The price war in the TV market is fading away, when will Internet TV come out of the cold winter?

On September 5, Europe's largest consumer electronics exhibition-Berlin International Consumer Electronics Exhibition (hereinafter referred to as "IFA") came to a close. Chinese and foreign color TV manufacturers are also "Eight Immortals Crossing the Sea", showcasing their latest TV products, reflecting the new developments of the Internet TV industry. The latest data shows that the market share has shrunk to 10%, and the Internet TV market has still not recovered. Some companies continue to launch new products to compete for the market after their name changes, such as LeEco; some companies suffer sustained huge losses, such as storms. This all marks that Internet TV, which has been fiercely competitive for five years, is ready to enter the second half. Industry experts said that after a brutal price war, industry spoilers will eventually be out, and only a few high-quality products can stand out.

The price war in the TV market is fading away, when will Internet TV come out of the cold winter?

Decreasing market share

According to data from Aowei Cloud Network, the market share of Internet TV brands in the first quarter of this year fell by 0.9% year-on-year, shrinking to 10%. Internet TV has not yet come out of the cold winter.

Some brands are still active in the public eye. At IFA, Letv Super TV, which has been silent for a long time, also brought its new products to the public again. Letv Super TV is almost the vane of China's Internet TV development. In 2013, after the launch of LeTV Super TV, it also kicked off the Internet TV war. Since then, Internet companies such as Baofeng, PPTV, Microwhale, Damai, CAN Kanshang, Fengxing, Thunderbird, etc. have entered the market to launch their own TV brands. These Internet TVs have been divided to a certain extent by virtue of their price advantages and novel product experiences. Thin the "commercial cake" of traditional color TV brands. However, as the price of upstream LCD panels has risen sharply, competition in the color TV market has intensified. Most Internet TV brands have suffered serious losses, and the market has entered a bottleneck period.

Relevant data show that in 2017, China's color TV retail sales volume was 47.52 million units, a year-on-year decrease of 6.6%, the largest drop since 2003. The share of Internet TV brands is still declining. A reporter from Beijing Business Daily learned that in the past six months, Internet TV brands such as Fengxing, Microwhale, and Baofeng have all withdrawn from the high-end TV market, and they have rarely seen any press conferences on Internet TV products.

Home appliance analyst Liang Zhenpeng said that the development of Internet TV is characterized by low quality and low price. Consumers have already formed an awareness of Internet TV. If it is not for low prices, there is no reason to buy it. However, since last year, Internet TV brands have gradually accepted No loss.

It is reported that from the first half of 2016 to the present, the price of LCD panels has soared, increasing by 50%-100% according to different sizes, and LCD panels account for more than 50% of TV manufacturing costs. "But the whole machine manufacturer did not rise as much as the panel manufacturer, only up 10%-20%. The direct result is the decline in the profit margin of the whole machine manufacturer. The current situation of Internet TV is also related to the rise of LCD panels. "Liang Zhenpeng said.

The fading price war

Beginning in 2013, the emerging Internet TV products, led by LeTV and Xiaomi, have set off a boom in the market. Many Internet companies without a physical industry background have "jumped into the river". At this stage, the TV market has ushered in a big brand. During the outbreak phase, the industry also referred to these Internet TVs as "spoilers."

Although Internet TV has the advantages of free selection of film sources, shorter advertising duration, and richer functions, they can quickly become the darling of the living room entertainment market. The more important reason is the low price. 2015-2016 is the most serious period of struggle among Internet TV brands. Internet TV manufacturers that shoulder various costs such as foundry fees and copyright fees have started a round of vicious competition. 55-inch TVs are more than 2,000 yuan. "You sell TVs. "Send members, I sell members to send TV." The phenomenon of selling one TV and losing one TV has become the norm in the market.

Such price wars have also planted thunder for enterprises. A few days ago, the 2018 semi-annual report disclosed by Baofeng Group showed that the company achieved operating income of 792 million yuan in the first half of the year, down 4.21% year-on-year; the net profit of the same period last year was 15.72 million yuan. The previous 2017 financial report of Baofeng Group disclosed that last year, Baofeng TV sales reached 840,000 units, hardware revenue was 1.283 billion yuan, cost was 1.375 billion yuan, and the gross profit margin of sales products was -7.15%. The net loss was 320 million yuan, which led to the overall loss of Baofeng Group.

Industry observer Hong Shibin said that with the current situation where overall demand has reached saturation, if TV manufacturers do not want to fall into the trap of price wars, they can only seek new value and develop high-end markets to achieve new breakthroughs.

Le Rong Zhixin COO Wang Zhi believes that looking at the entire TV industry, the "price fight" is like a "prisoner's dilemma", which not only consumes the overall benefits, but also has no stamina for its own development. It is understood that Le Rong Zhixin positions its latest product, Zero 65, within 10,000 yuan. This unseen TV will be launched in October this year.

Unicorns ready to come out

Wang Zhi believes that the strange thing about the domestic color TV industry is that until now, there is no unicorn in the market. For example, the air-conditioning beauty and Gree are the most powerful ones, and the range hoods are Fangtai and the boss, but the six traditional TV manufacturers in the Chinese TV market have always existed, and with the addition of Internet TV manufacturers, no one has emerged as a unicorn in the industry.

Liang Jun, the founder of New Vision Technology, said that although Internet TV has entered a short period of low tide, this does not mean that the industry should be put to an end. The next wave of Chinese Internet smart TV will be even more exciting.

Hong Shibin said that although the bonus era of “from scratch” led by super TV has passed, there is still a lot of room for the intelligent ecology of the TV industry in the future, and its core competition is content and interaction. With the advent of the era of consumption upgrades, the competition for new products and technologies in the color TV market will become more intense, and technology competition will become the key to manufacturers' wrestling, and it will also become a breakthrough in profit improvement.

"With the development of the entire industry and the gradual maturity of technology, a TV cannot meet the needs of users. Users need something that has a sense of technology and can change their original lifestyle. Based on this, TVs will become us in the future. A central point in the entire business, with it as the center, to radiate the entire family." Wang Zhi said.

In addition to Letv Super TV, Xiaomi TV is also a unicorn in the TV market. According to data from Ovi Cloud, Xiaomi TV won the sales champion in China in the second quarter of this year. Wang Chuan, the co-founder of Xiaomi and head of Xiaomi TV, said that in the second half of the year, channel construction will be increased, and it will strive to win the first place in shipments this year.

Analysts said that there is a fundamental difference between the play styles of Xiaomi and LeTV. Back then, LeTV's TV hardware was sold below cost, while Xiaomi TV was not the same. Its hardware did not lose money, and it still made a profit. Xiaomi asked industry analysts for research last year. The analysts said that the average price of 32-inch smart TVs on the market is more than 1,000 yuan. If Xiaomi wants to sell the volume, the price needs to be sold below 1,000 yuan. Then in September last year, the 32-inch Mi TV 4A launched by Xiaomi was priced at 999 yuan. This explosion helped Xiaomi quickly seize the market.

This approach is similar to how Redmi phones play. Xiaomi TV uses Internet thinking, online channels mainly rely on official website direct sales, and offline is mainly based on Xiaomi's home. Compared with traditional color TV manufacturers, Xiaomi has almost no channel premium.

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