LeTV super TV giant "encirclement and suppression"

In May this year, LeTV officially released Super TV products. Jia Yueting, chairman of LeTV, once said that like Apple, the television will be Internetized, completely "subverting" the traditional TV industry. At the beginning of the LeTV Super TV release, the most exciting thing is price. However, since its launch one month ago, many TV manufacturers have successively lowered their prices and launched a "price war" for LeTV. LeTV does not have a price advantage.

Traditional home appliance manufacturers also launched a "media war." Sharp China stated that it has never cooperated with LeTV to develop Super TV. The subsequent occurrence of Lenovo's "hand in hand" Sharp event made people even feel "encirclement and suppression".

In the "encirclement and suppression", LeTV's own business model has also been questioned. Jia Yueting once said that LeTV hopes to make profits on the hardware, occupy the market as soon as possible with low prices, and then profit through high-definition video service fees and advertising fees. However, the analysis indicates that the Super TV function is not super functional and there are not many breakthroughs in function. Now it is facing a loss of price advantage. It is still unknown how much LeTV can reach sales volume. The face of rapid development of IPTV and local radio and television competition, its high-definition video on demand fees are also facing pressure.

Nevertheless, this did not affect the capital's pursuit of LeTV. After the conference on May 7, LeTV.com's share price appeared two daily limit. On June 14th, after a cumulative increase of more than 20% for three consecutive days, LeTV rose 7.4 percent against the trend, to close at 28.31 yuan, which was the highest point since its listing. Calculated at this price, LeTV's market value has exceeded Youku Tudou, with a price-earnings ratio of over 100 times. Behind the sharply rising stock price is an opportunity or risk?

On May 27, Sharp made a statement that LeTV was paralyzed. Sharp said that it has never cooperated with LeTV to develop super TV. At a press conference held several days ago, LeTV once indicated that Sharp was one of its partners. Following this, some traditional home appliance manufacturers responded to price reductions for LeTV’s claimed low prices. Sharp TV manufacturers such as Sharp, Sony and Skyworth have all launched 60-inch LCD TVs with prices of more than 7,000 yuan.

LeTV, a latecomer in the TV industry, is facing a siege. On June 5, Lenovo announced that it will cooperate with Sharp on smart TVs. Sharp will launch a "meet-of-war" war on LeTV and "hands in" Lenovo to launch new smart TV products. IT giant Lenovo also stood in the camp of "encirclement and suppression" of LeTV.

The "encirclement and suppression" triggered by the "Sharp Statement" caused Leti.com's share price on the road to turn its head down. However, on the four trading days before and after the Dragon Boat Festival, LeTV.com's stock price once again reversed the trend and rose by 28 yuan.

In fact, LeTV's "enemies" are not only television manufacturers, but also many video sites, set-top box manufacturers, and even video production companies.

Whether LeTV's success in this game and LeTV’s ability to break through this “encirclement and suppression” will ultimately depend on whether its profit model can be successfully innovated. Letv originally hoped to make profits on hardware and earn money through late service fees and advertisements. But if this model is unsuccessful, LeTV will become an ordinary hardware manufacturer that makes money by selling TV.

Appliance makers form alliance to launch "price war"

Within one month after the launch of LeTV, many competitors reduced the price of 60-inch LCD TVs to over 7,000 yuan.

The remote control also sells for 199 yuan. Recently, in LeTV's fan forum, many users complained about LeTV's price details.

At the beginning of the launch of Super TV, the most exciting thing is the price - 60-inch LCD TV X60 price 6999 yuan, 40-inch LCD TV S40 price 1999 yuan, and before this, the mainstream price of similar products in the 10,000 yuan To 12,000 yuan.

On June 9th, LeTV announced the price details of the Super TV. Many “music fans” discovered at this time that LeTV’s “Super Remote” was not a standard, but had to be increased by 199 yuan for purchase.

There are "music fans" who have made a calculation. In addition to the price of 60,999 yuan for the 60-inch super TV X60, users also need to pay 490 yuan for the first year service fee, 299 yuan for the cloud base, and 199 yuan for the super remote controller. The actual price is 7987 yuan.

When the "music fans" complained about the price, LeTV's competitors lowered their prices. The Beijing News reporter noted that since the launch of Super TV, many domestic TV brands have launched PKs with 60-inch LCD TVs of the same price. In Jingdong Mall, the prices of 60-inch LCD TVs from Sharp and Skyworth have been reduced to RMB 7,999, and the price of Sony's 60-inch LCD TVs is RMB 7,888.

Under the price cuts of traditional TV manufacturers, LeTV's 60-inch super TV has no price advantage.

According to Hong Shibin, a researcher in the home appliance industry, this is a "bulwark" for LeTV by traditional home appliance manufacturers: "For these vendors, there may be multiple products at high prices, but they will definitely come up with one or two products. Let's play a price war with music."

Sharp China Denies Collaboration with LeTV

Sharp was first involved in the relationship with LeTV and then "hands in" the association, which was considered to be "playing the face of LeTV."

In addition to price competition, traditional home appliance manufacturers have also launched a "media war." On May 27, Sharp China issued a statement saying that it has never cooperated with LeTV to develop Super TV. After the statement was released, industry insiders commented that "Sharp played LeEco's face" and "Lokoshi made a big Oolong."

The next day, LeTV.com stated that the SDP with LeTV is jointly funded by Hon Hai (owned by Foxconn) and Sharp headquarters. It has no direct relationship with Sharp China, but LeTV does use Sharp's technology.

This "public opinion war" has also been interpreted as an attack by traditional television manufacturers on LeTV. LeTV said in the statement that Super TV “reached the interests of some traditional whole-machine sales companies including Sharp (China)”.

The subsequent occurrence of Lenovo's "hand in hand" Sharp event has a more "encirclement and suppression" meaning. Sharp (China), who just had a relationship with LeTV, announced a high-profile "close cooperation" with Lenovo. On June 5, Lenovo and Sharp launched two smart TVs. Lenovo's purchase of Sharp's Nanjing factory, Lenovo did not deny when interviewed by reporters, saying that if the business needs, it will consider the acquisition.

As for the future of LeTV, the operators and researchers of the household appliance industry seem to have unified their calibre and agreed that they are “not optimistic”.

Skyworth spokesperson Li Congxiang believes that TV makers have a special emphasis on scale, and that it is difficult to generate profits if the annual sales are less than 1 million units.

TCL spokesperson Liang Qichun said that after years of development, the home appliance industry has paid special attention to the accumulation of technology, and it is difficult to rely on single products to achieve results in terms of channels and services.

Liu Buchen, a researcher in the home appliance industry, is LeTV's “bearer”. Since the LeTV conference, he has issued multiple microblogs and pointed out various problems with LeTV. In an interview with the Beijing News reporter, he said that the market structure of the color TV industry was formed after many years of precipitation. Samsung did a good job of TV as a mobile phone tablet. LeTV said that traditional manufacturers do not have Internet thinking and they are too small to look at their opponents.

Conflict with Bestrade and Radio and TV

IPTV and cable TV stations in various places have also opened high-definition video-on-demand (VOD) features, and it is considered that LeTV is not easy to obtain a competitive advantage.

LeTV also manufactures boxes while producing smart TVs, and this market is even more of a quagmire and a match.

According to industry insiders, the manufacturers of TV boxes are divided into three categories: One is Internet companies such as LeTV, Xiaomi, PPTV, and even Alibaba is also planning Alibaba closely; the other is that 7 companies have Internet TV licenses. Companies such as Zhejiang Hua Digital launched Xiao Hong and Hunan TV launched a mango box; three of them were home appliance companies and IT vendors. Skyworth even planned to spin off the box that produced the box. Letv switched from the video industry to the hardware field. Undoubtedly, it broke into the Red Sea from the Red Sea.

According to LeTV's "platform + terminal + content + application" full-fledged industrial chain strategy, LeTV.com also cooperated with CNTV, trying to create an Internet TV platform - LeTV TV version. This makes LeTV become a competitor with Bestrade and local radio and television network companies (IPTV and cable TV have paid high-definition on-demand services).

The purchase of LeTV, must pay the first year's annual fee of 490 yuan, but LeTV's customer service staff told the Beijing News reporter, this 490 yuan only includes some of the high-definition copyright film and television drama, and can not watch live television. If you need to watch TV properly, you still have to connect cable TV and pay for cable service.

The 490 yuan video on demand service fee, plus two or three hundred yuan for cable TV, will cost seven or eight hundred yuan a year. It is still unknown whether users are willing to pay for it.

In contrast, in recent years, the rapidly developing policy of IPTV has been more flexible, allowing users to watch live broadcasts from hundreds of TV channels and on-demand high-definition video. In terms of marketing and promotion, telecom operators often bundle IPTV services into broadband charges, bundle them and sell them to users. The price is even lower than that of cable TV.

Shanghai Telecom's customer service staff told the Beijing News reporter that at present, Shanghai Telecom's IPTV service is bundled with broadband Internet access. The annual fee for 10M broadband and IPTV is 1599 yuan, while the price for separately handling 10M broadband service is more expensive, which is 2160. yuan. Customer service staff said that they generally recommend bundled packages to customers.

In addition to IPTV, cable TV stations around the country have also launched high-definition video-on-demand (VOD) functions, and their annual fees are mostly below 490 yuan. The Beijing News reporter inquired that the annual fee for Beijing Gehua HDTV on-demand was 336 yuan, while that for Guangdong Southern Cable was 10 yuan and 20 yuan per month.

Under such heavy competition, analysts believe that it is not easy for LeTV to gain a competitive advantage.

"The whole industry chain" layout enemies

Film and television drama production, selling wine, LeTV said to dig deep customer resources, "extracted music as Lexus on the industry value chain."

LeTV has expanded to the upstream, and its music video industry has entered the field of film and television drama production, and has signed Zhang Yimou as an artistic director. Jia Yueting, chairman of LeTV, said that it is necessary to strive to let LeTV enter the industry's top three in 2013, which has allowed Huayi Brothers, Ray Media and other movie and television companies to become LeTV’s competitors.

â–¡ Beijing News reporter Zheng Dawson reports from Beijing (Beijing News reporters Li Yuan and Liu Xia also contributed to this article)

LeTV is even selling wine. Its network wine network was established in December last year. The company stated that it would like to dig the customer resources of LeTV and “extract the remaining value in the LeTV industry chain”. It is worth noting that LeTV and NetWine are all owned by the LeTV Group, and the listed company LeTV is a “brother company”.

With such a layout, Jia Yueting wants to create a brand new profit model that integrates hardware and software vertically, captures the market through low-cost hardware, and earns real money by charging for content service fees.

In an interview earlier, Jia Yueting once said that he did so from the Apple case. All of Apple's applications are for its own hardware, from hardware to software to content, to service, to the platform, perfectly integrated. If you only do hardware, or thinking in the industrial age, it is not the thinking of the Internet age.

In his opinion, no matter how horizontally integrated, it is an addition. Only the true vertical integration of the various links in the industry chain can be multiplication, or even exponential, and thus achieve explosive growth.

According to his algorithm, if the number of users of the Super TV plus the box reaches 1 million, then the service fee for one year is 490 million yuan; if the number of users reaches 10 million, the value of TV boot advertising can be comparable to provincial TV.

Can LeTV's profit model break through?

According to industry insiders, the key to LeTV’s ability to break through is whether its business model can be truly realized.

Today, LeTV is like an octopus. Its tentacles reach out to various industries in the surrounding area. One trick is careless, that is, the possibility of being strangled by competitors.

According to industry insiders, the key to LeTV’s ability to break through is whether its business model can be truly realized. However, with the strength of LeTV, it is not easy to construct an entire ecosystem. After all, LeTV is not Apple. Jia Yueting is not Jobs.

First, the number of users is a crucial factor in LeTV’s business model. Only if the number of users reaches 1 million or 10 million, Jia Yueting will be able to realize the business model of earning profit from service fees and profit through publishing ads; to say the least, only the increase in sales volume can dilute TV production, marketing, and service. The huge cost.

However, the number of LeTV users can be great, and it is still a question.

The reason why Apple's closed ecosystem can be formed is that an important prerequisite is that both the iPod and the iPhone have triggered thousands of "fruit powders".

Judging from the products currently launched by LeTV, Super TVs are not "super" and do not have many unique features. At the same time, LeTV has not yet been listed and has basically lost its price advantage. Against this background, LeTV is unlikely to want large-scale distribution.

Second, it is unclear how high LeTV service fees can be paid. Compared with IPTV and cable TV, there is no special circuit for LeTV signal transmission, and the user experience is restricted by the speed of the Internet.

In other words, even if you purchase LeTV, you may not buy LeTV services. LeTV + Gehua Cable, LeTV + Xiaomi box, LeTV + IPTV ... These may be the user's choice, LeTV has many competitors in the high-definition video services, users have plenty of room for choice.

If LeSports business model is not successful, LeTV will become a mediocre video site, or a hardware manufacturer, then the listed company's market value of more than 20 billion yuan, more than 100 times the price-earnings ratio can be established?

After all, China's largest video site, Youku Tudou, has a valuation of no more than 20 billion yuan; and home appliance makers Hisense and Skyworth, which sell tens of millions of TVs each year, have a P/E ratio of 10 to 20 times.