LeTV isn’t well-known in the West though it is one of the most famous tech companies in China in terms of business strategy and publicity.
It was one of China’s first online video streaming services, online video rights resellers, original video content producers, independent smart TV/set-top box makers, and, most recently, electric vehicle manufacturer wannabes. Today, Jia Yueting, LeTV CEO, announced a plan for electric connected cars, the SEE project.
Founded in November 2004, LeTV turned ten last month. No one else in China, so far, has built an online video business as broadly as LeTV’s. It was far-sighted enough to often remain one step ahead of its Chinese peers.
One reason that the company isn’t widely known in the Western world is, unlike most Chinese tech companies that choose to go public in the U.S. or Hong Kong, LeTV is listed in mainland China. The company went public in August 2010 on the Growth Enterprise Market (GEM) of the Shenzhen Stock Exchange. Earlier this year LeTV became the largest company by market cap on the Shenzhen GEM.
It is also a secretive company. Mr. Jia, founder and CEO, and the members of his family who have stakes in the company, have more than once been at the center of political intrigue and rumours.
One of the First Profitable Online Video Sites
LeTV boasts one of the largest Chinese online video inventories and has three companies producing original contents. It’s one of the few Chinese video streaming sites that have been profitable, largely thanks to the video rights it holds. Other major Chinese video sites, such as Youku-Tudou, are still losing money.
The company purchased a large number of online video rights from 2007 to 2009, before the prices rocketed during the next few years. It is believed there are at least two reasons for the price jump: (1) Chinese video sites such as Youku and Tudou were planning for U.S. IPO and so could no longer allow pirated content, and (2) prices for several highly popular dramas were extremely high as video sites felt they couldn’t afford not to have them. A few of these hits brought LeTV a good return in those years.
The video rights it purchased several years ago are either no longer in demand or are expiring, but the company has backup plans. Two affiliate companies are making TV dramas and movies, and LeTV.com the video site has been making original content. LeTV has signed famous Chinese film directors, TV program producers and production professionals for the content creation.
Besides video rights sales, LeTV’s video site’s other revenue sources, as with other online video sites, are premium subscriptions, pay-per-view and advertising.
1.5 million smart TVs sold this year
LeTV launched its first set-top box for video streaming in 2009. Three Android-powered smart TV models have been released since May 2013.
LeTV smart TVs are pre-loaded with the LeTV UI, a customized Android system. As well as videos provided by LeTV, the system also includes an app store and other features. By contrast to other Chinese-made smart TVs, LeTV charges an annual fee for content and services available on the system.
All of the company’s hardware products are sold on its online store. The company claims 1.5 million smart TVs sold from January to November this year. Its direct competitors include Xiaomi, but it is estimated fewer Xiaomi smart TVs have been sold than those from LeTV.
The company recently began expanding to other hardware categories. Last week it unveiled a new gadget for parents to tell stories to kids.
Too Good to Believe?
It has been speculated Jia’s background includes governmental connections and that an early investor in LeTV was backed by a high ranking Chinese government official. He denied both. After Jia disappeared from public view this June, LeTV’s response was he was overseas working on its international expansion. But Chinese local media was skeptical, speculating that it had something to do with a Chinese official arrested in the latest corruption crackdown.
LeTV announced in October it had set up two branch offices in California for American video content, saying it plans to expand to more countries or regions. Meanwhile Jia returned to the mainland late last month.
But substantial speculation regarding Jia and LeTV remains. Political rumors aside, LeTV is nowhere close to being the tech startup many perceive. Who would spend so much money acquiring video rights when everyone else was working on scaling their video platforms?
We’ll see how far its electronic connected car project will go. What’s also interesting is the company recently began selling imported wine through a dedicated sub-site.
Editing by Mike Cormack (@bucketoftongues)