Chinese TV brands established by internet companies, such as Leshi (乐视) and Whaley (微鲸), are losing their grounds in the overall TV market. The only exception is Xiaomi.
A research by local home appliance market researcher noted that in the first quarter of 2018, the market share of such internet TV brands shrank to 10% from last year’s 20%.
Those internet TV brands operate a freemium model: providing cheap, often subsidized, TV sets to aggregate audience and then profiting by charging the audience for premium services, turning them to subscribers, or pushing targeted ads.
However, this model ran to a dead end.
First, TV viewership, around 300 million in 2017, is relatively small compared to China’s 772 million internet users over the same period, both figures per Statista, speaking to a smaller market.
Second, proceeds from advertising and selling premium value-added services could not cover the cost of content and operation for the internet TVs. The cost is still very high.
Some players tried to make their original content to bring down copyright cost. Yet, quality and reception are never guaranteed.
Xiaomi took a different approach, though.
Since 2013, the smart gadgets maker, instead of making its own content, has chosen to partner up with other content providers, the likes of iQiyi, Tencent, Youku and Sohu to get 3rd-party contents and distribute through its own network.
The approach helped Xiaomi, to some extent, reduce content cost and maintain a positive and fruitful partnership with the major video sites in China. The strategy also helped expand Xiaomi’s open ecosystem, as well as propel it to the second place in China’s TV market this September, even though everyone else is falling.