Eyeballing online [China Daily: Hong Kong Edition]
(China Daily: Hong Kong Edition Via Acquire Media NewsEdge)
Chinese Internet TV and media devices are revolutionizing information and entertainment even as traditional counterparts face demise, Bao Wanxian reports in Tianjin.
Command and control
Except during his childhood, Liu Yang, a cafe owner in Tianjin, has never found much use for a TV set.
"I thought I could get all the entertainment and shows I wanted from my laptop or iPad by visiting online video websites," said the 34-year-old.
But when the World Cup rolled out earlier this month, Liu realized he did not have a TV set to catch the matches.
Fortunately for Liu and other Chinese soccer fans, they were soon offered multiple options to enjoy the global sporting event by using the latest devices and channels like their smartphones, set-top boxes and Internet Protocol television or IPTV, in which TV services are accessed using the Internet.
Liu bought a 49-inch, 3-D IPTV set made by Xiaomi, a Chinese mobile Internet company that develops smartphones, apps and consumer electronics. It seemed like a much better choice than traditional TV sets, he said.
"It works well across multiple screen sizes. The only thing I needed to do was connect my WeChat social networking account with the set. It was easy and smooth access to all 64 games of the World Cup, the sports lottery and online games," he said.
Liu's experience highlighted the declining influence and use of traditional TV versus the huge potential of Internet-related content in one of the world's largest and fastest-growing markets. Traditional TV and its related devices and services, which have dominated most Chinese families' living rooms for the past few decades, are coming under increasing fire from mobile devices and online video sites.
The rate of residents who watched TV in Beijing alone dropped to 30 percent in 2013, from 70 percent three years ago, a report by the State Administration of Press, Publication, Radio, Film and Television, China's media watchdog, showed.
Figures released by the China Electronic Chamber of Commerce showed that in the first half of this year, sales of traditional TV sets hit less than 20 million yuan ($3.2 million), declining 15 percent from the same period last year. It marked the first drop in sales revenue in the past three decades.
Conversely, domestic sales of IPTV devices have experienced explosive growth in the past two years. According to the 2014 Internet Trends report released by Kleiner Perkins Caufield & Byers, a US-based venture capital firm, in
Command and control
2013, sales revenue of smart TV devices grew 39 percent worldwide.
In the first quarter of this year, LeTV, a leading provider of smart TV and over-the-top content, which refers to the delivery of audio, video, and other media over the Internet without a multiple system operator, covered 19 percent of sales revenue in the Chinese TV market, ranking first in the industry.
China's Internet TV market is expected to hit $1.38 billion in 2016, according to a study by Digital TV Research, a consultancy.
"Internet TV has revolutionized the way in which Chinese audiences receive information and entertainment in their living room," said Xie Wen, a Chinese IT expert and former president of Yahoo China.
"It is being seen as the new hope for those in the TV industry to win back audiences."
Research by TNS, a global leader in market research and business analysis, showed that the lack of diversified content and creative modes has led to the decline of traditional TV and boosted the development of Internet-based media.
"For traditional consumer electronics manufacturers, their job is done once they deliver a TV set to the customer. But for Internet-based media providers, our job has just started," said Yu Guangdong, vice-president for the search business of Internet company Qihoo 360.
"Internet TV has drawn a large number of Chinese viewers back to the living room, sitting in front of the television set. The refocus on the industry also brings more investment, covering operational costs and promising to help rake in more profits," said Zhang Yuxia, CEO of Future TV Co Ltd, a subsidiary of China Network Television, which is the online division of State broadcaster CCTV.
The emergence of Internet TV, combining services, facilities, video content and terminals, has obviously threatened the traditional profit model of the TV industry. That is prompting traditional TV set manufacturers to change their mindset and seek cooperation with online video providers.
From late last year, a group of China's leading TV set makers have joined hands with online video providers. Sichuan Changhong Electric Co Ltd teamed up with Youku.com, while TCL and iQiyi.com cooperated to produce Internet TV. Hisense Group announced it would work with 18 online video websites.
"The joint cooperation will provide advanced technology in producing TV facilities and innovative video services for users, helping to establish a positive cycle in the future," said Wang Zhihao, chief technology officer of Hisense Group.
Command and control
Amid the development of IPTV and its related devices, government scrutiny over broadcasting via these channels is expected to increase.
Some IPTV and set-top box operators that provide online video, audio and gaming content as well as other applications have been urged to halt download channels involving third-party applications for unlicensed online programs and illegal content, according to the country's media watchdog.
That means that enterprises that want to provide set-top boxes and IPTV can only cooperate with the seven Internet television licence holders approved by the State Administration of Press, Publication, Radio, Film and Television - CCTV.com, bestv.com, the Hangzhou-based hzcnc.com, CRI Online, CNR Online, South Interactive Media and Hunan TV.
"The move affects not only government agencies and enterprises, but also users of the set-top boxes and IPTV," Xie, the former president of Yahoo China, said.
The crux of China's Internet TV broadcasting system - which includes players like program content service providers, integrated platforms, and terminal service providers - must maintain the core value of providing safe and positive content for consumers, said Luo Jianhui, director of the online audio-visual programs management department of the State Administration of Press, Publication, Radio, Film and Television.
"The latest moves are likely to squeeze out some Internet TV players, integrate Internet resources and standardize the content of programming for both traditional and Internet TV, making the industry focus more on enhancing the quality of programs and promoting the healthy development of China's TV industry", Xie said.
Xu Yiran, chief business officer of Perfect World, China's leading online game developer and operator, said that although the use of IPTV and set-top boxes is growing across China with a strong user base, there are still problems providing creative content and finding an effective profit model.
"There is still a lot of room for enhancing profit from online games, e-commerce and other entertainment in a wide range," Xu said.
"I believe it will be an irreversible trend of the TV industry to provide entertainment and information to users over the Internet.
"But the key point is to establish diversified content production and legally profitable modes as well as creative services for consumers."
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Lyu Shuang and Su Zhou contributed to the story.
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