LeEco, the new brand identity for ambitious Chinese tech group Letv, has opened shop in India, a cornerstone market for its expansion plans.

The company revealed its first products and content partners for India at a launch event in New Delhi last Wednesday, selling branded smartphones pre-bundled with 12 months’ subscription to Indian SVOD service ErosNow via flash sales on Flipkart, the country’s largest ecommerce platform.

The high-end phones, including one (Le 1s) priced at a competitive Rs10,999 (~US$160), will go on sale next month.

Content from affiliated partners – Eros Now and YuppTV – will go live in Q2, although no further details about the tie-up with YuppTV, which livestreams 250 TV channels across 12 languages, were available at press-time.

LeEco also plans to open an R&D center in Bangalore, employing more than 1,000 people, and to introduce other branded products from its portfolio, from TVs to smart bicycles, later in the year.

The company is building a network of 555 service centers in India, providing support in English and nine Indian languages.

Entry in India effectively marks the end of the first phase of international expansion for LeEco, with established operations in the US, both for hardware sales and development of its smart car business, as well as in Hong Kong, which also serves as a beachhead to expand into Southeast Asia.

The company highlighted India and the US as strategic priorities following its rebrand earlier this month.

A Daunting marketplace

LeEco phones have received positive coverage in the Indian press, but success hinges on building share in an ultra-competitive smartphone market, where around half of smartphones sell for less than US$100, positioning both Le 1s and Le Max, LeEco's pricier handset, as premium products.

Reliance Jio, a multi-billion dollar video and broadband venture gearing up for launch this year, has also developed a smartphone line of its own, branded Lyf.

These could go head-to-head with LeEco by combining high-end specs with relatively low prices. Details on Jio’s plans are under wraps for now, unsettling incumbents across TV and telco distribution.

Access to content from domestic news and entertainment major Network18 – also controlled by Jio’s backer, Reliance Industries – as well as local scale, will make Jio a formidable competitor.

Most of the paid subs for LeEco’s current content partners, ErosNow and HyppTV, are outside India, an undeveloped market for paid video.

The current market leader is four-year-old Ditto TV, an SVOD offering backed by entertainment major Zee.

Ditto cornered about 80% of India’s Rs700 million (~US$10 million) SVOD market last year, based on estimates from Media Partners Asia (MPA).

Subscription contributes a small slice of a much bigger online video pie, however.

Revenues from online video advertising in India came in at Rs8.9 billion (~US$131 million) last year, according to MPA. YouTube ended up with an estimated 90%, leaving just Rs890 million (US$13.1 million) for everyone else.