U.S. TV company sold to Chinese tech innovator
American TV manufacturer Vizio is being sold to Chinese technology company LeEco for about $2 billion.
LeEco is already a major supplier of home-theater hardware, including smartphones and smart TVs, to the China and India markets. The company also is a key player in the distribution of online entertainment content — films, live sports — as well as Internet provider services in those markets.
The Vizio acquisition opens a fast lane into the U.S. market as Vizio is No. 2 in TVs, behind Samsung, according to IHS Markit. Vizio had a market share of almost 30 percent of all smart TVs in the U.S. in the first quarter.
The Vizio brand sold almost 8 million TVs last year while LeEco sold 4.5 million of it smart LeTVs, with an eye on 6 million this year. At present Vizio only has distribution deals in place in the U.S., Canada and Mexico..
Besides its hardware business, Vizio’s collection of user data is marketed through subsidiary Inscape, which LeEco will spin off and Vizio CEO William Wang will now run.
LeEco CEO Jia Yueting sees the deal as the next step in his desire to unite create an online ecosystem of IP services, content and consumer products in the power house markets of the U.S, China and India. “I hope we can lead the future of the Internet ecosystem era,” Jia told reporters.
It is a counterintuitive move in the tech industry where most companies expand into Asian markets for growth. “The world moves East, and we move West,” said Winston Cheng, LeEco’s corporate finance executive.
Vizio’s Wang took time to thank the retail partners that took a risk by helping launch the Vizio brand, singling out Walmart, Best Buy, Target and the warehouse clubs. The primarily bargain brand began pivoting last year to include higher-end models designed to attract the custom install and assisted sales floor channels.
Wang noted that Vizio distribution strategy in the U.S. will remain the same and all agreements with retailers will be honored.
“LeEco believes in breakthrough technologies, a complete ecosystem and disruptive pricing,” Jia commented. “Acquiring Vizio is an important step in our globalization strategy and building our North American presence. From its inception, Vizio introduced a disruptive business model that changed the industry and aligns with our vision of breaking boundaries to deliver consumer-focused products, software and services.”
In a statement, the companies said the acquisition benefits both companies, with Vizio offering LeEco a steady install base of users and a brand that is both popular and successfully distributed throughout major North American retail channels. LeEco provides Vizio immediate global scale to bring its innovations to consumers worldwide.
“Fourteen years ago, I mortgaged my house to start Vizio and since then, it has grown into one of the most well-known and respected CE brands in North America. As an entrepreneur, I couldn’t be more proud of what has been accomplished,” said Wang. “As we enter a new chapter with LeEco, I’m humbled by the hard work and dedication of Vizio shareholders and employees. Their unwavering faith in the brand and commitment to excellence is what made this venture possible. I’m excited to see how LeEco’s global reach and resources will elevate VIZIO as we continue to bring great technology, innovation and value to our consumers.”
Besides Wang, the Vizio executive management team will remain in place and will continue its operations as an independent subsidiary from its existing headquarters in Irvine, Calif.
The Vizio brand of smart TVs and soundbars will continue to be sold through its existing distribution channels and supported by the same North American-based customer service.
Wang will assume the titles of chairman and CEO of Inscape, with focus on the continued expansion and growth of the brand’s end-user data markting business.
As part of the definitive agreement, LeEco will acquire all of the Vizio hardware and software operations, technology and intellectual property. The transaction is expected to close during the fourth quarter.
Wang made the announcement at a press event in Los Angeles last week. “As the father and founder of Vizio, I was reluctant to do this. But for our loyal shareholders and employees, I know this is the right thing to do.” LeEco, he added, “made a very, very generous offer.”