TV set-top box accelerates elimination of smart TV penetration year after year

Introduction: The development trend of smart TVs is indeed very fierce. Following this momentum, the pace at which set-top boxes are eliminated will continue to accelerate.

As we all know, set-top boxes, especially cable digital TV set-top boxes, are used to watch TV.

However, everybody knows not knowing: Now you don't need a set-top box, you can also see a very rich TV program!

How do you see it? Directly to the home network cable smart TV is a smart TV can be inserted!

Now I believe that basically every household TV is a smart TV!

So, in this sense: Set-top boxes are about to be eliminated!

In the following, we demonstrate from three aspects that the development trend of smart TVs is indeed very fierce. In accordance with this trend, the pace at which set-top boxes are eliminated will continue to accelerate.

1. Domestic sales of smart TVs have increased year by year, and there has been a high rate of household penetration

First, annual sales of smart TVs continued to rise, and the number of smart TVs in domestic households approached 200 million at the end of the year. The “Intelligent TV Industry Model and Strategy Analysis Report” released by the Industry Research Institute in August 2017 showed that in 2014, domestic smart TV sales volume was 29.31 million units, 34.16 million units in 2015, and 40.98 million units in 2016; And sales of smart TVs in 2018 will continue to grow, reaching 46.62 million units and 52.19 million units respectively.


Figure 1 Sales and Forecast of Domestic Smart TVs in 2014-2018 (Unit: 10,000 units)

According to the “Blue Book for OTT Operations Big Data in 2017” published by Ove Cloud Network, at the end of June 2017, the total number of smart TVs owned by domestic households has reached 16,223 million units, as shown in Figure 2. The "2016-2022 China Smart TV Market Status Analysis and Investment Prospects Forecast Report" published by Zhiyan Consulting shows that by the end of 2017, the total number of smart TVs owned by domestic households will reach 180 million units.


Figure 2 Total number of smart TVs owned by domestic households in the first half of 2013-2017 (unit: 10,000 units)

Second, as the sales volume has increased year by year, the penetration rate of smart TVs has continued to climb. According to the latest data released by the Industrial Development Research Institute, the penetration rate of domestic smart TVs has increased from 32.7% at the end of 2012 to 95% at the end of 2016.


Figure 3 Domestic smart TV penetration rate, 2012-2016

Other domestic and foreign market research institutions have also released relevant data. Tencent's "2016 Smart TV Data Report" pointed out that as early as the end of 2015, the vast majority of TVs sold in the domestic market were smart TVs, and the penetration rate of smart TV households at the end of 2016 had reached at least 95%. The data released by Ovid Cloud Network in early September 2017 shows that as of now, the penetration rate of domestic smart TVs has approached 90%. Ruixin Consulting released forecast data at the end of August 2017, showing that the penetration rate of domestic smart TVs will reach 90.2% by the end of 2017. The GlobalTelevisionSetMarketResearchReport, published by GfK, a leading global market research organization, on August 30, 2017, shows that as of the end of June 2017, the penetration rate of smart TV homes in China has reached 86%.

It can be seen that the relevant data of various market research institutions are not much different, and most domestic families already have smart TVs.

Third, the market for smart TVs in first-tier and second-tier cities is approaching saturation, and it has begun to further accelerate penetration into third-tier cities with larger markets and rural areas. As a result, all mainstream market research companies are optimistic about the subsequent development of the domestic smart TV market. According to the monitoring data released by the Speed ​​Research Institute in February 2017, in the distribution of domestic smart TV sales in 2016, the proportion of first-tier and second-tier cities was only 11.5% and 14.1%, respectively, and that of the third-tier cities and rural areas. It is as high as 20.4% and 54% respectively. The team believes that in the next few years, sales of smart TVs in third-tier cities and rural areas will continue to grow rapidly until the country's smart TV market becomes saturated.


Figure 4 Sales of Domestic Smart TVs in Four Regions in 2016

The “2016-2022 China Smart TV Market Status Analysis and Investment Prospects Forecast Report” issued by Zhiyan Consulting also predicts that the smart TV market in 2018-2020 will also achieve relatively rapid growth, and will end at the end of 2018, 2019, and 2020 respectively. It reached 230 million units, 270 million units, and 320 million units.


Figure 5 Total number of smart TVs owned by domestic households in 2012-2020 (unit: 100 million units)

2. Domestic smart TV users maintain a high degree of liveliness, and TV live broadcasts and on-demand hits are the most popular

The first is that the smart TV operating rate and boot time are currently at a relatively high level. Ovid Cloud Network's OTT Big Data Blue Book for Mid-2017 shows that by the end of June 2017, the daily average operating rate of smart TVs is about 45%, the average weekly operating rate is about 65%, and the average monthly operating rate is about 77%; as of 2017 At the beginning of August, the daily average amount of domestic smart TVs has reached 100 million times. On August 18th, Ove Cloud.com released the “Counting of China's Color TV Industry in the First Half of 2017 and Forecasting in the Second Half of 2017”, which shows that in June 2017, the daily average daily time of domestic smart TVs was 5.1 hours.

The second is that nearly “magnanimity” of live and on-demand video content resources has become one of the main reasons why smart TVs are popular among users. According to the "Study on the Smart TV Market in the First Half of 2017" of the Speed ​​Way Research Institute, "content" is one of the most important considerations for consumers when purchasing smart TVs. On August 22, the data released by Ovid Cloud.com on the OTT Big Data Blue Book Launch Conference in mid-2017 showed that the OTT video content that can be presented on the smart TV presents two major features: the total amount of resources exceeds 54,000. Twenty-seven times more than traditional television (refers to the total number of TV programs of CCTV and TV stations around the country, variety shows, movies, and animations); it has covered 75% of content resources in the entire network and 87% of high quality content resources.

Third, the frequency and usage of live and on-demand applications for smart TVs are the highest. "2016 China Smart TV User Analysis Report" gives research results, using smart TV to watch live TV up to 90%, watch TV on demand also reached a high 52%, followed by TV Internet (17%), video games (9%), Family KTV (5%). Among them, the popular live broadcast and on-demand software includes movie and video search, TV cat, cloud audio, Taijie, Mango TV, VST, Tencent video, iQiyi, etc., smart TV users open these applications up to 75%-85 times a day. %. In addition, the "Smart TV Big Data Report for the First Half of 2017", which was released with data, also pointed out that watching video (live + on demand) is the mainstream choice for smart TV users. In terms of the average daily use time, the video class APP is 4 hours. , music APP is 1 hour, TV games, TV education and other APP are less than half an hour.

3. Domestic smart TV manufacturers will further accelerate their profit growth from traditional hardware sales to diversified earnings

First, after entering the year of 2017, the output of domestic smart TVs began to decline year-on-year, and it has entered the state of “hardware margin”. The Bureau of Operational Monitoring and Coordination of the Ministry of Industry and Information Technology announced from July 2016 that it will announce the production of color TVs for the current year. A comprehensive analysis of the 11 related data from January to September 2016 to January to July 2017 shows an important conclusion: The first year of smart TV production has dropped year-on-year. From January to September of 2016 and from January to December of 2017, the monthly production volume of domestic smart TVs increased by a large margin compared with the same period last year, which was 15.3%, 16.6%, 17.1%, and 11.1% respectively. In 2017, it still achieved year-on-year growth from January to January to January-June, but the growth rate decreased significantly from 2016 and decreased month by month, reaching 2.2%, 2.1%, 1%, 0.9%, and 0.2% respectively. . From January to July 2017, smart TV production for the first time decreased year-on-year and decreased by 2.4%.


Figure 6 YoY growth of domestic smart TV production from January to December in 2017 through January to December 2017 (%)

The related phenomenon that domestic smart TV production began to decline year-on-year has recently received attention and coverage from authoritative media such as CCTV Finance Channel and “China Electronics News”. From the relevant reports, from April 2016 to May 2017, the purchase cost of smart TV panels continued to increase substantially, and the entire machine was forced to raise prices. The large-size (55-inch) has become the standard domestic smart TV market. The impact was severe, resulting in a decrease in market demand for smart TVs. As a result, China’s color TV manufacturers’ profits declined in the first half of 2017 and individual manufacturers suffered losses. The profits of the entire industry fell to a level below 1%. The in-depth report of the CCTV Financial Channel even states that the current market situation is "the sale of a TV set is a loss," and described as "winter."

Secondly, in order to deal with the adverse effects of “hard-core hardware”, smart TV manufacturers are accelerating their profitability from the traditional hardware sales model based on “operating system + hardware terminals” to multi-profits centered on content and services. Extended mode extensions. Since 2017, traditional color TV manufacturers have accelerated in-depth cooperation with content service providers. For example, TCL and LeTV, Konka and Microwhales, Hisense and iQIyi and Tencent, Haier and Ali have all conducted in-depth cooperation on content. Even the collaboration between Haier Smart TV and Ali has expanded from the content areas (Ali Family Entertainment and Youku) to application products and marketing. Up to now, traditional TV manufacturers, video websites, Internet TV integrated broadcast control platforms, third-party application service providers, advertising agencies, third-party advertising monitoring platforms, and smart TV users have initially formed a complete end-to-end closed-loop value chain. . Taking smart TV advertising as an example, Ovid Cloud Network's OTT Big Data Blue Book for Mid-2017 shows that the average daily boot capacity of smart TVs is as high as 100 million times, providing new traffic channels for the continuous loss of live TV channels. As a result, it provided "mass" exposure opportunities for advertisements. The advertising revenue for the first half of 2017 was already comparable to that of 2016, and more and more advertisers switched from "trial delivery" to "regular delivery." Formally, in addition to boot advertising will continue to be popular, there will be broad development prospects. Analysys’ report “Comprehensive Analysis of China's OTT Marketing Market 2017” released on September 5, 2017 believes that advertising and content charging will become the two major sources of income for smart TV manufacturers.

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