Jia Yueting jokes about the gap between LeTV and BAT behind the scenes

The 2016 IT Leaders Summit with the theme of "IT·Intelligence·Sharing" was held in Shenzhen a few days ago. Unlike the last session, Jia Yueting of LeTV shared the stage with Robin Li , Ma Huateng ( Weibo ) and others, and was chased by the media. LeTV seems to have shown its ability to be on par with BAT (for example, during the summit dialogue, it accused BAT of being three big mountains that made countless startups dark, and used this to promote LeTV's so-called ecosystem). Of course, when Jia Yueting was interviewed by the media, as before, he still used Apple 's products (such as the recently released iPhone SE) to make fun of Apple, in order to prove that his LeTV ecosystem is the future. We don't know if Jia Yueting saw the gap between himself and these industry leaders when he made fun of them?

Coincidentally, just before the IT Leaders Summit, BAT and LeTV both released their 2015 annual financial reports. In terms of revenue, Alibaba , Tencent, Baidu and LeTV's revenues were 94.3 billion, 102.863 billion, 66.646 billion and 13.017 billion yuan respectively, and BAT's revenues were 7.2, 7.9 and 5.1 times that of LeTV respectively; in terms of profit, Alibaba, Tencent, Baidu and LeTV were 56.651 billion, 28.790 billion, 33.729 billion and 573 million yuan respectively, and BAT's revenues were 98.87, 50.24 and 58.87 times that of LeTV respectively. You really don't know until you compare, and you'll be shocked when you compare. In addition to the gap in revenue, the gap between LeTV and BAT in terms of profit, which measures corporate profitability, is even more astonishing. It can be said without hesitation that LeTV is not on the same level as BAT now, and it is not an exaggeration to say that they are several levels apart. More importantly, these are inseparable from the so-called business model. Since it is inseparable from the business model, the industry has to strongly question the future prospects (of course, profitable business prospects) of the so-called LeTV super ecosystem that Jia Yueting has been advocating, which still confuses many people in the industry.

Next, let's look at the performance of the terminal, one of the entrances to the LeEco ecosystem, which is of great concern to the industry (including LeEco). In fact, we are really embarrassed to compare the data with LeEco here, but since Jia Yueting always deliberately or unintentionally makes fun of Apple every time LeEco terminals (such as smartphones) are released, it is better to take a walk to see whether it is a mule or a horse. However, in order to avoid an ugly comparison, we only compare the performance of Apple's iPhone in the first quarter of fiscal year 2016. According to Apple's financial report, the revenue of iPhone in the quarter was 51.64 billion US dollars (about 335.144 billion RMB), which is 55.94 times the annual revenue of 6.089 billion RMB of LeTV terminal business (not only LeTV smartphones, but also LeTV smart TVs, etc.) in 2015. The industry needs to be reminded that this gap is between Apple's iPhone revenue in one quarter and LeTV's entire terminal revenue in one year. Given that LeTV smart TV revenue accounts for 46.78% of the share (nearly half), then LeTV smartphones basically account for about half of the share. If LeTV smartphones are compared with Apple iPhones, the revenue of iPhone in one quarter will be about 110 times the annual revenue of LeTV smartphones. As for profits, since LeTV's terminal business was in a loss last year, we have no way to compare.

If LeEco still says that its ecosystem is better than Apple, we might as well compare it with the revenue of Apple iPhone in the above quarter, which is 335.144 billion yuan, 25.75 times the revenue of LeEco last year, which was 13.017 billion yuan. However, in order to let the industry (including LeEco) see a more real gap, we can compare Apple's annual revenue with LeEco (because LeEco has repeatedly mentioned that its ecosystem is better than Apple, and Apple's ecosystem is not just iPhone, so it should be the same as LeEco, that is, Apple's annual revenue last year was 232 billion US dollars (about 1505.68 billion yuan), which is 115.67 times LeEco's revenue. With such an astonishing gap with BAT and Apple, I wonder how Jia Yueting viewed his so-called ecosystem when he was making fun of them? What kind of LeEco ecosystem can challenge them?

When it comes to Jia Yueting's LeEco ecosystem, although he talks a lot, judging from his annual report last year, it is far from that complicated. From the revenue structure, the terminal business revenue is 6.089 billion yuan, accounting for 46.7% (nearly half) of LeEco's total revenue of 13.017 billion yuan, plus 2.71 billion yuan of paid business revenue, the two revenues account for 67.60% of the total revenue, that is, terminals and payment are LeEco's main sources of revenue, but unfortunately, these two constitute one of its revenue sources, and also the terminal business with the highest revenue (accounting for 46.78%) in LeEco's entire business structure, but the cost is as high as 8.186 billion yuan, accounting for 73.67% of the total operating cost. I wonder what the industry sees from these data? The revenue accounts for the highest proportion, but the cost accounts for 1.57 times the revenue proportion, which shows that there are serious problems with LeEco's current business or LeEco's business model.

The so-called problem is that LeTV's terminal business is losing money. Some people may say that LeTV loses money on hardware and makes money by turning LeTV's terminal users into paying users. That's right, but we didn't expect that the gap between the revenue and cost brought to LeTV by LeTV terminals would be so large. In addition, how much of the 2.71 billion yuan in paid revenue in the financial report comes from users of LeTV terminals, or what proportion of users are brought in by LeTV terminals? However, according to LeTV's own disclosure, as of the end of last year, its paid members were around 12.2 million, and the total sales of LeTV terminals last year was 7 million (4 million smartphones and 3 million smart TVs), the proportion of paid users brought in by terminals was 57.3%. According to this calculation, the paid membership revenue brought in by LeTV terminals was 1.237 billion yuan (2.71 billion yuan multiplied by 57.3%), and the terminal business lost 2.097 billion yuan last year (8.186 billion minus 6.089 billion). Here, the loss of 2.097 billion yuan is deducted from the paid user revenue of 1.237 billion yuan. LeTV's so-called model of attracting paid users with free hardware actually brought a loss of 860 million yuan to LeTV's overall business. As LeEco increases its terminal investment in the future and diverts the source of LeEco's paid membership (for example, LeEco Sports, which LeEco is currently trying to develop), this loss will increase. In other words, the model of losing money in exchange for paid membership for the most important hardware in LeEco's so-called large ecosystem itself has a negative impact on LeEco's future profits. As for LeEco Sports, we have previously written an article to analyze it, and its model and prospects are not optimistic.

In summary, we believe that, in view of the gap between LeEco and these big companies and the problems in LeEco's own ecosystem, Jia Yueting's ridicule at this IT Leaders Summit is by no means an equal to these big companies, or equal in strength, but at best a ridicule. Just like a media report several years ago that a Chinese company proudly said at a dinner party of a Fortune Summit that they were having dinner with the Fortune 500 companies, "We are finally on par with the Fortune 500." In fact, we just got the opportunity to have dinner with them.

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.