LG Electronics will acquire Alphonso, a TV content data analysis company in Silicon Valley, USA for 80 million dollars (about 87 billion won). It is an additional merger and acquisition (M&A) one week after signing a joint venture contract of KRW 1 trillion with Canadian vehicle electronic equipment company Magna International at the end of last year. In the industry, it is said that LG Electronics has laid the foundation for diversifying its TV business portfolio, which has been mainly focused on hardware, into the software field.
LG Electronics announced on the 7th that it has invested about 80 million dollars in Alfonso, a TV advertisement and content data analysis startup headquartered in Silicon Valley, and secured more than 50% of the stake.
Alfonso is a TV advertisement and content data analysis company established in 2012. This company has an artificial intelligence (AI) image analysis solution developed independently. It has also accumulated TV viewing data of 15 million households in North America. Alfonso is collaborating with LG Electronics based on such technology and customer base, and provides services to global leading TV makers and content companies such as Japan Sharp, Toshiba, China Hisense and Skyworth. An official from LG Electronics said, “This acquisition is to expand to the service, content, and software (SW) sectors by integrating digital transformation with the existing flagship business (TV).” .
LG Electronics has a strategy to attract customers to LG TV’s enthusiasts by providing various customized services and contents to TV customers using Alfonso’s data analysis capabilities. LG Electronics decided to retain the current management and employees in order to maintain the autonomy and vitality derived from Alfonso’s unique organizational culture.
Consumers around the world are already familiar with the culture of enjoying a variety of content such as online streaming as well as broadcasting stations with smart TVs that can connect to the Internet. As of last year, smart TVs accounted for over 83% of TVs shipped worldwide. The ratio of smart TVs among LG Electronics TVs also exceeds 90%.
With this acquisition, LG Electronics plans to differentiate its service and content competitiveness to outperform competitors in China and Japan in the global TV market. LG Electronics occupies about 30 million units in the global TV market, which is estimated at 220 million units last year. LG is increasing its market share in the high-end TV market, with organic light-emitting diode (OLED) TVs leading the way. LG Electronics’ OLED TV accounts for more than half of the total global OLED TV sales.
An official from LG Electronics said, “Visible effects such as revenue related to contents such as advertisements and expansion of TV sales base are expected.” Said.
The industry is interpreting LG Electronics’ acquisition of Alfonso as part of the future preparations of President Kwon Bong-seok (pictured). This is a diagnosis that reflects the will to establish a solid foundation for growth by diversifying the hardware-oriented business structure into contents and software through digital transformation. President Kwon emphasized that when he was inaugurated as CEO last year, “We will secure new growth engines through proactive responses such as digital transformation in an era of rapid changes in the market environment. Digital transformation is the foundation of change and growth, that is, sustainable growth.” There is a bar.
President Kwon said in the New Year’s address announced on the 4th, “In order to create unprecedented innovation, we must focus on the disruptive changes that make Y through X+α, going beyond the gradual growth of making’super X’through X+α “He said. This means that an attempt must be made to boldly develop products and services from a customer’s perspective based on a segmentation strategy, away from the manufacturing industry that focuses on standardization, publicization, and modularization. It is in line with the emphasis that he emphasized, “You have to find the desire in your heart.”
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