China Mobile: Does China Mobile Make TV?

In early September, a blockbuster fell in the color TV market: As the world's most powerful telecom operator, China Mobile has to sell its own brand of TV sets.

A few days ago, BOE (BOE) and China Mobile signed a cooperation agreement, the two sides reached a cooperation on the provision of digital display products and systems, and jointly promote the development of TV (IPTV & OTT) industry. BOE and China Mobile will jointly launch a number of leading large-size 4K ultra high-definition TV products and meet consumers with the “China Mobile” TV brand, which is also China's first carrier-owned TV brand.

Operators are the new "kings" in color TV market

In the triple play strategy, operators have always been in an “absolute” dominant position. Because the so-called three networks, broadcasting and television, communications, and the Internet are essentially two networks in the country - communications and the Internet are integrated national networks. The battle for triple play is actually only a fight between the broadcasting and television departments and the telecommunications department. Moreover, in this battle, the Department of Broadcasting and Television has many hills, complex organizational structures, and interests that are intertwined and difficult to coordinate; the telecommunications department has already been integrated into three large networks, and China Unicom has entered a new phase of mixed reforms; the main body of the broadcasting and television broadcasting system, the television station at the content end, It will have a neutral attitude towards network ownership.

The direct result of the above strength comparison is that once the country starts from the overall situation of triple play, it does not simply protect the vested interests of the radio and television network. In the IPTV strategy, the wide power network has barely regained its strength. According to the statistics of the Ministry of Industry and Information Technology, the total number of IPTV subscribers reached 103 million at the end of June this year, a net increase of nearly 16 million in January-June.

What does the net increase in IPTV for 16 million households mean? In a situation where the total number of domestic residents is basically stable, this is how the telecommunications department has grabbed 16 million households in the broadcasting and television network. This half-year data is almost equivalent to 2014-2015, and the sales of smart boxes during the most popular period are full-year sales. In the context of the growth of IPTV boxes, self-owned brand smart boxes also saw sales decline in 2016-2017.

The net increase of 16 million IPTV users in half a year has also basically reached the level of the historical stock of “active users of smart TVs” in the domestic mainstream TV brands. From the ecological + perspective of Internet TV, the three major operators have already “surged later”. Or, the true leaders and leaders of Internet TV have quietly changed positions. The OTTization of telecommunications started in 2015 completely changed the ecological landscape of the smart TV industry. In the process of triple play, the telecommunications department completed the "middle blossom" operation of the Broadcasting System.

"Free in Integration", Weapons of the Telecommunication Department

Why do so many consumers choose IPTV? The answer is not complicated, but just a very old weapon - "free watching TV" in packaged integration services.

In recent years, under the support of the National Broadband Program, not only cities but most of the rural areas have achieved broadband coverage of over 10M. In the Eastern Development Area, 100M starts and 1000M leads the slogan of operators. Huge broadband bandwidth construction makes it possible to use telecom networks to provide reliable digital HDTV services for each home.

On the other hand, the data services of the telecommunications department continued to develop at a rapid rate. Including mobile data services, Internet TV data services have a blowout effect. The latter also promoted the rise of emerging TV brands such as LeTV, Xiaomi, and Coolo. These new data services make consumers no longer distinguish between the application boundaries of mobile phones, computers, and televisions. Multi-screen and screen-based applications have become common applications. The use of the Department of Radio and Television is the development of the "all-media" business. This kind of market change, in the functional segment, first realized the seamless integration of the three networks, providing the basis for the masses to understand the integration of transmission systems.

More importantly, under the background of content and application integration, under the support of ultra-high bandwidth, telecom companies have discovered a new phenomenon: the application of IPTV products does not have a great impact on the total bandwidth supply. Because consumers are using mobile phones, computers, and color TVs in their three video applications, they exhibit "asynchronous" features. Even if you use a computer or a mobile phone, you will use the color TV to a great extent. At the same time, many families have the demand and business of accessing mobile phones and broadband network services.

This phenomenon makes it possible for the telecommunications department to promise a very good "IPTV" service without much investment in new resources. The bandwidth consumption of IPTV and computer video is basically the same. Looking at mobile video at home using a home gateway, compared to watching IPTV video, bandwidth consumption does not change much. And these applications rarely start at the same time. Therefore, starting in 2015, the telecommunications department had a slogan “Connect Broadband and send 4K iptv for free”.

A mobile phone communication, broadband network package, if it is a full-year contract can be obtained for free IPTV services and "box" hardware new services, consumers why not do it? Moreover, the first two are necessary: In other words, the fact that televisions choose radio and television networks does not mean that mobile phone communications and broadband networks can “save money”.

In fact, the telecommunications department utilizes huge Internet and mobile communication customer resources to integrate some “integrated package packages” that are more “economical” than originally purchased various services in the initial stage of many new service promotions. It is this kind of real money and silver concessions that together with consumers' habits of watching television on the Internet and the popularity of broadband networks, has promoted the IPTV's great development over the past three years.

Finally come to this step - the telecommunications department makes television

In 2017, with the outbreak of LeTV’s debt and financial crisis, the “Internet TV” concept brand had fallen sharply. However, this does not change the consensus that "smart Internet" is the inevitable direction for the development of television applications. In fact, almost all products in the domestic color TV market today are "Smart Internet" technology televisions.

However, the timing of the differentiation of the brand camp and the relocation of the market structure is not desirable. At this opportune time, after the telecommunications department has mastered the IPTV and OTT dominance of color TVs, it is only natural that the telecommunications department will further advance toward the integration of the terminal equipment and network functions and display functions. Especially with the experience and resources of the "mobile phone operator" market, the telecommunications department is trying to do color TV terminals, which is almost a matter of course.

In this regard, China Mobile chose to eat crabs first. BOE, as a hardware supplier, is the largest display panel company in China, an advanced complete machine R&D, and business-to-business, and it is also one of the few industry leaders in the world that fully understands semiconductor display technology. However, comparing with Samsung and LG giants, BOE’s overall brand capability is relatively weak, and there has been a lack of effective means for inserting the terminal market. China Mobile has advantages in services, channels, and content. As the largest mobile phone operator in China, its terminal service network and content ecosystem are precisely the “reinforcing plate” that BOE’s hardware lacks.

In a sense, the cooperation between BOE and China Mobile is an efficient integration of hardware and software resources. It is also an organic convergence of different stages of the industry chain. From the perspective of internal business logic, it is almost impeccable.

However, whether a brand-new operator's color TV product form is recognized by consumers still requires a "market awareness"-side revolution. That is how consumers see this matter. In this regard, operators already have operational experience and cognitive resources for mobile phone products, and also have IPTV's current trend and achievements. What is lacking is the consumer's understanding of the product's "professionalism."

However, in the context of the unprecedented proximity of smart TV technology systems and smart phones, the dissemination of online information, and the highly transparent nature of product technology, the resources needed to overcome the "consumer accreditation" are already the "historical lowest values."

At the same time, TV operators' color TV products have another huge advantage: Highly integrated hardware and software services are packaged as "economical." From the perspective of consumers, this is a repeat of the previous IPTV free promotion model (of course, the value of color TV is relatively large and it cannot be completely free); from the perspective of operators, TV product promotion and smart phones, communication services, and Internet access ‘Hitchhiking’ with IPTV. Moreover, in the context of operators not involving the production of products, it is entirely asset-light. In the short term, operators' TVs will only provide an opportunity for the terminal business offices to “create additional revenue” rather than a huge cost increase.

On the other hand, in the fixed-line business, China Mobile has been weaker than Unicom and Telecom. First of all, the layout of operators' color TV sets is also conducive to China Mobile’s playing a differential card in the fixed network business. For China Mobile, this can also be a strategic attempt to supplement the board.

In short, BOE+China Mobile’s China Mobile brand operator TV is a product that is readily available. The "people" section, which needs to be supplemented, is limited to "consumer approval" - this is precisely one of the areas where operators such as giants are most adept at. Therefore, perhaps China's color TV history should remember this September, because it is very likely that the traditional logic of "sales and purchase" of color TV sets will be radically changed.