China’s LeEco in talks with Netflix over content cooperation

Chinese technology giant LeEco is in talks with online streaming pioneer Netflix over possible cooperation in content after its US$2 billion deal to acquire US smart TV maker Vizio, its top executive said on Tuesday.

“We are planning a very significant cooperation with Netflix, and details will be announced in the third quarter,” Liu Hong, co-founder and vice chairman of LeEco, said in Beijing on Tuesday.

LeEco, which has businesses in online video streaming, smartphone and smart TV production and autos, is dubbed the Netflix of China.

Liu declined to provide details but he said the company plans to make an announcement at the end of September as the company has scheduled an event in the US to unveil for the first time details of its North America strategy.

The Chinese company recently acquired a 50-acre site in Santa Clara, California which will be developed as its North American headquarters.

LeEco and Netflix’s cooperation is expected to include content sharing as the Chinese company last Tuesday announced the acquisition of Vizio in a deal that marks a milestone in its expansion into the North American market.

Liu said LeEco will support Vizio with its user interface system, content, platform and applications. “LeEco has established a TV ecosystem supported by its internet technology and cloud platform [and] such a model can be copied to Vizio,” he said.

However, building up content in the US is more difficult as online streaming is a monopolised market with the copyright of TV shows and movies in the hands of leading film or TV production companies, Liu said.

The possible cooperation with Netflix will help strengthen its smart TV content, he said.

“In terms of content strategy, we will be more open to business cooperation in the US,” Liu said. The company also plans to work with smaller production companies to help them set up their own video sites, he added.

In China, LeEco’s smartphones and smart TVs are bundled to provide access to TV shows, live sports matches and blockbuster movies. Setting low prices for its smart TVs, LeEco’s strategy is to attract users to join its paid membership programme.

In addition to the North American market, India and Russia are other target markets under LeEco’s globalisation ambitions.

LeEco plans to launch smartphone and smart TV sales in Russia in the third quarter, Liu said.

“We will first introduce hardware into the market, and then we will build the content and also applications. The business model is similar to what we have in China, and I believe that such a model can be copied to more countries,” he said.

In India LeEco has already partnered with streaming service providers Eros Now and YuppTV for content.

Separately, LeEco has been questioned about its fundraising capability amid its aggressive acquisition and globalisation plans.

“It’s not the case that we do not have the fundraising pressure, but we are able to make the best use of money,” Liu said.

LeCloud, LeEco’s cloud platform, completed a series A financing round for 1 billion yuan in March this year, while LeSports, its sports arm, raised 8 billion yuan in the same month in its series B financing.

Liu added that the pre-A funding round of LeEco’s auto unit will be completed soon, and the amount will be significant.

Television dramas such as House of Cards, Orange is the New Black, Bloodline and Sense8 are popular on the Netflix platform. Available on the streaming platform are also award-winning movies like Spotlight and Jurassic Park.