and will invest a significant proportion of the recent Rs 3,500 crore fund infusion to expand into services, Xiaomi India managing director Manu Kumar Jain said.
“Xiaomi globally made less than 1% profit margin from hardware or device sales in 2018, and we have stated that will never make more than 5% profit margin on hardware,” he said. “It is the internet services which will make money for us.”
Jain said Xiaomi globally has three financial pillars – devices, retail and services — and the last one is yet to be monetised in India. “Designing and selling hardware is only half the job for us. Remaining half of the job is to engage with customers and sell internet services to grow fast,” he said.
“The Mi Credit platform is currently on pilot where finance is offered by partners since we don’t have a non-banking finance company (NBFC) licence,” Jain said. “We are evaluating whether we will apply for NBFC licence, and if we do it we would ourselves offer credit. But it would take time.”
Xiaomi Technology India’s sales in 2017-18 grew by 175% to Rs 23,060 crore, while its net profit too went up 79% to Rs 293 crore.
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Xiaomi has over 40 million users per month in India consuming Mi Music and Video which are right now mostly free. The company has recently started a paid subscription plan for music.
Players such as Amazon Prime, Netflix and Reliance Jio are investing to create a local content library including original productions, while Spotify last month entered entered the country with aggressive plans.
According to a latest report by Boston Consulting Group, the $500-million video streaming market in India is set to touch $5 billion by 2023 with some 650 million users. The overall internet services sector in India is currently valued at US$ 33.8 billion and by the year 2022 it will more than double, as per the Internet and Mobile Association of India.