How LeSports is turning content into cash?

LeSports, the sports arm of Beijing-based internet giant LeEco, has raised a record-breaking 8 billion yuan ($1.2 billion) in Round-B financing.

According to a Chinadaily report, more than 20 institutional investors, led by HNA Capital and Zhongze Culture Investment, joined the financing round, as well as a collection of individual investors including Chinese TV celebrities Sun Honglei, Liu Tao and Chen Kun.

Then here’s the question: what’s the next step for LeSports? How can its sport content be turned into cash?

For LeSports, sports content with embedded ads and event operation are two major revenue sources, accounting for 43% and 35% of the total revenue respectively, according to a report by Jiemian, an influential Chinese news outlet.

As well as this, revenue also comes from hardware sales (12%), the electricity supply charge of Super TV (9%) and on-demand streaming and broadcasting (1%).

The event operation revenue refers mainly to ticketing and sponsorship of the International Champions Cup and local marathon operation. In 2015, the revenue raised from these was about RMB 100 million though the company did not have enough time to prepare for those events.

However, the sports start-up seems more ambitious with its subscription model. It announced on April 6th a plan to launch a pay-to-view model within mainland China. It is now marketing three packages, namely, the RMB 590 yearly package, the RMB 159 quarterly package and the RMB 59 monthly package.

Several days later, on April 14th, the sports company confirmed that the sales of Super Sports Membership reached almost RMB 330 million within the first 24 hours. At the same time, consumers bought 3642 AC Milan franchising products and 915 MBL franchising caps from the LeSports e-commerce platform. This is the first time that China has seen the establishment of a subscription model in sports marketing.

“In the past year, LeSports has made an amazing breakthrough. We have accumulated a large number of sports programmes on our platforms,” said Lei Zhenjian, founder and CEO of Le Sports. “We will continue to provide better services for our users.”

“Profit is not the only yardstick of success in this stage. Whether it made a profit or not in the past year, LeSports’ estimated value this year has reached RMB21.5 billion. Anyway, the market position is a key element for us.” Lei added.

Proofread by John Devlin.