OTT set-top box crossing the river with stones

In November 2012, the just-released OTT set-top box millet box was halted, causing the industry's attention. More than two months later, by cooperating with CNTV, China’s online TV station, Xiaomi’s box regained its vitality. This once again caused the industry to think and explore.

At present, OTT set-top boxes are still in the market introduction stage in China. Due to the control and control of relevant national policies, there is a certain limit to the development of OTT set-top box business. However, this did not stop the company's footsteps. Traditional set-top box manufacturers, video websites, and telecom operators, including Tongzhou, Huawei, LeTV, and China Unicom, all tested the OTT industry and explored ways of cooperation and operation. . It is not difficult to see from the incident that Xiaomi’s box was released from high-profile to quickly halted, and it has now been re-launched through cooperation with licensees. It is not difficult to see that in the early stages of the development of the OTT set-top box industry, all parties in the industry chain are struggling to cross the river.

Survival: Cooperating with licensees is the only way to control Internet TV set-top boxes. Hardware vendors and licensees are the only way to make Internet set-top boxes.

On January 28th, Xiaomi Technology and CNTV's future television reached a three-year strategic cooperation agreement. The two parties will cooperate in the field of Internet TV and the millet box will be connected to the CNTV broadcast control platform. As a result, the project originally proposed by Xiaomi Box to cooperate with certain video sites may be difficult to implement. Some media have called this cooperation Xiaomi's "reincarnation". Yang Zhao, project manager of the Huada Digital TV Media Group’s terminal management department, also said in an interview with a reporter from China Electronics News that Xiaomi’s approach was a compromise.

“China Electronics News” reporter tried to interview the case of Xiaomi’s boxing from being stopped to leveraging the revival of CNTV but failed. Tang Yanglin, marketing manager of Xiaomi’s technology products, told reporters: “We don’t accept any interview on the Xiaomi box.” Li Yi, secretary-general of the China Mobile Internet Industry Alliance, told China Electronics News that the eco-environment of the Internet TV set-top box industry is set. The seven major licensees with qualifications have already established the rules of the game. Internet TV set-top boxes are not just consumption. Electronic products, which are closely related to industry and policy, are protected by policies, but this actually creates barriers.

Similar to millet technology is LeTV. As an Internet company, LeTV also recently launched the OTT set-top box C1 and achieved a good sales volume. But unlike this, LeTV chose to cooperate with CNTV from the beginning. Yang Fang, senior vice president of LeTV, told the “China Electronics News” reporter: “The cooperation between LeTV and CNTV is in compliance with the regulations that can be controlled by the State Administration of Radio, Film and Television. State Administration of Radio, Film and Television 181 clearly stipulates that internet TV set-top boxes can only be selected Connected to the legitimate content service platform set up by the Internet Television Content Service Agency approved by the State Administration of Radio, Film and Television, there is no other alternative to the current policy."

Yang Zhao told reporters that in the Internet TV set-top box industry, policy control is relatively large, and there are certain restrictions on hardware manufacturers. At present, hardware manufacturers have to do internet set-top boxes and they must cooperate with licensees, unless they do cottage products and that is illegal.

Competition: Differentiation Led by licensees to achieve the differentiation of OTT set-top boxes is mainly reflected in the content, but due to policy requirements, manufacturers must cooperate with the seven licensees holding Internet TV operating licenses.

Despite being illegal, there are quite a few cottage products on the market. The reporter learned from the interview that in Shenzhen and other places, many manufacturers have been producing cottage set-top boxes mentioned by Yang Zhao. According to Li Yi, these companies often use OEM and license exchange methods in order to avoid attacks.

The reporter visited several major electronic product stores in Zhongguancun, Beijing. Some merchants are selling Internet TV set-top boxes with the names of smart network set-top boxes, 3D high-definition players, and high-definition players. The prices of these products range from 300 yuan to thousands. Yuan range, some also have built-in hard disk slot. From the introduction of the business and the live demonstration, these products need to connect the cable, the bandwidth can be played in more than 2M, and generally can watch more than 200 TV channels. More importantly, these products can provide a huge video resources, including Sohu video, PPTV, Youku, Fantastic Art, excellent friends Pollock and so on. According to merchants, these video resources are synchronized with the content of the website, and through the application store, users can also download video websites that are not available on the product. Among these products, the reporter saw that some products have built-in BesTV or CNTV's video resources, while others do not. Therefore, among these products, there is no shortage of Shanzhai fishery products.

According to Yang Zhao, most Internet TV set-top boxes are currently based on the Android operating platform, and the technical threshold is relatively low. This is an important factor in the proliferation of Shanzhai products. However, the performance of the cottage products is not stable, and a large number of video resources are accessed on the network, and the contents of these network resources cannot be “managed and controllable”. Therefore, this kind of product is actually "can not see light."

However, illegal cottages have low prices and therefore have a certain market. According to some businesses in Zhongguancun electronics store, these products are very popular, users want to watch a variety of movies and TV dramas on the big screen TV, and the price is not high, than the "cost of cable TV." As a result, the illegal box will inevitably bring impact to the “regular army” of the OTT set-top box and become a powerful competitor. So, how to achieve product differentiation is particularly important. Yang Fang told reporters: "Compared with traditional home appliance manufacturers, Internet companies, such as video sites, have strong advantages in network technology and content and years of experience in online video services, and can provide users with better services."

In fact, the OTT set-top box products need to be differentiated, mainly in terms of content. However, due to policy requirements, manufacturers must cooperate with the seven licensees holding Internet TV operation licenses. It is not easy to achieve differentiation in content. According to Yang Zhao, the OTT set-top box ultimately presents the user experience. Comparing IPTV set-top boxes and OTT set-top boxes, their content transmission pipelines are actually the same. In terms of the products themselves, the differentiation is not very great. Therefore, the main difference of OTT set-top boxes is that they are led by licensees. Then according to this statement, the millet box and LeTV C1 set-top box that also chose to cooperate with CNTV may be overlapping in content.

According to Lin Sheng, a research analyst at Glenview, LeTV's box also adds LeTV's own website content, which is actually playing a clean game. However, in his view, through the differentiation of functions and applications, manufacturers can make more efforts in this area. According to reports, in addition to watching movies and TV shows for free, Xiaomi's box can also be used to project photos and videos from Xiaomi's mobile phones, iPhones, and iPads onto TV sets, and a large number of Android games are also built on Xiaomi's box. application.

Development: actively exploring the participation and cooperation of various parties in the business model industry chain. It can promote the innovation and development of the OTT industry in business models and operations.

At present, in addition to the barriers caused by the strict environment of policy supervision and the market chaos caused by illegal OTT set-top boxes, the “regular military” of OTT set-top boxes is also faced with major problems of unclear operation mode, and companies are actively exploring different issues. Business model.

After launching its own OTT set-top box "Little Red", BesTV recently launched a strategic cooperation with First Financial Media and released the "Fortune Box" to deeply integrate the BesTV OTT platform with the contents of First Financial. "Services". It is understood that BesTV will not rule out providing customized services for more media and content providers in the future.

In September 2012, China Unicom and the Central People's Broadcasting Station, Huawei, and iQiyi reached a cooperation to adopt the dual-mode architecture of “IPTV+OTT” to develop the Internet TV business. Lin Sheng said that China Unicom has a transmission pipeline, the Central People's Broadcasting Station has a license, Huawei has a profound accumulation of hardware manufacturing, iQiyi has a wealth of video resources. This combination converges the advantages of the three networks, and is an active exploration of their business models.

Lin Sheng believes that the participation and cooperation of all parties in the industry chain can promote the innovation and development of the OTT industry in business models and operations. At the same time, the differences in the parties involved in the industry chain and the different ways of cooperation will in itself bring about differences in the content and services of OTT set-top boxes.

The future: promising market prospects Although the industry has different opinions on the future development prospects of OTT set-top boxes, the company introduced the OTT production according to Yang Fang. The sales volume of LeTV Box C1 is 50,000 units, and it is open for purchase on January 21st. It takes 7 hours. Sold out. On Taobao.com, the reporter searched for "Internet TV set-top boxes," "Internet set-top boxes," and "internet TV boxes," and found about 268, 339, and 280 related products. In Zhongguancun’s electronic product store, there are also some merchants selling Internet TV set-top boxes with smart network set-top boxes, 3D high-definition players, and high-definition players as their product names, but there are many illegal “black boxes” in these products. These phenomena indicate on the one hand that the current OTT set-top box market is full of chaos and products are mixed; on the other hand, it also shows that OTT set-top boxes have a considerable market demand.

Li Yi believes that users have a demand for multi-screen integration. For example, users want to share content with other terminals through a display screen. As a carrier with integrated functions and similar routers, Internet set-top boxes have a market. In the long run, when all content resources can be integrated into the Internet platform or integrated into the cloud platform, the carriers of different display terminals will be weakened and may be concentrated in one terminal. Then smart TVs may replace Internet set-top box.

In this regard, the industry also has different voices. According to Yang Zhao, the market has a great demand for OTT set-top boxes, and this market will have great development in the future. Yang Zhao told reporters that compared to smart TVs and smart all-in-ones, the cost of OTT set-top boxes is very low, and replacements are also very fast, so that all households are buying smart TVs, at least within five years is unlikely. Yang Fang also believes that the set-top boxes and televisions have different updating times. TVs are durable consumer goods, and users cannot change them in a short time. The upgrading of hardware upgrades is much faster than TV itself, so choosing a set-top box is a good alternative.

For current stringent policy controls, Lin Sheng believes that the future policy may slowly relax. On the one hand, the competition in the video industry is getting more and more full, and the content resources of the licensees are not necessarily richer than those of video websites. On the other hand, the upcoming major reforms may have a great impact on the market segments.

The forecast data of Digital TV Research, an international consulting agency, shows that the global sales of hybrid set-top boxes will reach 102 million units in 2016, nearly 6.5 times that of 2011. At the same time, the share of hybrid set-top boxes in the entire set-top box market has also rapidly increased and will reach 42% in 2016, which is 5 times that in 2011. The data also shows that China's OTT revenue will grow to 1.38 billion U.S. dollars by 2016, which is a 27-fold increase in revenue compared to 2010.

Despite the industry's disagreement about the future development of OTT set-top boxes, the company's exploration of the OTT industry continues. The "compromise" of this millet box has not yet found a new way for OTT set-top box manufacturers. However, as the video industry becomes more competitive and policy has been relaxed, the OTT set-top box industry still has a promising future.