LeTV, which fired the first shot of TV price increase, deserves more attention for these three things

From traditional TVs to Internet TVs, the price war in the TV field has been going on for 30 years. Some people say that domestic brands' blind pursuit of low prices is not good for the development of the industry. Then, starting from September this year, the TV market has indeed reached the time when it has to raise prices.

According to the research data of iiMedia Research, due to various factors such as the adjustment of production lines of panel suppliers, as of August 2016, the price of 40-inch 4K panels soared from US$80 at the beginning of the year to US$100 in less than half a year. Even in just one month, the price of 40- and 43-inch panels increased by 12% to 15%.

The surge in panel costs will inevitably push up TV prices, but what is more surprising is that the first TV manufacturer to announce a price increase is LeTV, which has always emphasized lowering the price threshold of hardware.

On the eve of the 919 Music Festival, LeTV decided to increase the price of some models of its 4th-generation Super TV by 100-200 yuan. The subsequent strategic follow-up by other TV manufacturers was also seen by industry insiders as a general trend. However, if we analyze LeTV's price adjustment this time, what deserves more attention is far more than the price fluctuation of 100-200 yuan itself.

Reduce configuration or increase price? LeEco is loyal to its users and chooses the latter

Is it possible that TV prices will not increase as panel costs rise? Of course it is possible.

In the current era of smart TVs, it seems not difficult for the cost reduction of other TV components, such as processor units and storage chips, to offset the increase in panel costs.

Especially for LeTV, each generation of super TV is the top configuration in the industry when it is released. If other hardware configurations except the screen are conservatively reduced to the mainstream level of the industry, its pricing may not only not be troubled by the rising panel costs, but may also gain higher profits based on the original price.

However, the reduction in configuration is bound to affect performance. Sacrificing user experience for cost reasons is not in line with LeTV's product logic of bringing the ultimate experience to users and "except for the difference in screen size, there is no difference in hardware configuration."

Faced with the choice of reducing configuration or raising prices, LeTV's choice shows that users are always the first priority in the development of the brand. Being the first company to speak out about the price increase of TVs also shows that the right decision will not be swayed by cost changes. LeTV does not follow the industry's common "unwritten rules" of disguised price increases. LeTV also does not need to watch the expressions of its competitors from behind.

Content subsidies: LeEco ecosystem is the one that has seen a sharper increase in hardware prices than panels

LeTV is one of the few manufacturers in the current TV industry that dares to provide hardware for free or even at a loss.

According to the previously announced Super TV cost BOM list, LeTV basically sells each TV with a subsidy of at least 400 to 500 yuan, and at most 700 to 800 yuan. The increase in panel costs will undoubtedly put greater pressure on LeTV's original pricing rules.

Liang Jun, president of LeTV Zhixin, admitted that the price of screens in the market has increased particularly rapidly this year, which is a rapid rise rarely seen in the panel industry in recent years. However, LeTV is not a traditional company that relies on profitability as its benchmark, and the standards of ecological subsidies and negative profit pricing will continue.

As we all know, Super TV is not just a TV. LeTV hardware terminal is just the entrance to LeTV ecosystem. What is rising faster than the panel price is the rapid development layout of LeTV ecosystem.

At present, LeTV has built a full content ecosystem for the large screen, including video, sports, games, shopping, and education. The membership services that connect all aspects of the ecosystem have demonstrated unprecedented high value.

Liang Jun once revealed that in fact the price increase of the panel is definitely not 100-200 yuan, but higher. To a large extent, LeTV's TV business is based on an ecological closed loop that is fully capable of realizing ecological subsidies, thus controlling the inevitable price increase of TV hardware within a level that is difficult for traditional manufacturers and most Internet manufacturers to achieve and accept.

LeTV 919 wins again, a new era for the TV industry has been opened

LeTV was not only the first TV manufacturer to make price adjustments when panel costs rose, but it also chose to raise prices one day after the 919 Music Festival in the hope that music fans could fully enjoy the promotions brought by 919. Facts have proved that such thinking has yielded greater rewards.

Data from the final battle report of the Black 919 Music Fans E-Commerce Festival showed that the total sales of the entire ecosystem of the 919 Music Fans Festival exceeded the target and exceeded 4.97 billion yuan, nearly twice the previous 414 Hardware Free Day. Among them, LeTV Super TV created an epic single-day sales record of 866,000 units in the Chinese TV industry, not only exceeding twice the total sales of the 919 Music Fans Festival last year, but also breaking the total sales of 643,000 units of all TV brands on Tmall on Double Eleven last year.

In fact, LeTV's 919 TV sales in one day are equivalent to the output of China's entire TV industry in two days. Greater sales and higher market demand mean that the brand has more say in the industry.

919 is just a microcosm of LeTV's TV business performance in the market. Since the birth of Super TV, sales of 7 million units in three years have made it the fastest growing emerging TV brand in the market. LeTV has set the total sales target of Super TV in 2016 at 6 million units. Coupled with the recent acquisition of North American TV brand Vizio, LeTV's foreseeable stock of more than 20 million large-screen terminals is enough to shake the global TV market.

At the same time, LeTV is not only focusing on sales, but also on opening up all links in the upstream supply chain. At the end of 2015, LeTV invested RMB 1.875 billion in TCL Multimedia, which was an important measure for Internet brands to absorb the advantages of traditional brands. The production capacity that LeTV can control has reached the level of Skyworth and Hisense, which is also the message directly conveyed by Liang Jun at a recent media communication meeting.

Therefore, whether it is product sales on the marketing side or the supply chain on the manufacturing side, LeTV is actively striving to take the initiative. However, LeTV itself is not a company that makes profits from hardware. Under the combined effect of many factors, there is huge room for flexibility in the pricing of super TVs.

Some people working in the television industry predict that Chinese television brands will defeat Japan and South Korea in the market, and will eventually face competition among domestic brands, and whoever raises prices first will be in trouble first.

However, LeTV's high-profile first move to increase the price of its televisions has posed a difficult problem for other players in the industry. Whether competitors can keep up with LeTV's footsteps without exposing their own shortcomings will most likely be another highlight that determines the market structure and brand rankings at the current turning point of cost issues.

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.