Chinese technology company LeEco is betting on its “comprehensive ecosystem” – including content like entertainment options, TV dramas, shows, among others – and not just devices, for a success story in India.

So far, LeEco’s offerings are into TVs and smart-phones. LeEco competes with Xiaomi, OnePlus, Gionee, Oppo, among others, in India – one of the largest growing smart-phone market in the world.

Lenovo and Huwaei are the two other major Chinese names. Hence, it is no surprise that Beijing-headquartered LeEco will look to differentiate its offerings.

As Atul Jain, Chief Operating Officer (Smart Electronics Business) of LeEco India puts it, differentiation comes not just through “disruptive pricing” and “breakthrough technology”, but also through a content-driven ecosystem.

“The era of making profits from hardware is gone. So you will have to make any profits commercially from services or other things that you layer on it,” he told BusinessLine during an interview.

Ecosystem

And content is the next big driver for LeEco in India, the next big market for the company after China.

Often called ‘Netflix of China’, LeEco has been able to create a successful ecosystem in its home country, which comprises content, devices, cloud and platform. “Hardware is just an entry point into our ecosystem,” Jain adds.

In its home country in H1 2016, LeEco achieved a significant increase in subscribers and subscription revenue primarily on account of content (which includes exclusive ones like movies, drama and so on).

Moreover, the company has established its own production house Le Vision Pictures (LeVP) and acquired Flower Film & TV. “Content is something that we will either acquire or we have to create on our own (in India),” he maintains.

LeEco embarked on its India journey in February. The company has already sold 700,000 smart-phones till July.

So far, it has opted for the “faster way” (of delivering content) by entering into partnership with providers like Eros Entertainment, Yupp Tv, Hungama Music. The aim is to build a content library which will include movies, TV dramas, entertainment shows, concerts, and sports games.

Challenges in India

Faisal Kawoosa, Lead Analyst (Telecom), CMR, points out that as a strategy it is the “service-oriented model” that seems to be the most profitable one globally. But he warns of the challenges in India.

“Here, it is the same set of companies offering digital content across platforms and vendors. So what is really unique to LeEco’s partnership is something that has to be seen,” he adds.

He cites the example of the Middle East where there were three distinct players – one for Hollywood and European content; another for Indian; and a third for West Asia content.

Poor monetisation of content because of lax IPR is another point.

“People have started buying content online. We are betting big on our ecosystem and over the next one year – with 4G coming in and data becoming faster and less costly – this ecosystem will come into full play,” he points out. LeEco is eyeing to be the third largest smartphone vendor here by the end of this fiscal. This will be aided having its own assembly unit in the country.

LeEco has also applied to the FIPB for setting up its own stores. The idea, Jain says, is to “improve” consumer experience. Also on the agenda is the expansion of off-line channels (brick-or-mortar stores). The idea is to be present in 65 cities through 8,000 stores by end of this calendar year (2016). It is currently present in six cities through 2,000 stores.

“We expect offline to online sales to be 60:40 by end of next year. In China, it is just the reverse,” he says.

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