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LeTV is becoming the biggest winner of Internet TV
In a recent media event in Beijing, Xiaomi TV announced a price drop of 200 yuan for its 32-inch Mi TV 4A, bringing the price down to 999 yuan. This marks the latest price cut from Xiaomi this year, as it continues to leverage its competitive pricing strategy to expand market share. The real loser in this scenario is LeTV, once the dominant force in the internet TV sector.
LeTV had been the top performer in the internet TV space over the past few years, with shipments reaching 6 million units in 2016. Its success came from aggressive cost-cutting strategies that allowed it to outpace traditional TV manufacturers. However, last year, LeTV faced severe financial difficulties, which significantly impacted its position in the television market.
During the third quarter of last year, LeTV reversed its previous strategy by increasing TV prices, while Xiaomi continued to implement aggressive price reductions. For consumers, lower prices are a strong incentive, and this shift has led to a noticeable rise in Xiaomi’s TV shipments.
According to data from OvO Cloud Network, Sharp, TCL, and Xiaomi all saw significant increases in their global market shares in the first half of this year, with growth rates of 72.7%, 20.8%, and 66.7% respectively. This marks the first time Xiaomi has entered the global TV top 15 brands. Interestingly, both Sharp and Xiaomi have focused on price cuts to gain market share, showing a similar strategy despite being different players in the industry.
Most of Xiaomi’s TV sales still come from the domestic market. The company’s rapid growth in shipments has coincided with a sharp decline in LeTV’s sales, which was previously China’s largest internet TV brand. Data from OvO Cloud Network shows that LeTV’s global market share fell by nearly 50% year-on-year in the first half of this year, making it the biggest drop among the top 15 global TV brands.
Analysts suggest that while Xiaomi is gaining ground, Sharp is also benefiting from LeTV’s struggles. Sharp’s resurgence began after it was acquired by Hon Hai (Foxconn) last year. The company has targeted China, the world's largest TV market, and recently reduced its TV prices by 20% to 30% in China. This aggressive move has clearly helped increase its market share.
However, supporting Sharp’s price war comes at a cost. Hon Hai reported a 36% month-on-month drop in net profit in the second quarter, though it was only a 4.1% decrease compared to the same period last year. In 2016, the same quarter saw a 31% drop compared to 2015, raising questions about how long Hon Hai can sustain these losses.
Xiaomi has long been willing to accept lower profits in exchange for market share growth, compensating through its expanding internet services. This model worked well in 2015 and 2016 when its internet business grew rapidly. Apple, the world’s second-largest smartphone company, is also focusing more on its internet ecosystem.
With the Double 11 shopping festival approaching, Xiaomi chose to reduce the price of its 32-inch TV to 999 yuan — one of the lowest prices for a 32-inch model. Other traditional brands typically sell similar-sized TVs for 1050 yuan or more, highlighting Xiaomi’s strong pricing advantage.
According to OvO Cloud Network, LeTV and Xiaomi TV had global market shares of 1.4% and 1.0% respectively in the first half of this year, with the gap between them shrinking further. Recently, the head of Xiaomi TV revealed that third-quarter shipments increased by 144% year-on-year, marking the highest quarterly growth so far this year. With this latest price cut, Xiaomi is poised to capture even more market share, possibly surpassing LeTV this year.