Will Xiaomi monetising streaming content pose a threat to OTT players?

Xiaomi has made a smart move with MI Video and MI Music but there is no immediate threat as the market has the potential to absorb new players, say experts

e4m by Moumita Bhattacharjee
Updated: May 14, 2019 9:17 AM

Xiaomi has come up with plans to monetise streaming content on MI Video and MI Music, a BCG report has revealed. The company has already launched Mi Pay, an UPI-based application for the same. Its move to step into the OTT space by monetising video content might pose some threat to the existing platforms like Netflix, Amazon and others, the report has suggested. 

exchange4media spoke to a few industry experts to understand the extent of the threat to the existing non-local OTT platforms since Xiaomi is the smartphone market leader in India. 

Vivek Katoch, VP & Head - Business Development, Grapes Digital, said, “Let us first understand the OTT market in India. As per estimates, the market is currently valued at $280 million with nearly 100 million subscribers, and it is growing at 35 per cent year-on-year. As per the BCG report, the Indian over-the-top (OTT) streaming services will grow to $5 billion by 2023 and the current players have only touched the tip of the iceberg. There is lot of potential in the OTT segment as a market. I don’t think there would be any immediate threat to OTT players from Xiaomi as of now as the market is growing and it has potential to absorb any new player.” 

However, he said the trend is here to stay. “If you read industry reports, mobile handset manufacturers have realized that it would be difficult to make more margin from the device sale only. It is the internet services that will bring additional revenues and margins for them. I see more mobile handset manufactures trying to capitalize and monetize internet services in the future. The trend is clearly visible from mobile handset manufacturers to internet services provider in the future,” Katoch added. 

Deep Mehta, Co-Founder, Digichefs, said it could be a possible threat but Xiaomi has a long way to go before it can match up to the content volume of Netflix or Amazon Prime. “Value-added internet services is the low hanging fruit for a market dominator like Xiaomi to make a quick buck in the long run. Mi Music, which is backed by Hungama music for free streaming, will definitely impact competitors like Saavn, Gaana and now Spotify, considering the app will come pre-installed in Xiaomi phones. Of course, the content and its curation will decide the stickiness of users to Mi Music. On the other hand, Mi Video is an aggregator of various video streaming services like Voot, Hungama Play, Sony LIV and others. This aggregation will definitely have new users weigh Mi Video as a competition to the likes of Netflix and Amazon Prime Video but there's a long way to go to match the quality and volumes of content generated by these two platforms.” 

Mehta, however, called it a smart move for now for a major market leader like Xiaomi to hop into the crowded space and build a differentiator via its value added services.

Frank D’Souza, Partner and Leader, Entertainment and Media, PwC India, said the OTT sector was all about whether you have just consumers or both consumer and content. “Anybody who has a direct connection with the consumer will try and get into it. Anybody who believes they either have content or now need to get consumer or others who have the consumers but license content from third parties can get into this sector. That’s how it operates.  We will have two-three large players and some niche players. How many apps can a person carry? Along with the spending power you should also need them to scout through everything. Why can’t Facebook be the next OTT player? They have the consumer base but they don’t have the content. See what is happening to Netflix. People are moving their libraries out of it. The only reason HBO agreed to give their library was because it doesn’t have its own platform.”

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