Editor's note:
In November 2016, LeTV's mobile phone supply chain crisis broke out, triggering breaks in the LeTV asset chain. Since then, LeTV has continued to have negative news and debt problems have intensified.
Severe turmoil followed. In July 2017, 1,235 million yuan of assets belonging to the three companies of LeTV and Jia Yueting, the chairman of LeTV, were frozen by the judiciary. Subsequently, Jia Yueting resigned as chairman of LeTV.
This enabled us to pay attention to the livelihood of LeTV, the highest quality business in the LeTV system. We hope to understand whether this LeTV can develop steadily in the industry's most prestigious business and eventually lead LeTV out of the quagmire.
However, unfortunately, according to recent information from related channels, the current LeTV has already reached a critical point of life and death. When the overall brand declines, any one of its units cannot be left alone.
Text/Spa
"In the past two months, LeTV's sales have fallen sharply." In mid-November, a person close to LeTV reported to NetEase. "Under the line, LeTV's monthly sales have fallen to the original 1/10 to 1/5. Online, sales of Leshi Mall have also fallen to less than one-tenth of the original, and sales of e-commerce channels such as Jingdong Tmall have fallen by about half.
"This situation is so bad that it can't be broken." Another person who is very familiar with LeTV is sighing with NetEase.
The deterioration of this situation did not happen suddenly but it has been going on for some time. In November 2016, the LeTV mobile phone supply chain debt crisis broke out. Affected by this crisis, LeTV sales also began to decline. At the end of June 2017, at the LeTV Shareholders' Conference, Liang Jun, the CEO of LeTV at the time, revealed that LeTV had a negative growth in TV performance since the first half of 2017.
However, LeTV was always considered to be the best quality asset of the LeTV system. All parties believe that it will not be affected too much; after all, LeTV was born in 2013 as a "subversive" image, and to the present Up to now, its sales volume has already surpassed 10 million units (of LeTV official figures), ranking first in the emerging Internet TV brands. In September 2016 when LeTV’s sales peaked, there was 1 Levision Super TV for every 5 TVs sold in the domestic market. This figure was among the highest in all TV brands.
So now, what about LeTV?
Sales bottomed!
LeTV's sales are falling sharply in all channels.
LeTV’s sales sub-line and offline channels are mainly sold online by Jingdong, Tmall and LeEco’s own LeEco Mall, and offline are mainly sold at LeSe’s own offline store LePar. A former LeTV employee told Netease Technology that among the total sales of LeTV in 2016, the online Jingdong Tmall accounted for approximately 30%, Leshi Mall accounted for approximately 30%, and the offline LePar accounted for approximately 40%. .
The proportion of this data was confirmed by a number of LeTV employees, but it was not confirmed by LeTV.
Online sales, Netease technology did not get a specific number, but there is a publicly released list can be a certain amount of evidence. According to relevant data released by JD.com, in 2016, LeTV was able to rank first or second in sales of Jingdong Color TV in the best sales, but in 2017, LeTV sales have already top 15 Disappeared on the list.
Online, NetEase visited LePar's 10 stores in Haidian District, Beijing, followed by random visits to 4 LePar stores in Chaoyang District and Tongzhou District, and online contacted 5 LePar owners in second and third tier cities and small county towns. .
All LePar shopkeepers told Netease Technology that the business is now bleak.
One of the shopkeepers told Netease Technology that LeTV sold the best TV in 2016. At the peak, the monthly flow of one of his stores could reach 600,000-700,000 yuan. Now there are only 100,000, less than 1/3 of the original; LePar, the owner of the county store in the central province of China, told Netease Technology that in 2017, it would sell only 5 TVs.
A figure close to LeTV’s sources revealed to Netease Technology that LeTV sales in the first three quarters of 2017 were approximately 1/3 of the same period in 2016.
The third party's corroboration comes from the monthly public release of the Ovi cloud network "Global TV brand shipment monthly data report": comprehensive monthly report data, LeTV's shipments are gradually approaching the "bottom."
It needs to be explained here that shipments are not sales, and shipments refer to the number of televisions that get sales channels from manufacturers. There is a "stocking" between the TV and the final sales of the TV. It is possible that the TV has reached the sales channel and the backlog is in the warehouse. It has not been sold. In general, the more TVs are sold, the more manufacturers produce, and the more TVs from manufacturers to channels. On the contrary, the less you have. The overall trend of shipments and sales volume is consistent.
From this table, we can see that before April 2017 (including April), the shipment of LeTV was still in the order of 100,000 units, and its shipment in April was 387,000 units; however, it was In May, shipments fell directly to 80,000 units; by August, it dropped to 24,000 units.
"This trend is very dangerous." A senior industry source told Netease Technology, in the color TV industry, the annual shipment of 1 million units is a threshold - to achieve this number is considered to be a certain size of the manufacturer, lower than the annual shipment of 100 Million, this brand is difficult to gain a foothold in the market. However, this figure is a rough estimate, not an exact figure.
The source explained to Netease Technology that this is because the color TV production is a more complicated issue and it is necessary to integrate the resources of each production link. Each year, about 1 million units of shipments can substantially guarantee the operation of an independent brand's funds; Too little, with limited turnover, the money earned may not be enough to support the operation of various production processes.
According to the current situation, if LeTV can only maintain the current shipment status, its shipment in 2018 is expected to be less than 1 million units.
According to the owner, during the peak season in November-December, LeTV’s sales have picked up slightly, but this increase is seasonal and small, and it is difficult to influence the overall situation.
Regarding the decline in sales, NetEase Technology has already confirmed it with LeTV. However, it has not received a reply before the press release.
Offline channel collapses
The sharp decline in TV sales has brought about a series of chain reactions.
The first is the large-scale closure of LePar stores under the line, which is a fatal blow to LeTV: LeBi stores are lost. LeTV loses not only TV sales from stores, but also profitability in the future.
The birth of the LePar store began with the "LePar Super Partner" program opened on LeTV in August 2014. The reason why we want to open stores offline is because China's color TV sales account for 70%-80% of sales, and online only accounts for 20%-30%. At that time, LeTV, which had a good sales trend on the Internet, had to go down the line if it wanted to further expand its scale.
LePar is not only LeTV's offline store, but also related to LeTV's business model, because although LeTV stores account for only about 40% of all LeTV sales, quality sales are offline.
A person close to LeTV told Netease Technology that LeTV’s business model is hardware negative and the TV itself is not profitable. We plan to make money through the later TV advertising operation. To achieve this, we must vigorously develop our membership because only a large number of The video members, music as the "seeing and buying" and other operating modes can really fall. Sales of LeTV members are mainly off-line. “We hope that two of the 10 people online will buy members, but actually only about 0.2 of the 10 individuals will buy members. However, offline sales, because of salespeople’s active promotions, basically bring members.†Netease Technology.
Letv started to sell its sales channels in 2015. Officially disclosed figures have been leaping forward all the way, reaching 10,000 in 2016. However, according to Netease Technology, the current number of LePar stores may already be less than 2,000, which is a critical value that LeS has internally estimated. If it is lower than this threshold, LeTV may not be able to maintain the current market size and continue to shrink in the future. .
NetEase science has seen with its own eyes that many LePar stores are disappearing.
In August and September 2017, NetEase Technology visited the LePar shop in Haidian District of Beijing according to the LePar official website address (total 10), and randomly visited 3 stores in Chaoyang District and 1 in Tongzhou District. However, the situation at the time of the visit was not optimistic. Only 4 of the 14 shops were still operating.
By December, the situation has become even worse. On December 27th, a reporter from Netease Technology found on LePar's official website that there were only 16 LePar stores in Beijing. In August and September, the stores on LePar's official website in Beijing were divided into districts and counties, and there were more than a dozen or more in one district.
NetEase's random interview with two shopkeepers in Beijing and Shandong confirmed this. One of the six LePar stores originally closed in August; the other had 4 stores, and it was already in December. Closed two.
This is not a partial situation. People close to LeTV have confirmed to Netease Technology that a large area of ​​offline LePar stores is a fact.
He disclosed that the regional demolition and dismantling of LePar stores under the line has shrunk from the original 16 regions to 12 large regions, and this "big area" is not his "region": For example, Beijing originally belonged to the North China Region. Now Beijing is a separate region. At the same time, he revealed that from the feedback of the district heads of staff, the LePar shopkeepers in each region were only unable to make progress. Every day they heard only who retired, but no newcomers joined.
The region is also famous. According to the source, LePar shopkeepers are not willing to be the heads of large districts, that is, grid masters, because the grid owner has no benefit. In LeTV's plan, the grid master theoretically has two advantages: the wholesale right of the television in the region, and the revenue sharing of the television in the region (the operation of TV commercials in the future) in the region. "But now that TV can't be sold, nothing else can talk about it," he said.
This situation is also confirmed in the interview with NetEase. LePar shopkeepers told Netease Technology that they didn't feel that there were too many benefits to the grid master. Instead, they had to pay a lot of deposits, and the goods were also punished. Therefore, the enthusiasm of the grid owners was not high.
However, there are still a lot of LePar stores left. The aforementioned person who is close to LeTV stated that I am afraid that LeTV will not have any of it. After the LePar shop is closed, it will not immediately give feedback to LeTV. LeSparks discovered that the LePar shop was shut down because only about 1/10 to 1/5 of the original sales left the line, and many stores were not stocked. "The significance of the existence of the offline LePar store is that it can bring in some retail sales. If the goods cannot be sold, the store will be meaningless," he added.
If the proportion of sales declines, the estimated remaining TV stores for LeTV will be 1/10 to 1/5 of 10,000, that is, 1,000 to 2,000.
The above-mentioned sources explained to Netease Technology the origin of the critical mass of 2,000 homes - based on two figures: "the sales volume that LeTV needs to maintain" and "how many televisions each LePar store needs to survive."
Let's look at the sales that LeTV needs to maintain. The source said that LeTV sold a total of about 10 million units before the TV, often starting 700-800 million units; the average life expectancy of a TV is 3-5 years, according to 5 years, 10 million TV is about 5 After the year, it was eliminated from the market; therefore, LeTV needed to sell at least about 2 million TVs each year. After five years, the market will continue to hold 10 million LeTVs.
Look at how many TVs each LePar shop needs to sell to survive. According to this source, a reporter from Netease Technology stated that a LePar shop needs to sell about 500 TVs each year to survive. (This figure is an average, not a uniform and accurate figure. In a first-tier city, selling 500 units may not be enough to survive, but it is small. The county seat, selling 500 units may be able to live very well.) The person explained that this was estimated by integrating the cost and profit of a LePar shop.
Given that LeTV considers both online and offline channels, it is estimated that 50% of offline sales will be sold, and that offline sales will need to sell 1 million units per year. Each LePar shop needs to sell 500 units, and selling 1 million units will require 2000 units. Home shop.
If the offline store is less than this value, the stock of LeTV may continue to decrease. The data obtained by Netease Technology from Ovid Cloud Network shows that the total number of LeTV TV shipments from January to October 2017 is 1.421 million units, even if the average monthly sales of 142,000 units are used to calculate its annual shipments. It will also be 1.705 million units, which is less than the target value of 2 million units; moreover, 83.67% of the 1.421 million units will be shipped in the first four months of 2017.
This is a powerless sharp decline.
With regard to offline store closures, NetEase Technology has already confirmed it with LeTV. However, it has not received a reply before the press release.
National chaos price confusion
In addition to the LePar shop that has been closed, the still-existent LePar shop has started a mutual goods trip in order to sell LeTV.
This may make Letv TV fall into a vicious circle.
According to a reporter from NetEase science and technology, the national LePar shopkeepers have formed various groups. One of the functions of these groups is to mobilize sources from each other: because some LePar shopkeepers are in stock, they cannot find buyers; some shop owners have buyers. However, there was no supply at one time.
This kind of behavior is called "chain goods" in the industry. Under normal circumstances, in order to continue to develop, the general brand will resolutely put an end to this behavior and impose severe penalties on such acts of random goods and price cuts; The price war made the brand's price quickly bottomed out in the market, resulting in the channel business being reluctant to sell on account of thin profits, thus creating a vicious circle. There are industry insiders told Netease technology, the price system is a taboo on sales indiscriminately, LePar shopkeepers between the "chain goods" will lead to LeTV lost control of the channel business; and on the consumer side, because of the sales seen in various channels Different prices will also question the brand, which will lead to further decline in sales.
However, for LePar stores, the nationwide chain of goods has become the survival of shopkeepers. Now many shopkeepers are holding the hurry to ship goods, clear the goods and then do it again. They have no idea whether there is still a fine.
In addition to the goods between the shopkeepers, there are other channels available (LTV). A LePar owner told Netease Technology that many of LeTV’s arrears were arrived on television, but not on the money. He gave an example to the NetEase science and technology reporter. For example, LeTV did a lot of advertising, but it was not enough for the advertising company's money to put the TV on to the advertising company. The advertising company needed to find channels to sell the TV used to offset the debt. In order to try to ship, in order to try to ship, the price of TVs from such channels will generally be lower. After the owner of lePar gets it, the selling price will be reduced accordingly, but there is still a difference to be made.
A shopkeeper showed NetEase Technology's chat history in the LePar partnership crowd, and even the owner was willing to sell a TV for 2,000 yuan. "I have to rush shipments now." He said that in his own store, LeTV, each bid price is already several hundred dollars lower than the Internet.
With regard to the string-related situation, NetEase Technology has already confirmed to LeTV's official, but it has not received a reply before the press release.
Supply chain collective buzz
The biggest threat posed by the decline in sales volume and the collapse of channels is the issue of payment back to the supply chain. If it fails to pay back the supply chain in time, it will threaten the production of LeTV, and this may cause further chain reaction. This point, music as the mobile phone is a lesson.
It is understandable that by April 2017, LeTV has five foundries: TPV, Foxconn, Yichang, TCL, and Zhongqiang. In March 2017, LeTV organized a number of media to visit TPV's largest foundry, TPV Technology (Qingdao) Co., Ltd., which was revealed by Wang Dayong, senior vice president of Le Serene Intelligent Terminal Supply Chain, when answering media questions at the time.
However, by August 2017, industry insiders told Netease Technology that LeTV’s foundry had only one TPV. This information has not been verified and verified directly and cannot be fully confirmed. However, from a series of media reports in 2017, three of the remaining four companies - Foxconn, Yichang, and TCL - do have their status.
In July 2017, according to the “Beijing Commercial Daily†report, Foxconn Affiliate Shenzhen Guanding has already withdrew from LeTV’s new shareholder series, and since 2016, Shenzhen Guanding has ceased to appear in LeTV’s new shareholders. In the list.
By October 2017, LeTV Zhixing still owed Yichang shares 440 million yuan. On November 30, Yichang Stock Co., Ltd. issued an announcement regarding the reply from the Shenzhen Stock Exchange inquiry letter, which disclosed the cooperation with LeTV.
Yichang Co., Ltd. and LeTV.com, a subsidiary of LeTV, started cooperation in February 2016. The main products sold are TV sets. In 2016, the company made new sales of 1.079 billion yuan to LeTV; January to September 2017. The company's new sales to LeTV reached 1.141 billion yuan. As of the end of September 2017, the company's balance of LeTV receivables was 556 million yuan. In October, LeTV generated a total of approximately 116 million yuan in payments to the company.
Yichang Shares stated that the company's senior executives have maintained close communication with LeTV’s new executives and have initially reached a follow-up payment plan. Since 2017, the LeTV system has continued to face negative news. LeTV's performance has been declining. The capital chain has been strained. As a result, LeTV has caused overdue payments for company repayments. The company expects the recovery of some overdue receivables to be uncertain and risks of bad debts.
The TCL disappeared from the list of new LeTV core partners. According to media reports, on November 24, 2017, New LeTV held the first batch of core partner closed-door meetings. The partners participating in this closed-door meeting were all from the core suppliers of the global smart TV industry supply chain, including Sunny. Chairman Lin Huizi, General Manager of Zhongqiang Optoelectronics, Xiong Haitao, Chairman of Yichang Technology and Gaojin Group, Ding Jinyi, Vice Chairman and General Manager of Yichang Company, Qiu Chuangyi, General Manager of Foxconn Consumer Electronics Group, General Manager of TPV Group China TV Business Ye Guoyuan, Chairman of the Controlled Electronics Chen Shuncheng, Jin Ruixian Chairman Fang Jiangtao, Morningstar Semiconductor Chief Operating Officer, Morningstar Semiconductor China General Manager Lin Yongyu, Sannuo Shengzhilian Chairman Liu Zhixiong, Xinzhi Chairman Tian Weidong – No TCL in this list representative.
In addition to the announced Yichang, Netease Technology tried to contact all the companies on this list. Among them, Hao Yu, Jin Ruixian, and Zhixin were unable to contact and the rest of the company refused the interview without exception, even half a year ago. TPV, who warmly welcomed the media, also said that it was not convenient to interview.
Netease Technology also contacted Wang Dayong, the senior vice president of the LeSung intelligent terminal supply chain at the time, and the other party also refused the interview.
In early 2017, LeTV announced that its sales target in 2017 was “to protect 7 million units and strive to reach 8 million units.†Wang Dayong said in an interview with the media in March of TPV: “In order to complete the goal of 8 million units, LeTV will create new targets. It is necessary to expand production capacity appropriately. In the future, LeTV will not rule out the introduction of more partners to cooperate in large-scale areas.According to the plan of LeTV, large-screen TV will be the next step to focus on. During 414, the total stock of super TV 75 Millions to 800,000 units, in order to ensure the availability of cash, the current major foundries are stepping up shipments." However, according to media reports, the actual situation is 2017 414 TV sales fell 30% year-on-year, about 384,000 units, followed by In May, Wang Dayong left.
Even if TPV is still sticking to it, the actual cooperation with LeTV will not be very certain. In March 2017, TPV faced the media, LeTV, said that Qingdao TPV factory supply to LeTV since 2017 is in a state of increase, LeTV's payment method is taken monthly, payment within 60 days, has not appeared Delinquency. However, Netease Technology found a worker at the TPV factory in a legal forum complaining that LeTV’s debt owed a performance award to the blond. The posting time was June 4, 2016. The authenticity of this post Netease technology can not be verified.
At the same time, it is not easy for LeTV to replace the foundry. Industry insiders told Netease Technology that if a large foundry withdraws, a small foundry would not even dare to do it: The level of the foundry is uneven, the large foundry can give the account period (that is, it can be produced before payment), the small foundry Many are cash.
Regarding the supply chain cooperation, LeTV also did not respond to NetEase.
Life and death speed
At present, the core logic of LeTV’s life and death is whether sales, products, or supply chains can form a virtuous circle. The more products are sold, the more profits are made, and there is no problem in the supply chain repayment. The suppliers are willing to produce. The extra profits can improve the products and the scale can be continuously expanded. On the other hand, if the products cannot be sold, there will be a vicious circle if there is no capital to enter.
To get out of this crisis, speed is very important.
After tossing for more than a year, nowadays LeTV is faced with a brand-new market environment - LeTV's traditional advantages are being lost. Competitors are marching in succession and are increasingly strong. LeTV’s own team is not stable.
In 2013, when LeTV had just entered the TV market, the Chinese TV market was still dominated by five traditional manufacturers (Hisense, Skyworth, TCL, Sharp, and Samsung). At that time, Internet TV relied on rich content and low prices to open the market.
Now turning to home appliance stores will be able to find that televisions have basically become a look - all televisions have their own systems, can be freely installed APP, rich content and low prices of these two advantages, LeTV lost its roots.
The music copyrighted by LeTV has gradually aged. LeTV started as a copyright distributor and purchased a large number of genuine movie and TV dramas at ultra-low prices. In 2012, it had more than 50,000 episodes of television dramas, more than 4,000 movies, and got about 70% of domestic popular movies and TV dramas. Exclusive internet copyright. However, in the following years, LeTV focused on “painting cakesâ€, built music as an ecological environment, and missed the golden era of video content competition. The "People's Name" and "My First Half" dramas that were hit so far in the past can be seen on almost all video sites such as Tencent Video, iQIYI, Youku Tudou, Sohu Video, PPTV, and Mango TV. , but can't see it on LeTV.
Similarly, low prices are burned with large sums of money, and LeTV is now the most in need of money.
In the year of 2017, in the camp of Internet TV, both millet and storms that followed immediately behind LeTV have experienced explosive growth. According to media reports, Xiaomi’s sales growth in the first three quarters was as high as 253.9%, and Stormwind’s TV sales in the first three quarters increased by 30% year-on-year, and revenue increased by 82%. Since September 2017, the storm has left LeTV behind, and sales have exceeded LeTV for several consecutive months, and the gap has widened.
More serious is the loss of talent. According to an interview conducted by Netease Technology, many employees who left the LeTV business line went to Xiaomi or other competitors.
At the same time, LePar owners are looking around. Whether or not to withdraw from the LeTV system and join a new brand becomes a problem that shopkeepers are currently considering. However, it is not easy to choose the next brand to join. Traditional channels have already formed a system that is difficult to insert. Emerging channels, good or bad products, and high returns to channels are issues that need to be considered. This choice will take some time. However, the wave of new retail has swept over and it is only a matter of time.
In 2018, perhaps everything will have answers.
Bottom out opportunity
However, LeTV has a chance to rebound.
It is such an opportunity for Xinle to view the "backward operation" of LeTV as the wise home. At the press conference on December 26, 2017, Li Yin, head of marketing for LeTV’s super TV, said that the sales volume of Daping’s new shopping in 2018 is expected to exceed 350 million yuan. He also mentioned that the future will be LeTV's ability to platform, LeTV as there are many children's games and many other scenes.
"Backward operations" can indeed enable New LeTV to earn a certain amount of revenue. This is what the former LeTV executives who have left now are very confident. He even optimistically predicted that after three years, backward operations will generate cash flow of more than RMB 2.0 billion to RMB 3 billion per year, including LeTV’s open screen advertising, insert advertisements, membership income, big screen shopping, and games.
He further explained that LeTV is divided into new and old models, and the old model (first and second generation) is small in size, and the new model is large in size. The larger the model, the longer the life cycle. Because the cost of the replacement machine is high, the user will be willing to extend the use time, so the revenue from the backward operation is also high. According to previous estimates, the old model will earn about 200-300 yuan per year per unit, and the new model will earn about 300-400 yuan per unit per year. The income of 2 to 3 billion yuan is estimated based on this.
However, his optimism still has reservations. "Backward operations" had not been particularly good after the landing, and there is still suspense about whether the revenue can be successfully obtained in the future.
In addition to the “backward operationâ€, the new capital injection can give LeTV more time and space for transformation.
On the evening of January 2, LeTV announced that the new LeTV plans to raise RMB 3 billion at a valuation of more than RMB 12 billion. For LeTV, this is undoubtedly a life-saving money.
If you make the worst plan - LeTV can no longer rely on its own strength to complete self-rescue. Its own value is actually recognized by people in the industry, and it is still possible to rely on sales for long-term development. Dong Min, vice president of Owe Cloud Network, believes that LeTV's greatest value is twofold: First, it is an entrance of tens of millions of grades - TVs that have been sold are in the tens of millions, and can be operated in the future; Second, it is The brand, despite its declining brand image, is more famous than many televisions, and because of the large number of businesses before it, brands have appeared in many fields such as music, education, and children.
LeTV, if acquired, is another story.
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