Xiaomi is India’s top smart TV brand, as per a new IDC report.

“Anybody can make an electric car (a lot of brands are now doing it), but no one can get close to a Tesla. Tesla is at least 10 years ahead of competition,” Eshwar Nilakantan, who is category lead for smart TVs at Xiaomi India, tells Financial Express Online in an exclusive interview. That is a crude analogy, Eshwar points out –to compare Xiaomi with Tesla– but one that is seemingly backed by logic. “Anybody can make an Android TV but making the whole experience better is what’s going to take a lot of time for a lot of players. We have at least a year, year and a half lead over any other brand launching a smart TV now.”

Whatever it is that Xiaomi has been doing, it is safe to assume that it has been working. “As per IDC (smart home device tracker), we are the No.1 smart TV brand for Q1 of 2020,” Eshwar says, adding that “every second Android TV being sold in India today is a Mi TV.” That’s not the big breaking news though. It’s the part where you get to know that Xiaomi has continued to remain the top smart TV brand in India for the last eight quarters, straight. That is, since Q2 of 2018. Xiaomi entered India’s smart TV space in Q1 of 2020.

All of this is remarkable for two reasons. Smart TVs are still a relatively new concept for India and Xiaomi has been in it for only two years now. And already, Xiaomi commands a sizable 30% share of the segment (and 50% share of Android TVs) with its 32-inch models being the volume drivers (and the Mi TV 4X being the fastest growing in terms of market share). Eshwar is also quick to note that there was a time when many industry people said that Xiaomi “had lost it, because this consumer (buying 32 and 43-inch TVs) does not even consume internet content. But we were happy to prove them wrong.”

If you ask Eshwar, there’s no secret sauce to Xiaomi’s success. It’s just that Xiaomi has been sticking to the basics, “trying to solve the pain point of customers, rather than moving boxes (hardware) around” and by doing the right thing at the right time, it has been able to buck the trend to become this new trend-setter that’s also inspiring others to aim higher. India’s smart TV space has never been more exciting.

Doing the right thing (at the right time)

The 2017-18 period saw some huge changes in terms of how India was consuming content. Data was getting both cheap and fast. Of course, Reliance Jio had a lot to do with it, but because of it, everybody else also followed suit. India was waking (and warming) up to content streaming. It started primarily with YouTube and eventually the likes of Hotstar started getting traction with events like IPL being streamed by millions concurrently.

Mi TV 4X

“We believed that if we could offer an affordable screen with great quality and latest hardware, we would be able to take a lion’s share of this space because this was an untapped market,” and “in the first half of 2018, we launched our first smart TV with disruptive features at a disruptive price.” Eshwar is talking about the Mi TV 4 which literally took India’s smart TV market by storm upon launch. A 55-inch smart 4K HDR TV for Rs 39,999 was hard to imagine back in the day after all.

The 55-inch Mi TV 4 was followed by even more affordable options with varying screen sizes in the coming months, but more importantly, it’s how quickly Xiaomi was able to understand the market, and adapt, that helped it capture the lion’s share of the market it had set out to achieve. That it did by changing its go-to market strategy. A primarily online-only company was going offline, but it wasn’t easy.

“We realized that if we had to continue growing in this category, we also had to ramp up our presence in offline stores. But to do that, you needed a lot of promoters, a lot of display space, and pay a lot of margins, because the cost of operation was very high initially. We did not choose that route,” Eshwar says.

Instead, Xiaomi chose the route less traveled. The company approached 50 of its Mi Preferred partners in Karnataka and asked them to list their TVs. “Initial response was just about okay because people didn’t normally expect TVs inside a mobile store. But once they got aware, things started picking up.” In the coming months Xiaomi would expand to over 2,000 such outlets, a model that “our competition has started copying as well.” Around the same time, Xiaomi had also started expanding its Mi Stores. Xiaomi has over 5,000 Mi Stores in India now. It was a risk, but a risk worth taking. With a 20% market share, Xiaomi is now the third largest smart TV brand in India when it comes to offline sales.

In the middle of all this, Xiaomi was also working on an even bigger plan, to potentially make its smart TVs in India. In fact, it had been looking for partners even before the launch. In October 2018, Xiaomi partnered with Dixon Technologies and started local assembly, at Tirupati, Andhra Pradesh. Over 85% of Xiaomi Mi TVs are now made in India and “we have also started making our main boards here in Chennai.”

Building trust

Unlike smartphones, smart TVs are a whole different ball game. Almost 30-40% of buyers require installation as well (while in the case of phones, you simply ship it to customers, and that’s about it) and after-sales is tricky. Xiaomi has over 700 service centres covering close to 12,000-13,000 PIN codes and up to 95% installations happen within 24 hours (after the token has been raised), it claims. Moreover, “we have one of the lowest field failure rates for our TVs because of all the quality checks that we do.”

From a pure manufacturing standpoint, Xiaomi maintains one of the most “stringent” quality standards. “We select about 30 people from the company to whom we send out beta testing units to find any bugs, so we can fix them (before launch). We also run a Mi Fan Early Access Program wherein we send our Mi TVs to those enthusiastic enough to test our features first (we don’t pay them anything),” Eshwar explains. The latter helps Xiaomi get feedback and suggestions for features that it may or may not bring to its Mi TVs in the future. “I think the biggest advantage that Xiaomi has is that we continue to talk to our fans (to make our products better).”

Mi 2.0 and monetization

Xiaomi is no doubt at home in India when it comes to smart TVs (and smartphones) but 2020 is also about a certain Mi 2.0 taking centrestage. Mi 2.0 is about Mi going full throttle with new products, new categories, and inevitably, more premium pricing. Since Mi TVs are “Mi” TVs, the next obvious question would be, what lies ahead. “For the second half, something is coming up. I’ll not be able to share the specifics, but I can say, we’re working on something.” Probing a bit further, bringing in the OnePlus smart TV angle into the picture and how the company made its debut with high-end QLED smart TVs in India, Eshwar hints “we are working towards something like that” but we will have to wait for more specifics. Short answer, a more premium (possibly also QLED) Mi TV for India, can’t be ruled out completely at this point of time.

Mi Box 4K

Which brings us to the last, but most important question. How does Xiaomi plan to monetize its Mi TVs in India and whether or not serving advertisements is a possibility in the future? The answer to that is a bit complicated. So let’s just hear it out as is.

“Xiaomi is an internet services company, which means that we don’t make money on the hardware and that’s one of the reasons why you see most of our products are priced so aggressively. Our hardware margins are negligent. But at the end of the day, we are a listed company, which means that we have a responsibility towards the shareholders we have.

Having said that, for TVs, until now, we don’t know what the strategy (of monetization) is going to be. We do have a certain strategy which is whenever somebody signs up for a subscription on Mi TV, we get a very tiny share from our content partners, but then that’s really miniscule and that’s the only way of monetization that we have right now. Beyond that, we’re not thinking about any other mode of monetization right now. But will we never think about it? No, we will have to think about it at some point. Right now, I still believe 4 million (smart TVs) is not a very big base, once we hit a bigger base, those are things that we will be looking at. In terms of what form and shape it would be, we have no comments right now.”

Xiaomi is off to a blazing start in India this year, with regards to its smart TVs, and there’s still a lot that’s coming soon, including new streams of monetization (hopefully, no pesky ads) once it hits a non-stipulated golden figure. But despite all that’s coming, one thing will remain constant. Xiaomi will continue to sell experiences rather than just moving boxes around.