BEIJING (Reuters) – Xiaomi Technology Co Ltd will acquire a stake in Chinese video streaming firm Youku Tudou Inc, cementing ties between China’s leading smartphone maker and one of the most popular content providers in the video-hungry country.
In a joint statement on Wednesday, the companies said the transaction would take place on the open market but did not specify how large the smartphone maker’s stake would be or how much would be invested.
Word of the stake acquisition, coming a week after Xiaomi pledged to invest a total of $1 billion to expand its Internet TV content, adds to the frenzy in China’s fast-growing online video market. E-commerce giant Alibaba Group Holding Ltd already owns nearly a quarter of Youku Tudou.
Online video sites include those run by Sohu.Com Inc , Baidu Inc’s iQiyi and Tencent Holdings Ltd have been jockeying for position in a market estimated to be worth $3 billion in 2014.
Youku Tudou and Xiaomi will jointly invest in the production and distribution of online video content and films, while Xiaomi will license Youku Tudou’s video content, the companies said.
But Xiaomi may be entering a regulatory quagmire. China’s authorities have in recent months moved to cut unapproved and “harmful” online TV content, which had been freely proliferating.