MUMBAI: It came in like a storm with booming announcements about the humungous investments ($200 million, according to news reports) it intends to make in content in India for its LeEco content ecosystem.
It hired quick and fast and before you knew it the media went to town about how great Chinese smart phone, TV maker and online content aggregator LeEco India is.
But early into the new year, the company silently started the process of cutbacks, and has nearly shuttered its Mumbai operations. Some 400 employees were asked to take a month’s pay check in lieu of their notice period and leave.
Insiders state that LeEco COO Indian content Debashish Ghosh, marketing head Divya Dixit, commissioning editor Harini Calumur, subscription head Jayahsree Sriram, among a slew of other professionals quit. No information was available at the time of writing on whether LeEco India head Atul Jain had also been shown the door.
It looks like the dot com boom to bust story is set for a repeat in the VOD segment where a gaggle of players has set up shop. And LeEco might be the first of the many carcasses that could line the streets of streaming scorporate-dom.
Former employees claim that LeEco India is a victim of the spending spree hangover its international business has been experiencing. The company has been in a bit of a bind financially and the squeeze was felt in India. And how!
LeEco’s founder and chief executive Jia Yueting had in a mail to employees in January said that the firm had burnt cash too quickly as it expanded into other businesses, including smartphones, driverless cars, etc.
Chinese real estate firm Sunac China Holdings reportedly invested about $2.18 billion in the company a couple of months ago, giving it a bit of a breather.
Hence, the company decided to go into pause mode, relook at its business strategy for the Indian market, which is among the ones it sees a lot of promise in, apart from the US.
The buzz is that of the overall estimated 400 employees based out of Mumbai, Delhi and Bangalore, 250 were issued pink slips sometime during late last year and over the new year.
Its Delhi and Bengaluru offices also underwent heavy downsizing is what company insiders told indiantelevision.com.
Says a senior manager: “It came as a shocker to everyone. LeEco invested too much money in India and hired a lot of people in one go. The business model went wrong,” said a source. “We had little to do but play games as money had totally dried up in the last few months and found it challenging to honour our commitments to our partners.”
LeEco India had also planned to set up a device manufacturing company in Noida but that plan was cancelled a few months ago. The company also exited its offline sales of smartphones and slashed its advertising budgets.
Media pundits say that demonetisation further hit its operations, deepening the crisis.
Apart from India, the company had major plans for the US and other territories.
LeEco forayed into the Indian smartphone market with the launch of a few smart phones over the past year under online sales partnerships with ecommerce platform Flipkart. It rolled out its line of TVs too in India,
It also inked content partnerships with over-the-top (OTT) players Eros Now, YuppTV and Hungama. Content from VOD platforms was pre-bundled with the purchase of the phones.
The company also planned to produce its own content for India.
But that will have to wait for a while. Until it gets its business plans sorted out.
(The article had earlier stated that the company had 700 people of which 630 were issued pink slips. It also stated that senior management was shown the door; they actually resigned.)
Also read:
LeEco to produce content for India; launches new phone with ‘Supertainment’ package
Debashish Ghosh to join LeEco as COO
Will LeEco’s device-content bundling strategy pay off in India?
