LeTV's first-quarter results will increase by more than 100 million TV hardware free model will shrink

LeTV said that from January to February 2017, the company's performance growth slowed down due to the negative storm of tight liquidity of related companies; as the company introduced strategic investors, Sunac China and the second largest shareholder, especially After its funds are gradually in place, the company's operations and performance have started to pick up in general since March. In addition, the performance in the first quarter will not have a significant impact on the company's 2017 full-year performance growth.

LeTV is the leader of China's new Internet TV army. In April last year, it used "hardware free" marketing propaganda to substantially increase sales. At the end of last year, the growth rate was slowed down due to the financial turmoil of related companies. It once said that it would abandon the hardware subsidy model. . Now that the performance of the major shareholder LeTV has picked up, will its hardware free model continue? Analysts believe that LeTV's free hardware model will shrink this year.

During the LeTV new product launch conference on March 29 this year, LeTV ’s new president Liang Jun and other executives emphasized the expansion of high-end products, offline channels and B2B in an exclusive interview with the media. Liang Jun said at the time that LeEco targeted white-collar consumers in cities. "When it comes to pricing, we still do not rely on hardware to make money in the next three years. The future profit will all depend on ecological operations, and ecological operations will have rapid Development and a large amount of income come in. The changes in hardware have changed from losses in the past to gradually reducing losses. "

This means that LeTV's subsidies for TV hardware will be reduced this year. In fact, affected by the rise in upstream panel prices, the price of LeTV 40 and 43-inch TVs has increased slightly.

Dong Min, vice president of Aowei Cloud, analyzed to the first financial reporter that LeTV is a premium business of LeTV. "Compared to the problem of tight capital chain, the price of TV panels has been rising unilaterally for 11 months, and supply and demand are in short supply. The impact on LeTV will be greater. "

"From the current point of view, the sales volume of LeTV in March increased by more than 30% month-on-month, and it has stabilized to a certain extent. At present, Sunac has most of the funds in place, and the supply and demand situation of the panel has changed. In addition, companies such as Truly and Compal "Debt-to-equity swaps" into LeTV Zhixin, in general, eased LeTV's internal and external funding, and the operating environment has improved. "Dong Min said.

Dong Min believes that hardware profitability and operating profitability are two business models in the color TV industry, which can be mutually independent and complementary, but it is not a necessary trade-off. Of course, the industry is tilting and developing from a single hardware profit to an operational profit. In addition, "the hardware that LeTV initiated before is free, it is just a promotional method, not a business model."

Aowei predicts that the opportunities for the subversion of the color TV industry will increase this year. Dong Min said that this mainly stems from the diversification of the competitive dimension, the contest of new technologies, the contest of marketing models, the contest of channel collaboration, and the contest of supply resources. New products are only one aspect of the competition, and intensive cultivation in many aspects can seize the opportunity.

Zhang Bing, director of R & D for IHS China, believes that LeTV ’s annual TV sales last year were more than 5 million units, slightly lower than the original target of 6 million units, mainly because sales in the fourth quarter were affected by LeTV ’s tight funding. LeTV is still in the adjustment period in the first three months of 2017. LeTV's acquisition of VIZIO in the United States has been rumored to be miscarried. The domestic "4.14" promotion this year is not as strong as the marketing promotion last year.

In Zhang Bing's view, unlike last year's low price hype, LeTV's release this year puts more emphasis on high-end products and brands. Therefore, the first half of this year, LeTV can stabilize last year's color TV sales has been good.

"Hardware free is just a promotional method," Zhang Bing said, whether it is hardware or content, color TVs have to cost, and someone must pay the bill. The current color TV hardware is free, and the cost will be recovered year by year through membership service fees. Now, it is necessary to pay for TV manufacturing costs to upstream suppliers. This requires strong capital capacity. "LeTV's model will shrink somewhat."

Zhang Bing predicts that the overall sales volume of emerging Internet TV brands will remain stable or slightly increase from last year, the growth rate of LeTV and Xiaomi will slow down, and the growth of micro-whales, PPTV, and storms will also increase. This year's overall domestic color TV market sales will increase slightly, and the overall sales of traditional color TV brands are good to hold.

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