LeTV is currently facing its most severe crisis. Once a pioneer in the Internet TV industry, it has now become a symbol of decline. The ongoing financial struggles and negative media coverage have cast a shadow over the entire sector, leading to a period of uncertainty and depression for the Internet TV market.
According to data from a survey agency, in the first half of 2017, the domestic retail share of traditional TV brands dropped slightly to 69.1%, while the share of Internet TV brands fell sharply to 12.0%. This marked a significant downturn for the sector, signaling that the "Internet TV winter" had arrived.
Reports suggest that LeTV’s actual sales in the first half of the year were below 1 million units, with annual projections not exceeding 2 million units—far below the original target of 7 million. Some sources indicate that LeTV may be shutting down certain TV factories or even exiting the TV business altogether. Similar challenges have also affected other Internet TV brands like Storm TV and Micro Whale. While Storm TV once shipped over 1 million units in 2016, recent figures show a sharp drop to just 500,000 units. Micro Whale, which previously produced 800,000 units, now ships only around 400,000.
Despite some revenue growth, many companies are struggling with profitability. Stormwind Technology reported a 66.89% year-on-year increase in revenue to 826 million yuan, but net profit plummeted by 16.64% to just 157.249 million yuan. According to CFO Jiang Hao, the primary cause of this decline was losses in the TV business, which grew at an alarming rate of 146%.
The situation is equally dire for Micro Whale. In 2015, the company posted a net loss of 131.5 million yuan, with total assets of only 185.2 million yuan. By early 2017, the company reportedly faced losses exceeding 1 billion yuan.
A noticeable trend is the silence that has fallen over the Internet TV industry since the second half of the year. Before the LeTV crisis, brands held numerous PPT conferences and made frequent public appearances. However, after the scandal broke, most companies entered a quiet phase, focusing on internal adjustments rather than external promotion.
Industry insiders believe the LeTV crisis has sent shockwaves through the sector. A Beijing-based Internet TV brand founder admitted that the negative publicity surrounding LeTV has damaged the reputation of the entire industry.
While some argue that LeTV's business model itself is not flawed and could still be profitable, the financial troubles of the larger LeTV group have disrupted its core video content and copyright holdings. Additionally, a lack of strong intellectual property (IP) support has made the platform less appealing to users.
Despite the challenges, some industry experts remain optimistic. One executive noted that while the color TV industry as a whole is struggling, LeTV's presence initially had a positive impact on the Internet TV sector. However, the current situation is worse than before.
Many Internet TV brands are now in a "silent period," focusing on optimizing operations and deepening user engagement. This shift reflects a broader industry move toward more sustainable practices.
Gu Yingqiong, a software engineer at eBay, recently wrote a series of articles exposing flaws in the LeTV model. He pointed out that over 98% of LeTV's stores are unprofitable, and the company often pressures home appliance retailers to open experience shops. He described LeTV's sales strategy as misleading, claiming that the company encourages high-price purchases without delivering sufficient value. He also criticized the company as a "Ponzi scheme."
Other industry leaders, such as Zhou Kun, CEO of Popular TV, have echoed similar sentiments. He believes that LeTV's money-burning model eventually led to its downfall, and that the brand's image has been severely damaged.
In summary, the crisis of LeTV and similar companies highlights the risks of aggressive expansion and unsustainable business models. However, despite the current challenges, some believe that the future of Internet TV remains bright, driven by consumer demand and increasing broadband access. Recent reports suggest that LeTV is exploring new investments, including potential partnerships with BAT, indicating that the company may still have a chance to recover.
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