iQIYI, which is backed by Internet search giant Baidu, sees the deal as helping it further expand into mobile video, in which it already claims a lead.
A statement from the three companies framed the deal as helping Xiaomi to capitalise on iQIYI’s content development and iQIYI to deepen cooperation with the world’s third largest smartphone maker.
Xiaomi itself has 85 million monthly unique users of its online platform and Xiaomi and iQIYI foresee greater overlap of their user bases.
“This round investment by Xiaomi shows that Xiaomi recognises the high value and future prospects of both the online video industry as a whole and iQIYI as a company. We believe that through Baidu, Xiaomi, iQIYI‘s joint efforts, we can usher in a new stage of development for the whole Internet industry, and create a vibrant and more complete, video ecosystem,” said Gong Yu, CEO of iQIYI.
The deal was initially reported, but unconfirmed, earlier this month when Xiaomi announced that it would also buy a stake in and establish a strategic relationship with iQIYI’s direct rival Youku Tudou.
At the beginning of the month Xiaomi said that it would pour $1 billion into content.
Baidu will also up its investment in iQIYI, with a cash injection of “several hundred million dollars.”
“Baidu will give constant strong support to iQIYI through both capital and resources and play a key role in building up the industry chain and holistic platform as well as maintaining rapid growth during the next stage of development,” the three companies said in a statement.