BEIJING—The Chinese company that is buying American TV brand Vizio Inc. defies a simple definition.
Although often compared with Netflix, LeEco has no U.S. equivalent. It would be like Google's YouTube making TVs, smartphones and even driverless cars, or Apple Inc. producing its own online video content and staging professional soccer games.
LeEco has its roots in online video content. But since its founding in 2004, it has sprawled into hardware and futuristic technologies.
By acquiring Irvine, California-based Vizio for $ 2 billion, LeEco is moving to realize its long-held ambition to expand its brand to the U.S.
"LeEco is spending lavishly on their overseas expansion by hiring lots of people in places like Silicon Valley and India, and I would say they are the first Chinese technology company which actually leaves a real footprint on the process of globalization," said Fang Xingdong, who runs ChinaLabs, a technology think tank.
LeEco bought Vizio through a subsidiary, LeEco Global. Both are privately held and controlled by company founder Jia Yueting.
LeEco conducts its online content business in mainland China through Leshi Internet Information Technology Co., a publicly traded company on the Shenzhen stock exchange, with a market cap of 90.9 billion yuan ($ 13.8 billion). Shares fell 2% on Wednesday to 48.5 yuan.
Much like Amazon with its Kindle e-readers, LeEco believes its content service is compelling enough that users will want to use LeEco's TVs and smartphones and pay for its content services, forming an ecosystem. The company rebranded itself from LeTV to LeEco last year.
Revenue from the video-streaming service can help subsidize LeEco's smartphone hardware, in a way that is not feasible for pure hardware makers, Feng Xing, president of LeEco's smartphone business, told The Wall Street Journal last year. The idea is to hook consumers with popular films and TV shows, and then sell them phones on which to watch the programming.
Many industry observers questioned whether LeEco could compete against much bigger players in an increasingly saturated market when it launched its first smartphone in April last year. Skeptics also abounded when the company unveiled a driverless electric concept car earlier this year.
Even so, LeEco's smartphone, sports and cloud businesses were able to raise roughly 9.3 billion yuan in total from outside investors over the past year, not including funds from Mr. Jia, according to the company.
"I hope LeEco could be criticized like this all the time…and we would always focus more on bringing more meaningful stuff to industries and to our shareholders," Mr. Jia told reporters Tuesday in Hollywood, where the deal was announced.
"LeEco is never a follower to anyone else," he said.
In China, LeEco's sports division LeSports is well known among Chinese audiences for its ambitions in broadcasting and operating domestic and international sports games in one of the world's biggest sports market.
Mr. Jia is a big basketball fan who is also known for his attention to detail, according to colleague who wasn’t authorized to speak publicly.
One of the efforts it is making is to help realize Chinese president Xi Jinping's dreams for his nation to become a soccer power.
Apart from signing contracts with soccer organizations like the British Premier League for broadcasting rights, LeEco has also been playing the role of operating partner of commercial games.
LeEco's sports endeavors include serving as a strategic partner for last year's International Champions Cup China, featuring Italian and Spanish élite clubs like AC Milan and Real Madrid.
But another high-profile event fell apart this week when the much ballyhooed first match between Manchester United and Manchester City outside the U.K. had to be scrubbed because of soggy field conditions in rain-soaked Beijing.
—Yang Jie
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