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The troubling of Internet TV: ushering in the second half in a bitter struggle
The rapid evolution of the internet era has not only transformed how users access knowledge but also gradually brought digital entertainment into everyone’s living room. This shift, however, came with its own set of challenges—especially for major online brands that launched "Internet TV" as a revolutionary concept. In 2012, "Internet Explorer" was at the forefront of this movement, aiming to completely replace traditional TVs in the home. For years, it dominated the market, pushing traditional television aside. But by 2017, the tides began to turn. Lately, we've noticed a subtle decline in the loud claims and aggressive marketing from Internet TV brands.
As the industry entered a period of stagnation, Internet TV found itself facing unprecedented difficulties. Questions like “Do you still watch TV every day?†or “How much time do you spend on your computer?†may sound trivial, but they highlight a deeper issue: the domestic TV market might be struggling. Since 2016, signs of fatigue have become more apparent, and by 2017, the situation had worsened significantly. According to China Unicom's omnichannel data, TV sales in Q1 2017 dropped to 11.53 million units—a 12.5% year-on-year decrease and the lowest in five years. The second quarter saw no improvement, just further decline.
Take the May 1st sales event as an example. During that period, color TV sales fell to 4.5 million units, a 17.4% drop compared to the previous year. The online market shrank by 4.7%, while offline sales plummeted by 19.3%. Clearly, the domestic TV industry is under immense pressure.
In response, traditional appliance manufacturers are shifting their focus toward high-end, premium products such as quantum dot TVs, OLEDs, and ultra-high-definition displays. Meanwhile, Internet TV brands have struggled to keep up. Market share for these brands fell by 4% year-on-year in the first half of 2017, and the trend shows no sign of slowing down.
However, not all companies are experiencing the same fate. Xiaomi, for instance, has managed to maintain a strong position. Its vice president, Gao Xiongyong, attributed this success to the launch of the AI-powered 3A series and the Pachwall platform, which delivered an exceptional user experience. Some analysts believe that competitors’ struggles have also helped Xiaomi gain ground.
While the broader TV market faces a cold winter, the Internet TV sector is even more vulnerable. LeTV, once a dominant force, now finds itself in turmoil. Once hailed as a disruptor, the company has faced financial setbacks, leadership changes, and a loss of market confidence. Its decline serves as a cautionary tale for the entire industry.
Internally, Internet TV brands face significant hurdles. Rising hardware costs, particularly for panels, which make up over 60% of the total cost, have hit them hard. A 14-month price increase in panels is the longest in nearly five years, making it harder for low-cost models to compete. As a result, both LeTV and Xiaomi have raised prices, reducing their previous advantage.
Another challenge is the homogenization of content and business models. What was once a key differentiator—exclusive online content—is now less impactful. With platforms like iQIYI, Tencent Video, and Sohu offering similar services, the competitive edge is fading. This has led to increased competition and a decline in user satisfaction.
As the industry moves into its second half, the pressure is mounting. Companies are now focusing on new concepts, such as artificial intelligence, to differentiate themselves. While some, like Xiaomi, are optimistic about the future, others, like LeTV, are struggling to find their footing. The path forward is uncertain, filled with both opportunities and risks.
Ultimately, the Internet TV industry is at a crossroads. Whether it can adapt and innovate will determine its survival. As the market evolves, the battle between old and new players will continue, and only those who can truly meet consumer needs will come out on top.