Cable operators fight back: Gehua layout TV terminal

With the rapid rise of IPTV and Internet TV (OTT), the market share of traditional limited TV is being eroded. As the largest limited TV operator in Beijing, Gehua Cable decided to change its strategy and change its passive defense into an active counterattack.


On May 26th, Gehua Cable announced the latest plans of listed companies, and launched “Gehua TV” 4K Fusion All-in-One to enter the smart TV terminal market. It is understood that the all-in-one is based on the "Gehua Cloud Platform" and jointly developed by Gehua Cable, BesTV, Skyworth, and Hisense. The product is equivalent to high-definition interactive digital TV, Internet-rich video content and high-definition TV terminals. ".

In this regard, broadcasting industry expert and managing editor of integrated network Wu Chunyong pointed out in an interview with reporters that there is not much time left for the traditional cable operators, Gehua Cable needs to take the initiative to attack the way to retain their users, while delaying The speed with which IPTV and OTT forces erode. "The current layout of television terminals is the result of an industry trend."

In the current situation of local radio and television in China, the overall strength of Gehua Cable as a cable TV operator is more prominent. Relevant data show that Gehua Cable currently covers large-scale cable television transmission networks in 16 districts and counties in Beijing, with more than 5.5 million registered cable TV users.

However, this amount of possession is not stable. In addition to broadband operators represented by China Telecom and China Unicom, which compete for traditional TV users through IPTV, Internet companies represented by LeTV, Xiaomi and Ali are also occupying the market with terminal strategies for low-cost smart TVs and Internet set-top boxes. .


Great changes in the format of television terminals

Internet technology is disrupting the television industry. The division of work for transmission and technical support of cable TV operators has been ushering in a major change in the "rules of the game" of the overall industry.

In 2013, LeTV.com announced its entry into the smart TV field and quickly began to occupy the TV user market through cooperation with Foxconn OEMs. In 2014, LeTV’s sales of super TVs reached 1.7 million units. In 2015, Jia Yueting released an annual sales volume of 4 million units to LeTV. This also means that by the end of this year, the number of TV users will be more than Gehua Cable.

It is worth noting that the smart TV sold by LeTV has never been just a hardware product. Through the large amount of content copyright accumulated by LeTV video websites, LeTV binds the user's payment to the television. In the words of LeTV insiders, each selling hardware is tied to a high value-added APRU (average monthly revenue contributed by each user). It can be said that once Internet TV companies like LeTV are bundled, users will bid farewell to traditional cable TV.

Due to the limitation of China’s television broadcasting in the past (only one Star TV is allowed in each province), local radio and television are not allowed to compete with each other. Now the rise of Internet TV completely breaks this pattern.

In addition to being unable to directly enjoy live broadcasts, Internet TV can be regarded almost as a national television station. Therefore, after LeTV, Xiaomi also began pushing the smart TV business, and spent $ 1 billion to acquire copyrighted content resources, and has stakes in Youku Tudou, iQiyi, and Huace Television. Although millet TVs sold only 300,000 units in 2014, under this trend, volume growth is only a matter of time.

In contrast, BesTV, which is part of the Shanghai Media Group, saw the seriousness of the issue earlier. In 2014, along with the return of Li Ruigang and the reorganization opportunities of the Group and its listed companies, Shanghai Wenguang has completely adjusted its operation concept and transformed BesTV from the original IPTV main business to the main business of Internet TV.

For various industrial changes, Gao Hui, Chief Analyst of Everbright Securities Media Internet, said that the appearance of Internet TV has changed the inherent thinking of broadcasting and telecommunications, and has shifted from an antagonism to an OTT “general” situation without further development. Therefore, the cooperation between the two parties is imperative. "From the international perspective, Google and Apple's predecessors in the smart TV field have shown that the model that does not develop cooperation and purely depends on its own development does not work in the smart TV field. An open mind is the way out."


Layout hardware terminal

In terms of Gehua Cable, Gehua TV is an innovation of TV terminals. Before this, domestic cable TV operators did not enter the 4K field, and Internet TV sold on the market could not achieve the live broadcast and review of content programs. The "latecomer" Gehua TV successfully integrated the two.

It is reported that in terms of content, Gehua TV 4K Fusion All-in-One has more than 500,000 hours of program reserves, of which 4K film area has nearly one hundred 4K blockbusters, and will update two each week. In addition, there are full-time live broadcasts including major sports such as NBA and CBA, and more than 2000 broadcasts of sports events are broadcast each year.

Taking live content as an example, Gehua TV 4K Fusion All-in-One has now integrated 175 sets of SD channels and 108 sets of channels.

It is worth mentioning that several partners behind Gehua Cable, BesTV, Skyworth and Hisense are particularly concerned. Just like Lexus asked Foxconn OEM, Gehua Cable's foundry line consists of Skyworth and Hisense. Among them, the partner Hisense produced 40-inch, 43-inch, 48-inch, 55-inch four sizes, and Skyworth produced 49 inches, 55 inches in two sizes.


And Bestom General is a more crucial move. On March 7, 2015, BesTV signed a strategic cooperation agreement with Gehua Cable, which will participate in the three-year increase of Gehua Cable, with a total investment of 300 million yuan. Gao Hui said that at the time, cooperation that was not surprising to the outside world was similarly insisted that this was a landmark event in which telecommunications and broadcasting were moving from competition to cooperation.

Sure enough, in the launch of the Gehua Cable TV, BesTV will provide a major copyright supply in addition to the broadcast business, including 4K film and television and NBA, Premier League and other high-quality sports events.

However, this combination has also caused the industry to start worrying about the profitability of Gehua Cable itself. Wu Chunyong bluntly said: "Hardware sales have always been almost unprofitable. The model of Internet TV is to pass the cost to paid content viewing of copyrighted content. However, a large part of the content of Gehua Cable comes from BesTV, and this is likely to result in Product profit will be very limited."

Xu Juan, an internet media analyst at Huatai Securities, believes that Gehua’s self-revolution plan has been in place for a long time. The cooperation with BesTV has also demonstrated the company’s determination. “The company's initiative in introducing OTT services on its own site is based on its confidence in its own TV operating capabilities and in-depth understanding of the TV portal's value. Under the open platform strategy, the cloud platform's value mining process will not be too slow.”

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