Internet TV is silent, whether LeTV can recover becomes the focus of the industry

LeTV TV is facing its most serious crisis. It was once a commercial model for Internet TV, but now the constant crises and negative news about LeTV have plunged the entire industry into a low ebb.

LeEco crisis triggers industry earthquake

Data provided by the survey agency show that in the first half of 2017, the domestic traditional color TV brand market share was 69.1%, down 0.3 percentage points from the same period last year; while the Internet color TV brand market share was 12.0%, down 4.0 percentage points from the same period last year. Internet TVs are collectively experiencing a cold winter.

It is reported that the actual sales volume of LeTV TV in the first half of this year has dropped to less than 1 million units, and the annual sales volume is expected to be no more than 2 million units. The annual sales target of 7 million units is impossible to achieve. There are also reports that LeTV will shut down some TV factories and even abandon the TV business.

The sales of Baofeng TV and Weijing TV, which are similar to LeTV TV, have also suffered a setback. In 2016, Baofeng TV shipped more than 1 million units, and Weijing TV shipped 800,000 units. However, according to the latest data obtained by China Home Appliance Network reporters from informed sources, Baofeng TV has shipped 500,000 units so far, and Weijing TV has shipped only 400,000 units.

Baofeng Technology's 2017 interim report showed that its revenue was 826 million yuan, a year-on-year increase of 66.89%; however, its net profit was only 15.7249 million yuan, a year-on-year decrease of 16.64%. Baofeng Technology CFO Jiang Hao once said that the main reason for the decline in net profit was the loss of its TV business. As Baofeng TV's investment increased, the absolute value of the loss also increased despite the high-speed growth of 146%, which led to a decline in net profit attributable to the parent company. Feng Xin, CEO of Baofeng Group, once revealed that in 2016, every Baofeng TV sold would result in a loss of 300-400 yuan.

According to information previously disclosed by Weijing Technology, its revenue in 2015 was 137.8 million yuan, with a net loss of 131.5 million yuan. Its total assets were 185.2 million yuan, and its liabilities were 316.7 million yuan. In March this year, Weijing Electric Appliances was reported to have suffered losses of more than 1 billion yuan.

One obvious change is that Internet TV has been silent since the second half of this year. Previously, LeTV held nearly 200 "PPT press conferences" every year, and other brands also held press conferences several times a year to announce new products. However, since the LeTV crisis broke out, most Internet TV brands have entered a silent period.

The LeEco crisis has shaken the industry. “Definitely,” said the founder and CEO of a Beijing-based Internet TV brand when asked by a reporter from China Home Appliance Network whether the negative impact of LeEco has had on the Internet TV brand’s image and sales at the terminal.

Regarding the LeEco model and its impact on the industry, the above-mentioned senior executive commented to the reporter, "There is nothing wrong with LeEco's business model itself, and there is hope for profitability. LeEco TV has also achieved scale. However, the funding problem of the LeEco system has affected LeEco's basic video copyright and content. In addition, without the support of high-quality IPs from LeEco Sports and LeEco Pictures, this model is not very attractive."

"The color TV industry is not doing well this year, but the impact of LeTV (TV) has had an overlaying effect on the Internet TV industry," the senior executive said, "making things worse."

This Internet TV brand has been very active before the first half of this year and has made many voices in the industry, but the senior executive said that the company is currently in a "silent period" and "the business is being optimized in the near future, mainly focusing on Internet TV home platform operations and deepening user value (adjustments)."

Gu Yingqiong, software engineer at eBay Seattle, USA, said that for three months, Jia Yueting, former chairman of LeTV, has been on the headlines every day because of a series of revelations he wrote on self-media platforms. Gu Yingqiong exposed the problems of LeTV's model in his series of articles.

LeEco has developed many Lepa stores. Gu Yingqiong said that "more than 98% of them are losing money, and LeEco is still constantly deceiving home appliance merchants to open experience stores." He said that LeEco's sales routine is "telling you that it is very profitable and how to make money, so that you buy at a high price, but then they hold the goods and don't ship them to you. They give priority to sales in shopping malls and online channels, and there is no profit margin for offline sales. The market share of offline agents is very small, so small that they cannot survive." He said that LeEco and its Lepa stores "are a Ponzi scheme."

The outside world has mixed opinions on LeEco. Zhou Kun, CEO of Fengxing TV, told a reporter from China Home Appliance Network that "LeEco's money-burning model has lost too much money and has finally become a bottomless pit. LeEco should have been shunned and abandoned by channels, customers, and consumers. Its brand and image have completely shattered after more than a year of fermentation."

LeTV, Baofeng, and Weijing all have the same model. Their crisis is essentially caused by the money-burning model. LeTV and Baofeng both started as video websites, and after listing, they expanded into Internet TV, film, sports, VR equipment, and finance. They have the same development path. They all adopt the strategy of subsidizing hardware with content and selling at low prices. Although the revenue of the TV business has grown rapidly, it has continued to lose money every year. Since LeTV went public, it has raised more than 3.5 billion yuan per year, and Baofeng has raised 1.012 billion yuan since its listing.

Is there still hope for Internet TV?

Especially after the LeTV crisis broke out, the impact on the entire Internet TV industry was obvious.

Dong Min, vice president of AVIC Cloud Network, told a reporter from China Home Appliance Network that "LeTV has an impact on the decline of Internet TV companies." Dong Min believes that the overall environment of the color TV industry is not good, including high panel prices, which has caused traditional brands and Internet brands to decline sharply, price wars are difficult to maintain, and Internet companies' operations and financing are in a comprehensive decline.

Liu Buchen, an observer of the home appliance industry, believes that from the perspective of the industry, the birth of Internet TV has broken the long-standing single hardware profit model of traditional color TVs and realized the "hardware + software" dual profit model, which is indeed innovative in terms of business model; from the perspective of consumers, Internet TV and traditional color TV are not essentially different, and the content and services it provides have not been able to surpass traditional color TVs. It is precisely because it has never been able to establish a differentiated advantage that Internet TV has finally been questioned by consumers.

"Whether it is an Internet brand or a traditional brand, the business model and methods are essentially the same. The core is to let consumers know about your products and information, and your products must be alternatives to traditional ones." Zhou Kun, CEO of Fengxing TV, who is also engaged in Internet TV, still has confidence in the entire industry when he was interviewed by a reporter from China Home Appliance Network. He told the reporter, "Standing in the camp of Internet brands, I hope that LeTV, Baofeng, and Weijing can do well, which is good for the development of this industry. However, their failure does not mean that the development of the Internet TV industry is not good, because the future of this industry is determined by consumer demand and bandwidth, and these two factors are very optimistic. At present, more than 90% of rural households have access to broadband."

According to the latest news, LeTV TV has recently "talked" with BAT, and it is unknown whether it will attract a new round of investment. According to a new LeTV insider, "Currently, LeTV TV production is recovering, and various recovery work in related links of the LeTV TV industry chain is also progressing."

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.