Xiaomi to invest $1 billion in Chinese YouTube clone Youku

Xiaomi, the Chinese Android manufacturer which heavily bases its product designs and marketing on Apple products, is to invest $1 billion in the Chinese YouTube equivalent, Youku. Xiaomi has long been aware of the importance of an integrated hardware-and-services offering, initially selling its smartphones at cost-price in order to build market share, relying on its app store to generate profits. A tie-in with a video service makes similar sense, but the move is likely to be primarily driven by Xiaomi’s move into the smart TV market.

China’s Xiaomi Inc., which has rapidly become one of the world’s largest smartphone makers, said it would acquire a stake in the country’s largest video streaming company Youku Tudou Inc., marking the first step for the company to provide its own content. China’s technology firms are racing to snap up video content as they seek to draw the eyeballs of the country’s more than 600 million Internet users. Beijing-based Xiaomi announced last week it will invest $1 billion in video content. The move pits Xiaomi against other Chinese tech companies, such as Alibaba Group Holding Ltd. , which took a 16.5% stake in Youku this year. Youku and Xiaomi said in a statement Wednesday they will jointly develop content and technology, including online video services, but didn’t give a figure for the stake investment. “Youku Tudou’s ability in producing original content will provide strong support to the Xiaomi family of hardware by making the user experience more compelling, and will help to boost average revenue per user,” said Youku Tudou in the statement.