In the context of this year's "Double 11" shopping festival, an online e-commerce platform reported selling a total of 2,057,000 TV sets. According to data from a third-party market research firm, only two of the top ten internet TV brands have ever fallen out of the top ten list, indicating a relatively stable market position for major players in the industry.
Internet TV represents a technological innovation that leverages broadband cable networks, integrating internet, multimedia, and communication technologies to deliver interactive services to users. In simpler terms, it is a business model developed by internet companies, often described as "free hardware, paid content." This model relies on the sharing and integration of network resources, offering users a vast amount of content and driving significant market growth. However, since the beginning of this year, the growth rate has slowed, and market share has declined, with some even labeling 2017 as the "year of decline" for internet TV.
Initially, internet TV gained traction due to its ability to offer consumers experiences that traditional TVs could not provide. After being introduced in 2010, it was quickly embraced by the public and saw rapid development. The market potential was promising, with estimates suggesting that if 400 million households each paid 300 yuan annually for content, the annual market size would reach 120 billion yuan. When combined with hardware sales at 3,000 yuan per unit, over five years, the total market could exceed 240 billion yuan, making the overall potential more than 3,000 billion yuan.
Capital inflows surged after 2012, creating a hot market environment. In 2013, internet companies like LeTV entered the TV space, using low-cost, high-value models to capture market share and drive rapid growth. By 2015, annual sales of internet TVs exceeded 30 million units. In 2016, the penetration rate reached 84.7%, surpassing North America and Western Europe in both market penetration and average consumption.
However, the market has since leveled off. LeTV, once considered a dominant player, saw its market share drop from 2.6% in the first quarter of 2017 to 1.4%, falling out of the top ten. According to China Health data, LeTV’s sales from January to July accounted for over half of the year-on-year decline, while sales during the "618" promotion period dropped by 57%. The market share lost by LeTV was not fully reclaimed by other internet TV brands, leading to an overall decline in the sector.
Industry experts attribute the slowdown to rising panel prices, which account for over 60% of the cost of a complete TV. A 14-month price increase in panels—longest in nearly five years—has put pressure on manufacturers. Additionally, the market has faced issues such as disorderly competition, with companies engaging in aggressive tactics like "buy a TV, get a membership" or "buy a membership, get a TV."
As technology develops, homogenous competition becomes inevitable. Companies unable to survive the market will eventually exit. Consumer satisfaction with content is also declining, as different platforms offer unique content, making it difficult for users to meet their viewing needs on a single platform. Many end up purchasing multiple subscriptions, with over 80% of content being duplicated.
Zhu Sihai, director of the Industry Department at the Fujian Provincial Government Development Research Center, highlights that the profit model of internet TV differs from traditional TV, relying on content subscriptions rather than hardware sales. He emphasizes that differentiation and value-added services are key, rather than focusing solely on low prices.
The long service life of TVs means slow replacement cycles, and with high-cost panels, price wars are not sustainable. Internet manufacturers lack panel production capabilities, limiting their ability to grow sustainably. The technical demands of TV manufacturing are high, with flagship models costing several thousand dollars, leading to different consumer expectations.
For example, Xiaomi TV 4A has been popular, but higher-end models like the Xiaomi TV 4 have seen less interest. Many consumers ask: “With the same money, why not buy Hisense, TCL, or even Sony or Samsung?â€
Despite challenges, the future of internet TV still holds potential, especially with advancements in artificial intelligence. However, current AI integration is still in early stages. Experts suggest that collaboration between traditional TV manufacturers and internet companies can help improve content, technology, and smart home integration, enhancing the value of television beyond just video.
Zhu Sihai also notes that there is no universally successful profit model for internet companies entering the TV market. Content operations remain a challenge, particularly in cultivating a paid content culture among Chinese consumers. Efficiently managing and optimizing large volumes of data requires strong technical and financial support, as well as innovative solutions.
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