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Hong Kong,Sports

LeTV Sports Flexes Muscles In HK

LeTV Sports, which grabbed the headlines with its daring swoop on Premier League football rights in Hong Kong, is a new kind of internet company, moving on opportunities where data and technology can transform the physical world, as well as online.

Its ambition reaches beyond China. Hong Kong is one step in a bigger, global journey.

LeTV Sports VP, Hang Yu, talked to Media Business Asia on how the company can sustain its current momentum, at home and abroad.

 

China’s LeTV Sports took another step towards its stated goal of global leadership in sports media and services yesterday, becoming the first internet company in the world to land exclusive broadcast rights for the Premier League after announcing a successful bid for Hong Kong.

The undisclosed price is thought to be upwards of US$400 million for exclusive rights to three seasons starting next year, double the price that incumbent PCCW paid for the current cycle.

LeTV may defray some costs by continuing to allow access for subscribers to Now TV, PCCW’s pay-TV service.

At this stage however, pricing and packaging details, which will include options to pay for select games rather than an entire season, are unclear.

The headline-grabbing deal, which could be supplemented by Hong Kong rights for other leagues, is part of a broader push in the city, where LeTV aims to develop a similar business model to the one it has cultivated in mainland China.

There, OTT sports and entertainment form part of a broader ecosystem for the LeTV Group, anchored around content, hardware and value-added services.

In Hong Kong, LeTV is also looking to produce domestic dramas after securing rights to Chinese and Western films and drama for a local streaming service.

LeTV Sports meanwhile – a separate company within LeTV Group – is in the process of raising another US$500 million to support expansion plans at home and abroad, after securing ~US$130 million in Series A funding in May.

The company also plans to reinvest revenue in the pursuit of further growth and a foothold in a highly competitive market, said LeTV Sports VP Hang Yu, speaking on the sidelines of last week’s Sports Matters conference in Singapore.

“We don’t talk about profit,” Yu told Media Business Asia.

“At the current stage the purpose is to expand as much as we can, as quickly as we can, into the broader ecosystem, no matter whether that’s events, hardware, other services or online consumption of content,” he added.

“It doesn’t matter. These are our users.”

High velocity growth

LeTV Sports started life as a vertical on the parent company’s online video site but has grown rapidly after being spun out as a separate business early last year.

Since then, it has started a variety of other ventures, including an online/offline boxing training program across China, in partnership with Manny Pacquiao, and a co-founding role in a Chinese edition of the International Champions Cup, a football tournament that saw Inter Milan, AC Milan and Real Madrid play each other in Guangzhou, Shanghai and Shenzhen this summer.

It has also acquired a broad spectrum of international and domestic sports rights.

Such diversity reflects the scope of LeTV’s ambition, as well as an underlying business model around broader participation in sport, rather than focusing on media consumption.

Prices for the most desirable rights in multiple sports are already starting to take off in China, Yu notes.

“If you are only a media company, how can you be profitable and sustainable in the future?” he muses. “That is always a question.”

The thinking behind LeTV Sports investments is driven by how the company see itself, Yu explains: as an internet company first, then as a technology driven company, and then thirdly as a sports company.

That has steered expansion into data-led products and services within the broader sports landscape, from the launch of a smart bicycle to technology services targeting fans in sports stadia.

“It’s a bigger B2C model – that’s what we want to create,” Yu explains.

Sports and the internet of things in China… LeTV’s first smart bikes launched in August

At the same time, the scope of such initiatives today is also a bold free-wheeling gambit to get LeTV Sports noticed. Increasingly, the company will be more precise about the bets it places, Yu adds.

While LeTV is keen to develop its own IP its sports subsidiary will focus on four sports: football, basketball, winter sports and rally racing.

Rights acquisitions, meanwhile, will narrow around premium properties, secured exclusively, that can one day drive subscription revenue.

Unlike many parts of the world, many of China’s popular sports are free to watch today, on TV or online, obsructing the growth of subscritpion revenue.

Nonetheless that will come Yu feels, with LeTV already charging for online Premier League games in China.

At the same time, overseas ambitions are also tempered to the broader group strategy.

Much of the group’s smart hardware, from backpacks to cameras to drones, is designed in an office the US. That's there to focus on technology development, rather than branching out into other areas such as content, Yu points out.

Onto Southeast Asia

Additional media forays in Southeast Asia, meanwhile, are more likely to depend on partnerships to shore up a wider geographic footprint.

“We provide a different level of service, mainly on the OTT side which represents the future, but the current stakeholders that are still dominant in these markets are cable and satellite, and mobile,” Yu says.

“Whether we can have a combination or consolidation or joint venture, it is all possible. We don’t compete with their current users.”

It's critical that the company keeps its eye on the ball in its highly competitive home market, Yu stresses.

China’s nascent sports market, a major government focus, is projected to develop into an US$800 billion industry over the next ten years.

Other well-resourced internet companies are also looking to play, and LeTV has to sustain its current momentum to succeed.

“It is sustainable,” Yu said, in an on-stage interview at Sports Matters.

“We don’t want to be that aggressive, but aggressive is the only way we can survive the competitive environment in China right now.”

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