When Xiaomi debut its RMB2999 (USD490) smart TV, I asked my colleague whether he would want a smart TV like this. He answered “For price that cheap, I would definitely consider. And now it might be very hard for other TV brands to follow such pricing strategy”. But I said “I am quite confident rival will follow!” Then few days later I gave him my “I told you so” smile and showed the news that Alibaba should launch its smart TV in cooperation with Skyworth and the lowest price is set only RMB1999"
My colleague is not a native mainland Chinese, and that is why he probably would not fully appreciate our ethos of “price war”.
Though the market is huge here, the competition has always been much more ferocious and ruthless than most of lands on earth. From e-commerce to online travel, local business men, especially in internet sector, know the shortcut to gain dominant market share is by offering lowest price as possible. If your rivals cut their prices, then undercut them, even at the cost of losing your profits. To win simply means to beat your rival without a last breath to fight you back; or at least to a point both sides are exhausted and want a truce for the moment. I suppose this is “a necessary evil”. The CEO of JD (360buy, China’s second largest e-commerce platform) Liu QiangDong, is often acting like a lonely wolf because he is considered as “the king of price war” in China and has made many enemies over the years. But perhaps his acumen of “price war” has more or less helped his company to survive till this day.
Anyhow more and more internet companies are intending to dabble into smart TV market, which is often hailed as “blue ocean” at this moment. The forerunners are often those online streaming video sites, i.e iQiYi, Letv. Of course to do this, they often need an ally of electronics manufacturer. Hence iQiYi collaborated with TCL; Letv partnered with Foxconn, though they came before Xiaomi’s smart TV and have a much higher price tags.
So we have internet company and hardware producer in this game, but in fact we also need a third wheel here, that is the license media companies. According to the regulation, it is said basically any company which would like to gain the entry ticket to internet TV related business, including smart TV in China must seek cooperation with these license companies. Right now there should be 7 of them which are all ordained by the SARFT (The State Administration of radio film and television). They are:
1) CNTV (powered by CCTV)
2) Wasu (Zhejiang TV background)
3) Bestv (backed by Shanghai Media group)
4) SMC (Guangdong TV)
5) Hunan TV
6) CRI (China Radio International)
As long as the law does not change, I suppose these 7 license companies can have convenient and lucrative profits right in front of them to acquire. However the road ahead for internet companies might be thorny.
1) The strong headwind of cut-throat competition is blowing
2) Unlike mobile phone, consumers do not replace their TV, heedless smart or non-smart, on a frequent basis, like once a year.
3) I hardly remember my time to watch TV now days, and most hours are spent either in front of my laptop or ipad. I do not feel I need a TV, again whether it is smart or non-smart. Though my mother loves TV, she prefers old style.
Having said all these, I am not saying Smart TV market is without potentials. Someone out there must want to buy one. The thing is for those diving into this blue ocean for money, they might soon find themselves swimming in bloody hell.