Xiaomi and Ouya have agreed to a partnership to bring Android games to China, according to sources from both companies.

Ouya, a U.S. video game company, has not reached its expected growth in its home country. This is why it is taking its business to China in the partnership with the smartphone manufacturer.

Xiaomi, which has recently branched out to create streaming set-top boxes and smart TVs with its MiBox and MiTV products, is now the top smartphone seller in China after just three years, ahead of global giants Apple and Samsung.

According to Ouya CEO Julie Uhrman, the details of the partnership are still being finalized. However, it is most likely that Ouya will be getting its own channel on the Xiaomi software that is installed on the MiBox and MiTV devices. Through the channels, gamers can purchase and download Ouya-developed titles before the year ends.

Xiaomi will also likely help in the marketing for Ouya games, Uhrman added.

"For the likes of Xiaomi's MiTV, its set-top boxes and other Android set-top boxes that are entering the market, this could be a turning point..in bringing great content and developers to gamers and into a region that they have never had access to before," said Uhrman.

Ouya, currently employing 40,000 developers and with 900 games on its platform, launched a $99 gaming console that is based on Google's Android operating system last year after receiving funding through crowdfunding website Kickstarter. However, sales have been generally disappointing for the video game startup.

Ouya shifted gears and began selling its software as a stand-alone app that allows developers to sell their games on the devices of other gaming hardware manufacturers. However, the company has formed just a few partnerships.

Unlike the video games that are developed for the mobile devices running on iOS and Android, Ouya-developed games are created to be played on TVs, similar to the PlayStation and Xbox. 

Ouya is looking to drastically increase its profits by entering the Chinese market, which is the third largest video game market in the world. Revenues in the Chinese video game industry grew by over one-third to almost $14 billion in 2013.

"The whole industry is still in a very early development stage," said Uhrman. "There is an opportunity for both Xiaomi and Ouya."

Uhrman added that the revenues made in China will be shared between Ouya, Xiaomi and the game developers, though no specific details have yet been revealed.

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