Xiaomi is looking to generate revenue and profit in the Indian market from digital payments, applications, streaming of movies, videos and music. By monetising the internet services, the Chinese firm will take on the likes of Netflix, Amazon Prime, Spotify, Paytm and Google Pay.
Xiaomi India managing director Manu Kumar Jain told Economic Times that the company will invest a significant proportion of the recent Rs 3,500 crore fund infusion to expand into services.
“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. It is the internet services which will make money for us,” Jain said.
The company wants to monetise streaming content from Mi Video and Mi Music. 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.
It’s file transfer tool Mi Drop has already hit 100 million downloads. It’s UPI–based payment application Mi Pay has just launched. It will also soon commercialise Mi Credit, a marketplace from where consumers can get access to instant loan from KreditBee and ZestMoney.
Jain told ET that 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 also said that they are keen to invest in Indian companies and startups in the digital content and services business to get them into the Xiaomi ecosystem.
A Boston Consulting Group report said the USD 500 million video streaming market in India is set to touch USD 5 billion by 2023 with some 650 million users. The internet services sector in India is currently valued at USD 33.8 billion and as per the Internet and Mobile Association of India it is expected to double by 2022 .