Xiaomi's next big venture is Internet television. Reuters

Xiaomi Corp. plans to expand its business into online video content and will invest $1 billion on the venture. The company hopes to expand its smart TV ecosystem, which already includes products such as its Mi TV software and Mi Box streaming device, both of which launched in 2013.

Xiaomi will compete against many others vying for the rapidly growing smart TV market in China, which already sells 20 million to 30 million sets each year, according to Digital TV Research. In addition to established hardware manufacturers such as Samsung and Apple, companies including Chinese e-commerce giant Alibaba and Chinese Web services provider Baidu are also major players in the smart TV market. The latter companies have also started to increase their investments in Internet TV, which is a $3 billion market as of 2014, according to consulting agency iResearch.

While most details about the venture remain unknown, Xiaomi has announced that it has hired Chen Tong, the former editor-in-chief of news portal Sina.com, to head its expanding TV business -- a tactic that has proved successful to Xiaomi in its smartphone business. Notable former Google figures such as Hugo Barra and Jai Mani are now a part of Xiaomi’s mobile division, which has seen massive growth in market share this year and plans to soon expand internationally.

"We want to repeat the success of Xiaomi's hardware integration model in the television industry," Tong said at a press conference.

Xiaomi will likely use other methods that have yielded success in its smartphone business with its smart TV and Internet TV business. Xiaomi’s budget-friendly smartphones sell at a 1 percent margin, and the company has an established repertoire of software and online services from which it profits. Its TV business will likely follow the same structure.