Hardware loss content to make money LeTV want to copy TV mode

According to LeTV’s performance report, LeTV’s total operating revenue in 2014 reached 6.824 billion yuan, a year-on-year increase of 188.98% compared to 2013 revenue of 2.361 billion yuan; its operating profit decreased by 99.64% year-on-year from 237 million yuan in 2013 to 86.4 million yuan. The total profit also fell by 89.51%, from the previous year's 246 million yuan to 25.84 million yuan last year; but the net profit attributable to shareholders of listed companies still rose 26.84% year-on-year, from 260 million yuan the previous year to 320 million yuan last year.

LeTV said that LeTV Super TV has exceeded the annual sales target of 1.5 million units, making the "platform + content + terminal + application" ecological model play a synergistic effect, promoting the steady growth of the main business.

LeTV for video content started to launch LeTV in the second half of 2013 and entered the “hardware” field with a cross-border stance. Because the unit price of hardware is higher than that of service items, LeTV’s operating income is showing a trend of rapid development.

Talking about the pulling effect of television on LeTV’s operating income, Zhang Zhiwei, LeTV’s new vice president, told the First Financial Daily that the average TV price of LeTV is more than RMB 3,000. Zhang Bing, research director of Display Search in China, calculated that with a sales volume of 1.5 million TVs and an average price of 3,000 yuan, the revenue is about 4.5 billion yuan, which is roughly the same as that of LeTV last year.

Software makes profits

Although LeTV’s TV sales have soared, its hardware is not profitable, driving down its operating profit.

“Letvision said that each TV is not a loss. I estimate that the price per TV is similar to the cost. Because a company still has personnel, storage, logistics, advertising and other costs, if it counts, the probability of Levision hardware loss is relatively high. "Peng Xiandong, general manager of China Blackcom Research Center, said.

In case of hardware loss, it is necessary to use the content and advertising revenue to bring in compensation profits. Peng showed that LeTV has operating pressure from 2013 to 2015, but there is still room for future advertising revenue. In 2015, it will guarantee a sales target of 3 million units at the end of the year, and cumulative sales of TVs will reach 5 million units in three years.

"This year LeTV's sales target is 3 million to 4 million units." Zhang Zhiwei believes that LeTV is mainly based on large-screen televisions, with good quality and high stickiness. Last year, there were 2 million units, and the revenue from advertisements and applications could not cover the total cost. However, if there are 5 million units in this year, the advertising and peripheral revenues may increase geometrically because advertisers attach great importance to the quality and quantity of users.

Zhang Bing believes that "the key to see the renewal rate." LeTV's logic is hardware loss, content advertising to make money, it sells TV not only the surface price, but also users to pay the content service fee of 980 yuan for two years, which is not the same as the traditional color power plant, so its model can continue to see the key users Will it be renewed?

“Our current renewal rate is about 85%. Some people use LeTV as a monitor in non-network environments. These are not our target customers. With rich content and a convenient interactive system, LeTV's users are more sticky.” Zhang Zhiwei disclosed .

However, according to Zhang Bing, LeTV sold only 300,000 units in 2013, so the key to the renewal rate depends on 2016. Moreover, LeTV will increase the number of start-up advertisements in the future. It also needs to find a balance point if users want to watch advertisements while paying.

Liu Ye believes that LeTV has been successful so far. However, if the LeTV model can continue, it still needs to face the risk of policy control. Last year, SARFT once blew up regulatory turmoil and demanded that online video applications could not be directly loaded on smart TVs.

Can you copy it to your phone?

At present, LeTV is working hard and is about to launch mobile phones. Its color TV model, can be successfully copied to the mobile phone business?

China Quality Certification Center website recently showed that LeTV has passed 3C certification and its model is Letv X600, which is divided into two products: LTE and TD-LTE. The applicant is LeTV Mobile Intelligent Information Technology (Beijing) Co., Ltd. (hereinafter referred to as “LeTV Mobile”). ). In January of this year, LeTV announced the establishment of LeTV Mobile. Feng Xing, former vice president of Lenovo Group and general manager of MIDH China, joined the company as Senior Vice President of LeTV Holdings and President of LeTV Mobile.

According to LeTV’s announcement, LeTV’s online video business currently ranks among the top three in the country, alongside iQIYI and Youku. Leighton chairman and CEO Jia Yueting once stated that based on the vertical integration of “platform + content + terminal + application”, LeTV’s goal is not only to manufacture mobile phones, but to create a complete mobile internet ecosystem and realize “multi-screen” A cloud."

Liu Ye said that the success of LeTV does not mean that LeTV will succeed. Mobile phones are personal consumer goods, not just price, but also look at the experience. And now some 5-inch Android smart phones have sold 600-700 yuan, LeTV in the television field as a subversive at low prices, but the field of mobile phones have millet, Huawei, Meizu and a host of cost-effective subversive, future challenges are quite Big.

LeTV is still making "manufacturers". Last year, LeTV began to “go to the ground” to develop offline sales outlets for LePar, a cooperative platform. Zhang Zhiwei disclosed to the reporter of the First Financial Daily that the sales network of LePar in China has exceeded 500 last year and the target in 2015 is 2000. LeSpot Online Mall mainly covers first- and second-tier cities; LePar mainly covers third-to-fifth-tier cities, and second-tier cities have a smaller number of applications in China.

"We are building O2O channels, online shopping malls, LePar integration, online and offline linkage, users can understand online, offline experience, online purchase, offline service," Zhang Zhiwei said.

He stated that LePar's integration of social resources relies on three benefits: First, sales of the product in the preceding paragraph; Second, provision of after-sales user software application services, income share of LeTV; Third, future partners will share LeTV's long-term revenue, including sales content. Related derivative products, LeTV forward products (if Levision launches cars in the future, LePar has a strong partner will become a priority LeTV dealer), and even get LeTV options.

It is understood that as the person in charge of LePar, Zhang Zhiwei is also involved in the preparatory issues for LeTV's mobile phone sales. In the future, LeTV may also enter LePar's offline channels. Talking about LeTV, Zhang Zhiwei believes that “Letvision has a huge content. This is our core competitiveness. Other brands do not have it. We must maximize its energy, and we have accumulated a large-screen TV. User experience, UI interaction system experience."