On this year's "Double 11" shopping festival, an online e-commerce platform sold 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 in recent years.
Internet TV is a cutting-edge technology that leverages broadband cable networks and integrates internet, multimedia, and communication technologies to offer users interactive services. In simpler terms, it's a business model pioneered by internet companies, often described as "free hardware, paid content." Internet TV relies on the sharing and integration of network resources, delivering a vast amount of content to users. The market has experienced explosive growth, but recently, its growth rate has slowed, and its market share has declined significantly. Some even called 2017 the “year of decline†for internet TV.
Initially, internet TV gained popularity due to its ability to provide experiences that traditional TVs couldn't match. After its official launch in 2010, it was quickly embraced by consumers and saw rapid development. With strong market potential, industry estimates suggest that if China’s 400 million households each pay 300 yuan annually for content, the market could reach 120 billion yuan. Adding hardware revenue at 3,000 yuan per unit, with a five-year replacement cycle, the total market size could exceed 3,000 billion yuan.
From 2012 onward, capital poured into the sector, making it highly competitive. In 2013, internet companies like LeTV entered the TV market with low-cost, high-value models, leading to a period of rapid growth. By 2015, annual sales exceeded 30 million units, and by 2016, the penetration rate reached 84.7%, surpassing North America and Europe in both market share and average spending.
However, after years of rapid expansion, the market has started to plateau. LeTV, once seen as a disruptor, faced declining sales, dropping from 2.6% to 1.4% in the first quarter of 2017. Its sales dropped by over 50% year-on-year, and during the "618" shopping event, sales fell by 57%. Meanwhile, the market share lost by LeTV wasn’t fully reclaimed by other internet TV brands, leading to an overall decline in the segment.
Experts point to rising panel prices as a major factor. Panels account for more than 60% of the cost of a TV, and their price increase lasted 14 months—the longest in nearly five years. Additionally, the market became oversaturated with aggressive competition, leading to practices like "buy a TV, get a membership" or "buy a membership, get a TV."
As technology matures, differentiation becomes harder, and homogenous competition intensifies. Companies unable to sustain themselves are forced to exit. Moreover, consumer satisfaction with content is also declining, as different platforms offer overlapping content, making it hard for users to choose.
Zhu Sihai, a researcher from the Fujian Provincial Government, believes the profit model of internet TV differs from traditional TV, relying mainly on memberships rather than hardware sales. However, content homogenization and high costs make it difficult to sustain long-term growth. To survive, the industry must focus on differentiated and value-added services, not just low pricing.
With the long lifespan of TVs, replacements are slow, and the high cost of panels makes price wars unviable. Many internet TV companies lack panel manufacturing capabilities, limiting their sustainability. While some models, like Xiaomi TV 4A, are popular among budget-conscious buyers, others struggle to compete against established brands like Hisense, TCL, Sony, and Samsung.
Looking ahead, the future of internet TV depends on technological advancements, particularly in AI. Although the industry still has room to grow, current AI adoption is still in early stages. Additionally, smart TVs haven't seen major design or tech breakthroughs, reducing consumer motivation to upgrade.
The biggest challenge for internet companies entering the TV market is hardware. Traditional manufacturers have well-established supply chains and strong risk management systems. Collaboration between traditional TV makers and internet companies could lead to better R&D, content innovation, and integration with smart home ecosystems, expanding the value of TV beyond video.
Zhu Sihai also notes that there’s no proven successful profit model yet for internet companies in the TV space. Content operations still face challenges, including cultivating user habits for paid content and managing large volumes of data efficiently. Disruptive innovations will be key to overcoming these hurdles.
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