Before it evolved into a "Blue Ocean," the industry had already turned into a "Red Sea." Many sectors have begun to show signs of overexploitation. After the hype subsided, numerous industries did notè¿Žæ¥ high growth but instead faced prolonged downturns. Take the color TV industry as an example; despite trends in the integration of hardware and software, and despite licensees becoming more active, with larger screens offering better experiences, the most pressing issue for players in this sector remains profitability. Currently, even if the content market is thriving, the potential for corporate profit growth might be quite limited. This could be an opportune moment to focus on laying out the hardware supply chain.
Is the integration of hardware and software the right direction? Yes. Can this integration enhance enterprise profitability? Over the past couple of years, the color TV industry has been stirred by the internet, highlighting the importance of content. Liang Jun, the new CEO of LeTV, reiterated this point at the China Internet Forum, stating that the net profit margin for TV manufacturing had dropped to around 1-2%, suggesting that the era of TV makers profiting solely from hardware sales has ended.
Recently, the article "Appliances Speak" discussing how users are losing patience with repairs rather than buying new appliances may have sparked discussions. Many consumers agree that TV quality isn't what it used to be, repair costs are high, and it's often better to buy a new one. This indicates that traditional color TV companies face severe challenges in both selling whole units and providing services. These models may not yield high profit margins. Additionally, after several large-scale product promotions, consumer demand for color TVs has waned. There have also been periodic fluctuations in panel prices. The current state of color TV manufacturers is challenging.
Therefore, over the past two years, initiatives led by LeTV to enter the content industry have garnered increasing attention and participation from companies. However, similar to investments, the content industry has already shown early signs of saturation before fully developing.
Almost all domestic brands are now involved in content operations, with some foreign brands achieving content injection via cooperation models. Domestic brands have established themselves as content managers. For instance, Hisense has Good Vision, Skyworth has Cool Opening, Changhong has Rainbow Collar, and TCL has Thunderbird. Despite these efforts, many independent operating companies struggle due to deep branding ties to their parent companies. Their operational areas and service brands don’t extend effectively, or they rely heavily on their parent company’s resources and licensing fees to sustain their businesses.
This has resulted in a significant overlap in content resources among various brands. For example, many hardware manufacturers like Xiaomi and Coolpad have access to iQiyi and Tencent resources, while others like Sharp and Haier leverage Mango TV resources. While the initial novelty was appealing, consumer interest has waned, making the color TV content market feel oversaturated.
Focusing solely on content may not be the solution. Breaking through the involvement of multiple brands in the industry chain is crucial. It's clear that the content market has already transitioned into a "Red Sea" before realizing any "Blue Ocean" profits.
Now, the content market is still in its nascent stages of consumption. Control over content remains tight, which is why many consumers shy away from returning to the big screen. Although General Manager Gong Yuguo of CIBN Internet TV, one of the internet licensees, believes that licensees are positive forces for the development of internet TV, they are not obstacles.
In fact, the seven major licensees, including Future TV, BesTV, Southern Media, and CIBN, are eager for market liberalization to attract greater interest in the big-screen market. However, this won't happen overnight.
In this stagnant industry, perhaps it's better to refocus on the upstream and downstream integrated industrial chain discussed in previous years. Weak consumer demand for color TVs was partly due to rising panel prices affecting TV costs, causing dissatisfaction among some consumers.
Last year, Sharp triggered a sudden paradox by cutting Samsung’s supply. As a result, Samsung, the world’s largest TV maker, scrambled for alternative suppliers, and Hisense, the third-largest maker globally, along with TCL, had to resolve the crisis. This already signals a misalignment in the TV industry’s upstream and downstream supply chain.
Thus, color TV manufacturers should refocus on the supply chain, where their core advantages lie. Now, LCD panel technology has become relatively open. Without prior investment, catching up now is feasible through investment or joint ventures. The mature LCD industry presents more opportunities for brands.
Recently, TCL Group invested in China Star Optoelectronics, now holding over 85% stakes. This could be a sign. The competition among color TV makers may soon shift back to the overall industry chain advantage. In the content industry, numerous restrictions exist, and the situation might be more complex than anticipated. Making money in this field is not easy.
For smart TV/box information, you can check out Sofa Butler (http://www.chinabox.tv), a leading website in China focusing on smart TVs and TV boxes, providing news, communication, and software resources related to smart TVs and boxes.
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