When TV becomes "a smartphone with a larger screen", the living room becomes the target of competition

In a Gome electrical appliance store in Shuangjing District, Beijing, a Skyworth TV is broadcasting the popular TV series "The New Legend of Condor Heroes". Its signal source does not come from cable TV, but from the video website iQiyi.

When a shopping guide introduces the hardware parameters of a TV to customers, he will also mention what content can be watched on it and even demonstrate how to download and install TV applications. "This is a smartphone with an enlarged screen," a shopping guide explained in plain language.

The subsequent development of the story has become very easy to understand - for this "enlarged mobile phone", major video websites, TV manufacturers, network operators and even regulatory authorities, based on their own interests, have gone from "secret war" to "open war", and the entire TV industry is undergoing a new round of deconstruction and reconstruction.

There is no doubt that televisions are becoming intelligent. Non-smart TVs are almost nowhere to be found in urban home appliance stores. According to data from third-party market research organization Aowei Cloud Network, color TV shipments in the Chinese market reached 50.89 million units in 2016, of which smart TVs accounted for 83%. Two years ago, smart TVs accounted for only 58%.

Non-smart TVs are no longer seen in offline home appliance stores.

Zhao Gang, Duan Youqiao and Li Jie had dinner together almost every two months last year. They are the heads of Internet TV at Tencent Video, iQiyi and Alibaba (Youku). These three largest video websites in China are collectively focusing on the TV market.

Zhao Gang, general manager of Tencent Video Living Room Product Department, described 2016 as the "year of land grabbing" for the Internet TV industry. He told China Business Weekly that with clear licensing policies and rules, Internet TV has a viable business model, the gray area is gradually being cleared, and video websites are beginning to be willing to invest.

One of the most obvious changes is that video websites have set up separate Internet TV divisions in 2016. Prior to this, the development of the entire video industry had entered a relatively static and stable period, and everyone needed new channels and growth points to break through the ceiling. As a result, Internet TV became the "last opportunity for explosion" in the industry's imagination space.

Once the TV can regain the crown of "home entertainment portal", just think of the 400 million home users sitting in front of it. This is an extremely great temptation for every company that has the opportunity to get involved in this industry from all angles. Before this opportunity really came, it took a full 13 years to iterate the relevant software and hardware.

The traditional television industry relies on cable networks to connect TV stations and terminals, and the content watched on TV terminals comes from the rotating videos provided by the TV stations. This closed system was eventually broken by Internet technology.

The first breakthrough was IPTV, which made telecom operators the second channel for TV signal transmission besides cable networks, and provided TV users with more on-demand content to choose from. However, IPTV resources have always been in the hands of local branches of China Unicom and China Telecom, leaving little room and opportunity for other companies.

In the end, the private capital completely broke through with the help of the OTT TV (Over-The-Top TV, or Internet TV) model, which uses the Internet to transmit content to TV users. According to a survey by Aowei Cloud Network, as of December 2016, the total content resources of Internet TV included more than 8,000 TV series, more than 19,000 movies, 5,000 cartoons and more than 8,000 variety shows, covering 85% of online video resources, and the number of Internet TV terminal devices exceeded 200 million, covering 36% of Chinese households.

In other words, when you sit in front of the TV in your living room, you can watch almost all the content on video websites. The biggest change brought about by this situation is the viewing time. According to data from Aowei Cloud Network, the average daily power-on time of smart TVs has reached 6.01 hours, which is 1 hour and 50 minutes longer than the power-on time of traditional TVs.

When smartphones became popular, the value of both the terminals and the content in them was infinitely magnified. "The current development path of the TV industry is very similar to that of the smartphone industry." Li Jie, general manager of Alibaba Group's Home Entertainment Division, summarized to CBN Weekly that today's Internet TV industry has almost copied the development trajectory of the smartphone industry.

War of the Boxes

There is a key transitional product between traditional TV and Internet TV loaded with Android operating system - small TV box. It can be said that it is the box, a cheap and practical external device, that made Chinese users experience the convenience of Internet TV for the first time and also promoted the first round of popularization of Internet TV content.

Jin Linglin, CEO of Dangbei Network Technology Co., Ltd., remembers that he went to Shenzhen in 2012, where he found a large number of TV boxes being manufactured. "At that time, most of them were Linux systems, but some were Android." Jin Linglin saw an opportunity and immediately returned to Hangzhou and his colleagues to start their business in the field of Internet TV. They launched the Internet TV application distribution platform - Dangbei Market. He defined Dangbei as the "91 Assistant" in the TV field, providing a one-stop solution for all services related to OTT application downloads and management.

LeEco and Xiaomi also discovered the opportunity at about the same time. The two companies successively launched their own TV boxes, and along with them, many counterfeit box manufacturers were active in the market. In 2013, the sales volume of boxes exceeded 16 million units. Alibaba did not miss this opportunity either, and its Tmall Magic Box began to be sold to the public on Double 11 in 2014.

Xiaomi TV sales have been lukewarm.

The TV connected to the box becomes extremely open. By downloading various audio and video applications, you can not only watch live digital TV, but also watch on-demand content from video websites. All of this is new to users.

Jin Linglin used the word "wild growth" to describe the prosperity of the first stage of Internet TV brought by the box. In fact, there were no rules in the Internet TV industry at that time. Although Youku, iQiyi, Sohu Video, and Tencent Video have successively launched TV version applications, overall, the newly emerging aggregated video applications around TV are still full of pirated content. Just like the development process of other Internet vertical industries in China, such a wild growth period allows users to enjoy the dividends of Internet TV.

Li Jie believes that the box is an effective supplement to Internet TV. "The first thing users think of is to change the box, not the TV." Alibaba Group continued to vigorously promote the Tmall Magic Box throughout 2016. Data from AVIC Cloud Network shows that the number of boxes owned by the company exceeds 8 million.

Li Ye, general manager of the Home Internet Big Data Division of AVIC Cloud Network, observed that the life cycle of the box is very short, "many users throw it away after half a year." In 2016, the shipment volume of TV boxes still reached 13 million units. Currently, there are more than 60 million TV boxes on the market, but the activation volume is stable at 20 million units.

The external box, which costs about RMB 100 per unit, is ultimately just a transitional and supplementary product. It educates the market and expands the user base, but the commercial value it can ultimately extend is not high for manufacturers. "Let users who don't know LeTV use it first, and then buy my TV." Liang Jun, president of LeTV Zhixin, told China Business Weekly.

LeTV

The most valuable hardware is, of course, the TV. Facts have also proved that the existence of box products has not stopped the trend of replacing Internet smart TVs.

LeTV launched its first TV in 2013. Before that, it had never been involved in hardware. Even as a video website, it was still unknown. But it created its own "first" in the field of Internet TV - becoming the first company in China to take both hardware and content into account and adopt a dual-track strategy to enter the market. With the concept of Internet TV, LeTV TV's annual sales increased from 1.5 million units to 6 million units in the three years from 2013 to 2016. This achievement has made it one of the top five brands in China's color TV industry.

Around 2014, there were not many TV sets that could conveniently watch Internet content, which gave LeTV a first-mover advantage to a certain extent. In addition to on-demand content, LeTV also used its own copyrighted content to produce 24-hour rotation channels with various themes. Today, LeTV Zhixin, which is responsible for TV hardware manufacturing, and LeTV's video business together constitute the basic business of the listed company LeTV.com.

"LeTV's marketing capabilities have made users recognize Internet TV." Dong Min, vice president of AVIC Cloud Network, believes that it is precisely under the leadership of LeTV that many peers have realized that when talking about TV terminals today, it is no longer a simple hardware sales, and content has also begun to become an important indicator.

LeTV's way of combining content and hardware once made the leading video websites somewhat hesitant, and some even considered making hardware.

A senior TV industry practitioner told CBN Weekly that in the past few years, both iQiyi and Youku had planned to develop hardware. iQiyi once tried to invite Liu Yaoping, who later became the CEO of Baofeng TV, to be in charge of its hardware business, and Youku once considered launching two TVs, 55-inch and 43-inch, and even the filing information and foundry were finalized. But in the end, the two companies decided to suspend their plans to develop hardware.

The aforementioned industry insider analyzed that Youku's trial of TV hardware was suspended due to Alibaba's investment, while iQiyi was considering investing more resources in its core business.

LeEco has disrupted not only video websites, but also the traditional TV industry. In the past 10 years, China's color TV manufacturing industry has maintained a relatively balanced situation. Skyworth, Hisense, TCL, Konka, Changhong, and Haier - these six major TV manufacturers have maintained stable shipments through their own offline channels. They have even formed an industry iron rule: no manufacturer has ever exceeded 20% of the market share.

Duan Youqiao, who once worked for Skyworth and later became senior vice president of iQiyi, told CBN Weekly that it makes sense for TV manufacturers to maintain such a market share for a long time, because even if they occupy the largest market share, it does not mean maximizing profits. "The cost of increasing market share will be greater."

However, the "tacit understanding" that the big brothers had maintained for many years was finally broken by Internet TV. Everyone can see that Internet TV has brought a new business model - in addition to hardware revenue, TV is also a new Internet entrance and an operational platform.

Television no longer simply provides audio-visual functions, but is also a new Internet portal and an operational platform.

"We just want to break this rule." Sitting in a small office in the LeEco building, Liang Jun told China Business Weekly a little excitedly that in the original plan, LeEco Zhixin's vision was to break the "20%" market share rule in one fell swoop by spending another fortune in 2017, but constrained by LeEco's overall capital chain dilemma, he was no longer allowed to continue the strategy of excessive money spending.

It is undeniable that LeTV's sales of nearly 6 million units in 2016 are already quite impressive. Data from Aowei Cloud Network shows that Internet brand TV sales account for 19% of the total sales, of which LeTV alone accounts for more than 10%, making it the only Internet TV brand that can compete with traditional brands. The annual sales of Xiaomi and Whale TV are currently around 1 million units.

  New opportunities for the traditional TV industry?

The traditional TV industry has encountered dangerous rivals, but it also means new opportunities. On the one hand, since 2013, traditional TV companies including Skyworth and Konka have launched their own Internet brands. On the other hand, a vertical alliance around hardware and content has also begun.

Coocaa, a subsidiary of Skyworth, was born under such circumstances. Wang Zhiguo, chairman of Coocaa TV, told CBN Weekly that Coocaa is not only a hardware brand, but also responsible for operating all smart TV terminals under Skyworth and Coocaa. He compared the relationship between Coocaa and Skyworth to that between Honor and Huawei, but Coocaa TV is still in a loss-making state at its current price.

Wang Zhiguo explained that Internet TV brands with "similar quality but lower prices" place more emphasis on cost-effectiveness in their marketing strategies, which has also led to "all Internet brand TVs on the market being loss-making."

In terms of production costs, the mold-making cost of a TV is close to 5 million yuan. Add to that the early research and development, and the overall investment is not low. Add to that the later marketing and promotion costs, whether it is LeTV TV sponsoring "I Am a Singer" or Weijing looking for William Chan to be the spokesperson, all of these have aggravated the losses of hardware products.

As a durable consumer product with a replacement cycle of about five years, the offline experience link in the purchase process is still important. However, at present, Internet brands are more focused on online sales channels. In 2016, online channels accounted for 39% of the sales of TV sets in the Chinese market. "Internet brands are the financial sponsors of e-commerce channels." Wang Zhiguo said that brands have to cooperate with the consistent sales ideas of e-commerce platforms and continue to lower prices and make concessions.

Internet TV brands regard periodic losses as part of their overall development strategy. Although the idea of ​​using low prices to attract users is good, the key lies in how to strike a balance. Liang Jun said that LeTV TV's plan for the next three years is to achieve hardware revenue balance and no longer adopt a low-price strategy. As a mature brand, it certainly hopes to have more room for premium prices.

However, in terms of TV hardware, the advantages accumulated by traditional TV manufacturers in products and technologies will not be easily surpassed in a short period of time. The presentation of picture quality is closely related to the quality of the screen panel and the engineers' post-production algorithms, and these technologies are still more in the hands of traditional manufacturers. First-tier traditional brands have the most advanced panel resources, so high-end TV products are still monopolized by traditional TV brands.

Although China's TV industry has a complete OEM system, product quality control is heavily dependent on the requirements of brand manufacturers during this process. Therefore, new manufacturers without experience still have to face many challenges in details. Coocaa once gave part of its orders to OEM manufacturers, and the rest were produced by Skyworth's own factories. When the two products were compared, it was found that the quality gap still existed.

Liang Jun, president of LeEco Zhixin, did not shy away from this reality. He said, "In terms of pure hardware, the sound and picture quality of LeEco TVs still need to be improved."

70% of the cost of a TV lies in the panel and screen, which directly determines the cost of a TV. In the early days, LeTV had no bargaining power in the panel supply chain. In addition to its own financial pressure, LeTV TVs were mostly purchased by OEMs, so the cost was naturally higher. "Without funds and scale, the price can only be high." Liang Jun said that this was the reality that LeTV TV had to face in the early stages.

Liang Jun, president of LeTV Zhixin, said that as sales increase, the company's bargaining power with upstream OEM factories will gradually increase.

Of course, with the current annual sales of 6 million units, LeTV TV has improved its previous passive situation to some extent, and has a higher say in other components such as chips, memory, and Wi-Fi modules. Liang Jun's statement has also become more firm: "I can use (high configuration) that other manufacturers dare not use."

End the wild growth

Following the LeEco model, a number of companies that started out as content companies, such as Baofeng Technology and PPTV, have also launched their own smart TV brands. At the end of February this year, Mango TV, together with Skyworth and Gome, launched the "Love Mango" brand, claiming that it would achieve sales of over 10 million units within three years. This is also the first hardware project led by a licensee under the radio and television system.

"We are in the television business," Mango TV CEO Ding Cheng told China Business Weekly with certainty. He also emphasized the State Administration of Press, Publication, Radio, Film and Television's recognition of Mango TV.

Television media has always been an important ideological outlet for the government, and relevant regulatory authorities have always been strict in managing the broadcast of television content. This has not been relaxed at all as the tide of Internet technology has changed the viewing model.

In 2011, the radio and television authorities issued Document No. 181, which explicitly required that "Internet TV integrated services and content service platforms adopt license management." Currently, the state has only issued seven Internet TV licenses, and their holders include: China Central Television, China Radio International, China National Radio, and local radio and television companies such as BesTV, Hangzhou Wasu, Southern Media, and Hunan Radio and Television.

The regulatory "red line" is very clear - all Internet TV boxes and Internet TV content must be presented on the licensee's integrated broadcast control platform. The integrated business licensee is responsible for content review, broadcast control, billing, advertising distribution, and then shares the profits with the content provider. In addition, terminal manufacturers must also apply for client numbers to the State Administration of Radio, Film and Television through the licensee. The State Administration of Radio, Film and Television issues number segments in accordance with the rules of unified allocation, batch authorization, and one number for one machine. Terminal manufacturers who get the number segments can make Internet TV.

In short, all companies involved in the Internet TV industry need to "match" a licensee in order to operate legally.

In July 2014, the State Administration of Press, Publication, Radio, Film and Television met with seven licensed institutions and asked them to rectify the problems in the management and operation of Internet TV. This storm swept the entire Internet TV industry, and most TV boxes and TV applications were suspended.

The Internet TV industry, which had been growing wildly, immediately fell into a "cooling-off period". Affected by the tough regulatory policies, a large number of related startups faced financing difficulties. Afterwards, the companies that slowly recovered from that round of blows have been keeping a very low profile so far.

Due to the license issue, LeTV's Internet TV business has been in a "naked" state for several years, and LeTV boxes have been out of stock. It was not until August 2016 that LeTV finally finalized the license cooperation with China International Broadcasting Network Internet TV (CIBN Internet TV), resolving the crisis.

From the "2016 TV Application Distribution Report" released by Dangbei Market, we can see what users are doing with Internet TV. Among them, the download rate of audio-visual applications is as high as 66.8%, followed by tool applications. The education and game applications that were originally favored by the market have not been recognized by users at least for now.

TV or video site?

It can be said that in the past two years, Internet TV has been quietly accumulating terminals and users while testing boundaries and clarifying rules. The mainstream business models that have been explored are nothing more than two forms: membership fees and advertising.

Li Ye introduced that according to the statistics of Aowei Cloud Network, the scale of OTT advertising market in 2016 was about 970 million yuan, and the boot-up advertisement was still the largest part, with the annual revenue reaching 510 million yuan. Among them, LeTV's boot-up advertisement quotation is the highest in the industry. The industry's usual publication price is 120 to 200 yuan/cpm (cost per thousand), while LeTV can reach 280 yuan/cpm, while the industry's pre-roll advertisement is 60 to 100 yuan/cpm.

"Before, we talked about the business model, but we really started to do it and set up the team in 2016." Liang Jun explained the advertising model of LeTV TV in his office to CBN Weekly, including startup ads, launcher ads, carousel ads and patch ads. Liang Jun revealed that the price of LeTV startup ads for every 15 seconds has exceeded one million yuan.

Each OTT advertising type has a counterpart. Boot-up ads are like Focus Media’s building ads, which are also the most expensive of all advertising types. Carousel ads are similar to digital TV ads.

Data provided by Youku shows that the traffic of users on large-screen TVs has exceeded that on PCs, while data from Tencent shows that large-screen traffic accounts for 70% of PC traffic and is expected to surpass PC traffic in December 2017. However, based on the current activity and number of users of OTT terminals, compared with the user scale of other terminals of video websites, it is not yet sufficient to serve as an independent sales platform.

"OTT is still difficult to be an independent sales platform." Zhao Gang, who is also the deputy general manager of Tencent Video's advertising client department, explained, "For a media to enter the mainstream media and become a must-have delivery channel, its inventory capacity needs to reach a certain level." Currently, Tencent Video has connected mobile, PC, and OTT terminals to sell ads in packages. In 2016, more than 130 advertisers placed ads on the OTT platform. He predicts that OTT will become an independent sales platform in April or May 2017.

Li Ye's obvious feeling is that advertisers' enthusiasm for large-screen advertising is rapidly heating up. Fast-moving consumer goods including Procter & Gamble and Mengniu have provided advertising budgets for the OTT side, and the TV large-screen advertising of Tencent Video has changed from one 15-second advertisement in the first quarter of last year to three advertisements now. While users complain about the length of advertisements, their willingness to pay is also increasing. In addition to advertising, increasing the number of paying users of Internet TV is also what video websites hope for. Taking Tencent Video as an example, the membership price of four-screen access (TV, PC, Pad and mobile phone) is 10 yuan more expensive than that of three-screen access. In 2016, the revenue of Tencent Video large-screen membership has exceeded 100 million yuan.

2016 can be said to be a year of explosive growth in the membership payment business of video websites. In June last year, iQiyi announced that its paid membership had exceeded 22 million, and in November Tencent also announced that its paid membership had exceeded 20 million, with an increase of nearly 300% in one year. Just one month later, Alibaba Culture and Entertainment Group's Youku Business Group announced that Youku's membership had exceeded 30 million.

In the first two months of 2017, with the popularity of several TV series such as "Ghost Blows Out the Light: The Mystical Ancient City", "The New Legend of the Condor Heroes" and "Eternal Love", as well as the viewing effect of large-screen TVs, video websites have been further pushed to usher in a new round of payment craze.

Tencent, Youku, and iQiyi are video applications that exist on large-screen TVs. Tencent found that the activity of pre-installed content modules on the first screen of a TV can reach 35%, while the activity of Tencent's independent app "Yunshi Aurora" is less than 10%. According to feedback from Coocaa TVs, the activity of pre-installed modules is 15 to 20 times that of third-party apps.

“No aggregation” and “no subsidies”

It is worth mentioning that even in the industry's low tide after 2014, several major video websites have never given up supporting independent video apps. From the download volume of Dangbei Market, we can see that among the top third-party TV apps, Yunshiting Jiguang, Weishiting, and Taijie Video are all owned by Tencent Video, while Galaxy Kiwi and Lizhi TV belong to iQiyi, and Youku is owned by CIBN Global Films.

The usage scenarios of television are not as fragmented as those of mobile phones. It is more like a weakly interactive and highly immersive media. Users hope to see the content they want to see without making too many choices. Therefore, the content recommendation logic for large-screen TVs will also be different from that for mobile devices.

Many TV users do not know how to install third-party applications on Internet TV. Jin Linglin, CEO of Dangbei Market, said that many installation promotions now come from online tutorials, and for novice users, better learning ability is needed.

"This is also why video websites are willing to proactively expand their business around pre-installation, rather than just making an App (and waiting for users to learn how to download it themselves)," said Zhao Gang.

According to data from Aowei Cloud Network, as of the end of 2016, the installed base of iQiyi and Tencent Video exceeded 20 million units, and Youku exceeded 10 million units. LeTV has accumulated sales of its own products and currently has a market share of 10 million units.

Because the shipment volume of TV terminals is relatively stable, the business expansion mentioned by video websites directly means competition - Tencent, iQiyi, and Youku all want to get more models pre-installed with their own content modules, and it seems that there is only one way to do this: subsidies.

"Subsidies are pre-shares. At a stage when the value of pre-installed content is not yet visible on TV sets, hardware manufacturers will get a guaranteed income first." Wang Zhiguo, chairman of Coocaa TV, explained that the specific subsidy amount is usually calculated based on the models and quantities that the manufacturer can provide. Wang Zhiguo's speech was full of confidence, showing that the right to speak on pre-installation cooperation is still in the hands of hardware manufacturers represented by Coocaa, at least for now. However, this struggle for interests is not so easy to be settled.

Behind Youku is Alibaba Group. "What's interesting is that none of our three companies make TV programs. Those that do make TV programs are those with weak content." Li Jie, head of Youku's Internet TV, did not feel that he was the weaker party. This time, he brought out the word that Alibaba likes to use the most in the topic of external cooperation - "empowerment", thus putting himself in a more advantageous position.

The foreign brand Sharp has recently cooperated with Alibaba. One of Sharp's TVs is equipped with Alibaba's YunOS TV system. Terry Gou, chairman of Hon Hai Group, which recently acquired Sharp, sees this cooperation as a new venture for Sharp.

Not only Sharp, but also foreign brands in the Chinese market are looking for content partners. Samsung's partner is Mango TV, which holds a license. Those foreign brands that were once popular among consumers in first-tier cities have been squeezed by new Internet TV brands in recent years. Their overall performance in the Chinese market is not ideal. Compared with traditional domestic brands and Internet brands, their market share remained at 14.5% by the end of 2016.

Alibaba can indeed export a lot of "capabilities" to its partners - TV operating systems, Youku content platform, payment tools, and e-commerce applications. In exchange, Li Jie emphasized that the Youku content platform should be fully built-in, including membership and advertising systems, not just content. Therefore, relatively speaking, the situation that Youku is most reluctant to see is that hardware manufacturers pre-install content from several major video websites in the form of "aggregation".

In fact, "no aggregation" is a consensus reached by iQiyi, Youku, and Tencent Video. They believe that manufacturers should respect and understand the copyright costs paid by content platforms.

This is not good news for Xiaomi and WeTV, two Internet TV hardware manufacturers. "In fact, Li Jie does not approve." Xiaomi TV CEO Wang Chuan held a Xiaomi Max phone in his hand and explained the idea of ​​Xiaomi TV to "First Financial Weekly". He hopes that the content of all video websites can be seen on the Xiaomi TV platform. When Xiaomi released its first 42-inch Internet TV at a price of 1,999 yuan in September 2013, Lei Jun positioned it as "the first TV for young people". On the outer packaging of Xiaomi TV, there was a line of words printed: "Always believe that good things are about to happen."

However, when China Business Network verified Zhao Gang's thoughts with him individually, he showed a clear united front stance.

"It can be said that the three video websites were most united in their OTT strategy," Zhao Gang pointed out. "BAT is determined not to aggregate, and the product forms that are suspected of aggregation are being switched. We are very determined on this point to prevent ourselves from becoming CPs (content providers)."

With the support of the previous consensus, the three video websites iQiyi, Youku and Tencent also reached another important consensus: "no subsidies."

"We know this too." Wang Zhiguo's response seemed a bit understated, because he was confident that this consensus was not solid, and it was very easy for manufacturers to break this verbal alliance. "If you give more models to one company, the other two will be restless."

In fact, TV manufacturers and video websites are now more willing to consolidate their sense of security through "polyamory". In the past year, each TV manufacturer has quietly "aligned" with one or two video websites, and real alliances are also taking shape, such as Haier's tie-up with Youku and Skyworth's choice of iQiyi and Tencent. Speaking of partners, Wang Zhiguo also feels that subsidies are only a transitional form, "and greater commercial interests need to be considered in the future." He even hinted that in May and June of this year, there will be two major investments in the Internet TV industry, and the entire competitive landscape will become clearer by then.

Representatives of content websites such as Zhao Gang and Li Jie also expressed their positive attitude towards investing in hardware manufacturers in the interview. However, the contradiction between TV manufacturers and video websites is still prominent. Hardware manufacturers regard the system and desktop as the bottom line. They want to introduce content, but also want to keep user management firmly in their own hands.

This directly led to the difficulty of achieving linkage between hardware manufacturers and content providers in advertising. Content platforms could only operate patch ads, while hardware manufacturers controlled boot ads. Wang Zhiguo also agreed that this loose alliance was a waste of resources for both parties. He believed that a closer alliance would be for both parties to set up an operation team, have a common KPI, and achieve resource integration. In September 2016, iQiyi invested 150 million yuan in Coocaa, accounting for 5%. Three months before that, the two parties had already begun to set up a common operation team and various business lines began to connect.

"Both sides put their resources on the table, and whoever can bring the greatest value will do it." Wang Zhiguo introduced the cooperation between the two parties in this way, wherein all revenues are divided between the two parties in a ratio of 3:7, with iQiyi taking the lion's share.

"Maybe I would be more worried if iQiyi took a 51% stake in Coocaa." Liang Jun, who was watching from the sidelines, did not think the cooperation between the two would pose a threat to him. He brought up the example of Xiaomi's investment in iQiyi, when a reporter asked him if he was afraid, "But what happened? So what!"

The open and covert battles over the living room are nothing more than making their own terminals provide more content than their opponents. Liang Jun certainly understands this. Now, Wasu's content has been put into LeTV's TV terminals. Liang Jun said that his ultimate goal is to one day aggregate the content of the top ten video websites in China on LeTV TV, and use LeTV's unified membership system to have the same viewing experience. But this is most likely just LeTV's wishful thinking. It is reported that LeTV has also discussed with iQiyi to put its content on LeTV TV, but in the end the other party gave up the cooperation due to its competitive relationship with LeTV Video.

For LeTV TV, the worst news it has encountered since the second half of last year is that when the number of LeTV terminals approached 10 million, the content side began to be in crisis - LeTV Sports lost exclusive resources such as the Chinese Super League and the Asian Champions League. LeTV Video originally wanted to use high-quality and exclusive content as a selling point to emphasize self-production, but it only took a moment to lose its content advantage.

"If LeTV's content is finished, its terminals will be gone too." Wang Zhiguo was talking about LeTV and himself. He admitted that there is a "safety button" in the cooperation with iQiyi - "If the partner encounters risks, it will not be dragged down by it" - so half of Skyworth's models choose to cooperate with iQiyi, and the other half choose Tencent Video. And this "polyamory" situation, which is not very stable, is likely to continue for a long time in the future.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.