Xiaomi Pictures Beats a Retreat from Filmmaking

The company is paring back its involvement in filmmaking from production and marketing to just investing as the device maker refocus on its core business.

Chinese technology company Xiaomi is radically scaling back its filmmaking division amidst market-share struggles and high-level executive changes as the firm continues to overhaul it business.

Barely a year after Xiaomi Co-Founder and Vice President Li Wanqiang announced he was returning to the company to head up Xiaomi Markets and Xiaomi Pictures Division, the company is hastily beating a retreat.

Last week local media reported that the marketing department at Xiaomi Pictures, the filmmaking arm of Xiaomi, was being disbanded. The company has decided to refocus on its core business of phone manufacturing, according to reports citing company insiders.

The idea initially had been that the company, which makes mobile phones, TVs, air filters, and routers would also make the content for the media devices.

Reports suggest that in addition to jettisoning its marketing department, the company will also cease production activities but will still continue to make investments in film productions

The news leaked out onto Chinese social media just days before Hugo Barra, a Google veteran who ran Xiaomi’s global division, resigned from the company and returned to Silicon Valley to take a position with Facebook.

The company claims it has invested in over 10 productions but evidence of that is difficult to find. If those investments have been made, they haven’t been significant enough to warrant a credit.

The hardware maker captured global attention in 2013 with its savvy marketing strategy and rapid growth in sales of its sleekly designed Apple-like devices sold at budget prices.

Xiaomi quickly became the fifth-largest seller of smartphones on the planet in 2014 and at one point was worth an estimated $46 billion. That commanding position was weakened more recently with increased competition from domestic Chinese rivals such as Huawei, OnePlus, and Lenovo Group Limited.

The partial retreat from the market by the phone maker is the latest indication that the Chinese film business, which has in recent years attracted interest from non-film business oriented companies, is undergoing a correction.

Xiaomi’s short-lived entry into the filmmaking business came as rivals like Alibaba, Tencent, and LeEco made similar forays into the field with varying degrees of success.

China’s domestic ticket sales only increased 2.4 percent in 2016, compared with a 49 percent jump the year before, according to Entgroup, a Beijing-based film research firm.

The final sales number for the year ended up at RMB 45.7 billion, far short of the RMB 60 billion target the government set and that many industry watchers fully expected would be achieved.

LeEco announced last week it was facing a major cash shortage due to overly aggressive expansion plans which hinged on an almost opposite strategy of investing in content over hardware.

The cash-strapped company announced Sunday that it landed RMB 16.8 billion ($2.4 billion) in fresh funding led by China real estate titan Sunac China Holdings Ltd.

— Additional reporting by Wang Xinming