LeTV's $2 billion acquisition of ambition behind "American Millet"

Jia Yueting wants to read "ecological anti-criticism" to the United States.

In the early morning of July 27th, LeTV officially announced the acquisition of Vizio, the first TV brand in the United States, for US$2 billion and ended the bidding war with Ali and other internet giants. As a result, Letv opened up channels for entering the North American market, becoming the second largest smart TV manufacturer in North America after Samsung.

At the conference in San Francisco, USA, LeTV CEO Jia Yueting and Vizio CEO William Wang Wang Wei (American Chinese) announced with a handshake: Vizio will invest in Levision Holdings as a wholly-owned subsidiary. After the merger and acquisition, LeTV has sufficient right to speak in both China and the United States TV market.
“North American Millet”: How powerful is Vizio who has never heard it in China?

Although it is not well known in China, it can compete with Samsung in the North American TV market, only Vizio. According to the data of Vizio official website, Vizio ships about 8 million units a year, and in 2015, there are about 17 million smart TVs.

According to the Wall Street Journal, in 2015, Vizio’s market share in North America was 18.0%. By the first quarter of 2016, this proportion had grown to 21.3%, which was only behind Samsung, which accounted for 28%.
In terms of brand positioning, Vizio is taking a similar route to Xiaomi. Founded in 2002, Vizio has been welcomed by North American families in the image of local brands and affordable people. According to Toluna, a market research company, North American consumers have higher Vizio brand recognition, overall quality, and design scores than those of the “traditional Big Three” Samsung, LG, and Sony in 2015. 89% of Vizio users are willing to send relatives and friends. Recommended Vizio.
However, in face of the slow-growing TV demand in the North American market, more and more Chinese TV makers such as Shanghai Telecom and TCL have entered the North American market to participate in the war. The low-end TV market is already approaching saturation, which is increasingly difficult for Vizio. Once TV hardware sales as a core business have fallen, Vizio lacks other businesses that can leverage on its own.
At present, Vizio's new series of Cast TV has been returned by customers due to quality problems in some products in the North American market, and the shortage of goods has appeared because the supply chain has not kept up. This has a negative impact on highly dependent Vizio sales.

Whether it is continuing to sell LCD TVs and Samsung hard bars, or shifting to paid content services, Vizio needs external resources to help its breakthrough. At this point in time, LeTV seems to have paved a new path for Vizio.

What does LeTV look like on Vizio?

In the encirclement of capital giants such as Alibaba and Chinese culture, it took out $2 billion in cash at a time, and Jia Yueting’s decisive action showed that the merger and acquisition was a long-term brewing operation. “When I first saw Wang Wei, I wanted to merge with them and I had to chase after three years.” At the press conference, Jia Yueting did not forget to declare to Vizio.

If you look closely at Vizio's business, it's not hard to find that LeTV's business is full of complementary. In addition to the much-needed brand recognition of LeTV into the North American market, Vizio's advantages in hardware and technology patents are very attractive.

The first is the data server. Vizio's data server captures viewership behavior data in real time, providing a reference for advertisers and media providers. LeTV, as the “Newcomer” of the North American market, obviously needs a process of familiarizing and understanding user habits, and advertising is also the core business of Internet TV. These two are precisely the resources that Vizio's data server can provide for LeTV.
In addition, LeTV has always attached great importance to television imaging technology research and development and related patent acquisitions in the country. Of course, Vizio's audio and video and image processing technology capabilities will not be missed. Vizio's patented image processing technology, including full array LED backlight technology, UHD, HDR, hyperspectral, etc., is the core technology that all major manufacturers attach great importance to.

These hardware and technology patents are the desires and shortcomings of LeTV before it became a complete and mature television industry leader.

Jia Yueting also revealed his preliminary layout: LeTV will provide content, technology, internet and cloud services for Vizio. In the future, LeTV Eco will conduct deep “violation” with Vizio to help it transform and upgrade to an Internet eco-company.
Jia Yueting once again used his favorite word “reverse” at the scene: “This acquisition is a deep-rooted antithesis between the two sides based on the concept and vision. We bring to the US users more than just L+V ( Letv + VIZIO) brings the Internet's ecological model here to create a free-flowing ecological life for users in the United States and the world."

Saying that the TV is going to end, LeTV has eaten this piece of cake

It is worth noting that the main company that acquired Vizio is neither LeTV nor LeTV, but is responsible for LeEco, a parallel company that is overseas. The acquisition of Vizio is the first ring of LeTV's overseas layout, and it is only one of them.

Vizio, which relied on the local market, was less well-known outside of North America. Therefore, LeTV’s intention to use the North American market as its overseas layout was clearly intended. After Jia Yueting finished his "Fighting against the Circumstances," "Five in One," and "Seven Ecology of the Seven Sons," he was very likely to continue to expand overseas markets.

Prior to this, LeTV needed to prove that the current ruthless traditional TV market could indeed be reborn after being “internetized”. Vizio is LeTV's latest plus bet.
Unlike the domestic strict control over the contents of television channels, there is no excessive policy restrictions on Internet TV in the United States. The relaxed environment will allow LeTV to have more room for content. This is a huge advantage for LeTV, which always upholds the concept of “paying premium services” and even “buying service hardware”. This is also the reason why LeTV considers North America as the first stop for overseas expansion: a sufficiently wide “test water” swimming pool.

In the development of the domestic Internet TV market, LeTV also ushered in the technical advantages of the bandwidth expansion trend.

At the end of last year, the Ministry of Industry and Information Technology reported to the State Council’s proposal for a national broadband strategy. It proposed to adopt "broadband China" as a national strategy and attach importance to the construction of broadband networks as much as the expressway.
In early February of this year, Beijing Unicom and Beijing Telecom also announced the launch of free-to-speed broadband, and gradually implemented the all-fiber network at the end of June. The goal is to increase the bandwidth of more than 90% of Beijing Unicom broadband users to over 50M. Beijing Unicom also took the opportunity to launch 4K Ultra HD Unicom's broadband TV service (Beijing IPTV). High-speed bandwidth support has made necessary technical paving for the popularization of Internet TV.
The consumption habits of domestic consumers “paying for quality services” are gradually developed, and they also accumulate audience bases for the Internet TV industry that relies heavily on copyright resource revenues and paid service revenues.

Although it seems that everything is ready, but it wants to have a real impact on the traditional television industry that is “a hundred-footed bug, dead but not stiff”. The “Dongfeng” that LeTV and Tencent brewing by Internet TV brands must be strong enough.

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