Businessmodel of LeEco

Customer Segments

LeEco principally serves the general consumer market through its numerous interconnected products and services, including internet television, consumer electronics, video production, and technology platforms. The Company principally targets a younger segment of consumers, with its internet-focused offerings, and its business model based on the provision of online services, as opposed to the sale of physical products.

LeEco also provides a range of advertising solutions to commercial entities, brand marketers, and advertising agencies. Currently, LeEco appears to serve customers almost exclusively in China. According to reports, it has, however, begun to make inroads into the Indian and Russian markets, and plans to launch operations in the US consumer sector the near future.

Value Propositions

LeEco provides value to its customers in the following ways:

• Its extensive range of products and services, with the Company offering a broad range of internet-focused products and services, including online content, consumer electronics, and internet platforms;
• Its innovative business model, with the Company focusing on the sale of online content and subscription services, with a view to capitalising on the increasing trend of online spending, offering hardware products at low when subscriptions are purchased;
• Its commitment to research and development, with the Company committing a significant portion of its revenue to research and development activities and the creation of innovative products and services; and
• Its technical expertise and specialist experience, with the Company employing specialist personnel, with training and experience relevant to its operating activities in the technology space. ### Channels

LeEco operates a website at www.leeco.com, which provides information on the Company’s leaderships team and news coverage. Its website, however, provides little information on the Company’s activities. The Company operates an online LeMall store, through which it sells various consumer electronics products, including smartphones, televisions, audio products, and accessories.

LeEco serves its customer primarily through its online premium content, which subscribers are able to access directly through their desktop and mobile web browsers. This includes the Company’s internet television, video streaming, and other content. The Company operates sales and support teams for each of its operating regions, with offices in China, India, and the US.

LeEco also sells its hardware products through various retail affiliates, including online stores such as Letvmobilestore, and physical electronics retail outlets.

Customer Relationships

LeEco’s consumer electronics products are available to customers on a self-service basis through its online stores, as well as through its network of affiliates, which allow customers to browse products, make orders, and schedule deliveries of LeEco products without interacting with members of the Company’s sales team.

LeEco customers are also able to access the Company’s premium content on a self-service basis, once subscription memberships have been set up. These subscriptions appear typically to be bundled into product sales. The Company’s provides personal care to its customers through its sales and support staff.

Existing and potential customers are able to interact with the Company through its online support channels, as well as via LeEco’s social media accounts, including with Facebook, Twitter, LinkedIn, and YouTube.

Key Activities

LeEco is a China-based technology company, engaged primarily in the internet information service business. The Company provides various premium online content through web and mobile browsers, mobile applications, and television remote access services.

LeEco principally provides online network video services and an internet video platform, which include high-definition video streaming, the distribution of proprietary video content, and e provision of ultra-high definition display services. The Company also owns a Dongyang-based film company and a Tianjin-based media company, through which it produces its own video content.

Key Partners

LeEco operates in conjunction with a number of companies and service providers in order to provide customers with the best services possible. These partners include:

• Supplier and Service Partners, comprising suppliers of various services that support the Company’s operations, and companies to which the Company outsources certain non-technical functions;
• Manufacturing Partners, comprising various contract manufacturing companies that assist in the production, assembly, and packaging of LeEco products; and
• Distribution and Channel Partners, comprising delivery and distribution providers, and various affiliate marketing and sales partners, including online retailers and physical outlets. As part of its expansion into India, LeEco has launched partnerships with a number of companies, including a marketing tie-up with Jio Reliance for its smartphone range, and a manufacturing partnership with Taiwan’s Compal Electronics to produce smartphones locally in India.

Key Resources

LeEco’s key resources are its technologies and intellectual properties, its products and manufacturing networks, its IT infrastructure, its distribution and sales channels, its partnerships, and its personnel.

LeEco owns a number of intellectual properties, including patents and trademarks. Searches of records published by China’s State Intellectual Property Office identified a number of patent applications filed in LeEco’s name, including applications entitled ‘Operation method and system for interactive control of three-network terminals’, ‘Device and method for outputting multi-media format flow’, and ‘Data transmission system and method based on P2P (Peer-to-Peer) network and CDN’.

Cost Structure

LeEco incurs costs in relation to its research and development activities, the manufacture and distribution of its products, the operation of its sales channels, the maintenance of its It infrastructure, the management of its partnerships, and the retention of its personnel.

In 2105 LeEco recorded total operating expenses of CNY 1.84 billion (approximately $275.71 million). This included CNY 1.35 billion (approximately $202.30 million) in selling, general, and administrative expenses – including the payment of salaries and benefits to its employees.

Revenue Streams

LeEco generates revenue through the provision of various online services and the production and sale of consumer electronics products. This includes revenue derived from subscription fees for its premium online content. The Company focuses primarily on selling its internet content and services instead, offering its proprietary smartphones and televisions at low prices to those who have bought an online content membership.

In 2015 LeEco generated annual revenue of CNY 13.02 billion (approximately $1.95 billion), up on the CNY 6.82 billion (approximately $1.02 billion) recorded by the Company in 2014.