STRATEGY: How Xiaomi cracked the TV code

Having entered the Indian TV market in 2018, the Chinese manufacturer has emerged the fourth largest player here

Having entered the Indian TV market in 2018, the Chinese manufacturer has emerged the fourth-largest player here. ARNAB DUTTA writes

In late-2016, nearly two years after Chinese consumer technology major Xiaomi entered India with its range of smartphones, a group of researchers were busy collecting and processing consumer insights at the company’s India headquarters in Bengaluru. Xiaomi was yet to break into the top league of smartphone players in the country, but the team was working on a more ambitious project: They were readying the ground for the launch of a device with a much larger screen — a television set.

After nearly one and a half years of consumer research and application of the findings in tweaking its product, Xiaomi entered the local market with three models of smart TVS in March 2018. And by November that year, the firm had already shipped one million television sets to Indian customers. While it took the company close to nine months to hit the first million mark, the second million came within six months — by May this year. Raghu Reddy, head of TV category and online sales for Xiaomi India, says the company has already crossed the three million mark (October) — an achievement considering the market houses over 40 brands and all major TV makers globally, plus Xiaomi had stepped into the market late... only 18 months ago.

As per Consumer Electronics and Appliances Manufacturers Association (CEAMA), the country’s leading industry association for the appliances and consumer electronics sector, Xiaomi held a 13 per cent share of the overall TV market in 2018-19. While it continues to trail the three TV majors — Samsung (27 per cent), LG (25 per cent) and Sony (17 per cent), it has already toppled one of the big four —Panasonic (5 per cent).

Unlike the big four, Xiaomi offers only smart TVS. According to Reddy, while in early-2018, the share of smart TVS in the local market was some 18 per cent of the total, by September 2019 it had grown to 33 per cent. “As per estimates, Xiaomi has contributed nearly 80 per cent to this surge in smart TV sales,” he says.

Great going and the company attributes its success as much to pricing as to the overall product package. And its early decision to map the market well before entering it. Here are a few key insights that became the guiding light for the firm.

The rise of over-the-top (OTT) content and its popularity among smartphone users led Xiaomi to focus on smart TVS in the first place. “We realised the growing number of consumers who were fond of OTT content would also like to watch them on a larger screen, in their drawing rooms preferably. However, at that time the prices of smart TV were 25 to 40 per cent higher than that of a

regular LCD or LED TV of the same size. That was big barrier for them,” Reddy says.

To capture the latent demand, Xiaomi launched its first lot of smart TVS at the lowest price possible — even lower than the price of an LED TV from one of the big four. It came up with a 32-inch smart TV at ~13,499. And its flagship product — a 55-inch Ultra HD LED smart TV at ~54,999 — for a price that was at least 50 per cent lower than that of the closest competitor.

Xiaomi packed those television sets with most popular OTT apps like Hotstar, Sonyliv and Zee5. And to make the search experience seamless — a key feature for the smartphone-savvy consumer — it introduced a universal search engine that locates the searched content if it is available anywhere — online or on live broadcast. Analysts say, these features gave Xiaomi a head start in the market.

According to CEAMA, OTT saw a rapid growth since early-2018 due to their variety and quality of content and the convenience of its “on-demand” feature. This has resulted in a change in consumer behaviour — especially among buyers of entrylevel TVS, says the association.

Reddy agrees. The measures were crucial, given that at the time of its entry a bunch of other brands were eyeing the same market with their competitively priced smart TVS. Brands like Micromax, Thomson, Kodak, iffalcon from TCL, among others, were flooding the market with smart TVS sporting similar price tags.

To beat competition, Xiaomi began to sell its TVS online only. In terms of physical presence, the brand has a reach of over 2,500 branded or partner stores. Moreover, as competitors like Samsung, LG, Thomson, Vu, Kodak began catching up by pre-installing popular OT T apps, Xiaomi started loading regular software updates and added newer OTT apps like Eros, Hoichoi, Shemaroome, Jiocinema and Altbalaji in the TVS that it had sold already.

Like in the case of smartphones, with improving video quality and the speed of broadband, consumer preference was, in the meantime, shifting towards larger screen sizes for TVS. CEAMA, estimates that TVS with 55 inch or larger screens will have 20 per cent market share by end-2019 compared to 8 per cent two years ago.

Xiaomi has not only replaced its older models with newer ones, it has now launched many more 55-inch models and a 65-inch flagship model.