LeTV, which has been "naked" for two years, finally got an Internet TV license. What are the advantages of its business model?

On August 22, LeTV announced that with the approval of the State Administration of Press, Publication, Radio, Film and Television, all users on LeTV's Internet TV platform will be migrated to the China International Radio Internet TV (CIBN Internet TV) integrated platform. LeTV's existing Internet TV platform will be closed simultaneously, including Internet set-top boxes and all-in-one machines.

This means that the "naked running" situation of LeTV's Internet TV terminals (including set-top boxes and all-in-one machines) is about to come to an end.

How did LeTV end up in a naked situation?

According to the regulations of the State Administration of Radio, Film and Television, any organization must hold dual licenses ("Internet TV Integrated Business" license, "Internet TV Content Service" license) or cooperate with radio and television companies holding dual licenses before they can carry out Internet TV business, such as producing Internet TVs and set-top boxes like LeTV.

There are currently seven radio and television companies in China that hold dual licenses, namely Mango TV, Future Television (iCNTV), BesTV, Wasu, Southern Media, CIBN and Galaxy TV.

In July 2014, the State Administration of Radio, Film and Television issued the most stringent rectification document for Internet TV. In the information related to "cooperation with Internet companies that seriously violated regulations", LeTV was criticized by the State Administration of Radio, Film and Television. Insiders broke the news:

"The General Administration has always attached great importance to LeTV's illegal behavior and has verbally told licensees not to cooperate with LeTV. Now International TV and Wasu are still cooperating with LeTV, requiring licensees not to cooperate with companies that the General Administration is investigating."

At that time, the license holders cooperating with LeTV were CNTV and Wasu Media.

What did LeTV do wrong that caused such a strong reaction from the radio and television industry?

In order to carry out content control, according to the "Document No. 181" issued by the Radio and Television in October 2011, the broadcast control platform can only access the content of legal content service platforms, cannot link to websites established on the public Internet, and cannot directly provide content on the public Internet to users.

On January 13, 2012, LeTV and CNTV signed a strategic cooperation agreement. The video content was handed over to the supervision of CNTV's broadcast control platform. LeTV's Internet TV terminal was bound to CNTV, becoming a video website officially authorized by the State Administration of Radio, Film and Television.

But CNTV seems to have "embezzled"...

In November 2012, LeTV accused CNTV of illegally broadcasting its exclusive online copyright drama "Glorious Land" and collected evidence from three platforms, CNTV Baidu Channel, CNTV Xiyou Channel, and CNTV Main Platform, totaling 134 infringing TV dramas. In the end, the two sides reached a settlement.

In January 2013, CNTV and Xiaomi reached a cooperation agreement, and the cooperation relationship between the two parties was similar to that between CNTV and LeTV.

Although CNTV under CCTV is the licensee, it is weak in film and television copyright resources. The legitimate content is mainly concentrated in the fields of news, current affairs, documentaries, sports, etc. LeTV Internet TV has set up a "LeTV TV Edition" video area on CNTV to play LeTV's exclusive content resources, foreign film and television dramas, self-made dramas, online movies, etc. that have not obtained the broadcast qualification. #LeTV has made up for CNTV's weaknesses

CNTV intends to use its license advantage to "get something for nothing" and put LeTV's resources on another partner, Xiaomi's Internet terminal. From LeTV's point of view, not only will its rival Xiaomi get the film and television content "for free", but the advertising revenue generated by the film and television content will not go into its own wallet.

So at the end of June 2014, LeTV sued Xiaomi Box and CNTV for illegal broadcasting and won the case. Subsequently, CNTV announced that its cooperation with LeTV had been terminated.

In mid-July 2014, the SARFT criticized LeTV by name and ordered all licensees not to cooperate with LeTV because the "LeTV TV Edition" video section on LeTV's Internet TV terminal seriously ignored the SARFT's "review" requirements. In short, the SARFT stipulates that the content of video websites cannot appear directly on Internet TV terminals.

Because of this incident, LeTV's stock price hit the daily limit for two consecutive days on July 16 and 17, with a cumulative decline of more than 20%.

Then on July 18, LeTV urgently suspended trading and issued a clarification announcement, admitting that its cooperation with CCTV's CNTV had violated regulations and was required to make rectifications, and that it had also suspended cooperation with other licensees other than CCTV.

How did LeTV save itself after running naked?

Before LeTV went naked, its ecological model was "platform + content + terminal + application", which was based on licenses. However, due to the breakdown of cooperation between LeTV and the license holder, this model is no longer valid.

In the past two years, LeTV, which has been running naked, has been constantly trying to fix its licensing problems.

On July 23, 2014, LeTV announced that it had acquired a stake in Chongqing Cable TV Network Co., Ltd., which is controlled by Chongqing Radio and Television. LeTV stated in the announcement at that time that it would jointly apply to the State Administration of Radio, Film and Television for an Internet TV content license with Chongqing Radio and Television, but the application was aborted because the State Administration of Radio, Film and Television no longer approved new integrated broadcast control platforms. #Integrated broadcast control licenses only have 7 and will not be issued

On August 7, LeTV raised 4.5 billion yuan in emergency financing. On August 20, news broke that LeTV and Xiaomi were once again named by the State Administration of Radio, Film and Television.

In 2015, LeEco negotiated with another licensee, China Broadcasting Corporation (CIBN), for many times. In addition to business cooperation, LeEco even considered acquiring a stake in CIBN's shareholder, China News Media, to resolve the licensing issue. An insider close to China News Media once revealed that the two parties jointly submitted a rectification plan to the State Administration of Radio, Film, and Television, but the State Administration of Radio, Film, and Television has been slow to approve it. LeEco's acquisition of a stake in China News Media has also long been shelved.

Until today, the cooperation between LeTV and the licensee CIBN has finally been settled. The State Administration of Radio, Film and Television has approved LeTV users to migrate to the CIBN integrated platform. LeTV's existing Internet TV platform will be closed simultaneously, including Internet set-top boxes and all-in-one machines.

This means that LeTV's previous business model of "platform + content + terminal + application" has collapsed.

"LeTV's initial strategy for Internet TV was to take control of content, systems, and terminals, and build its own platform, advertising operations, and content operations. Now, after cooperating with China Broadcasting Corporation (CIBN), LeTV needs to connect with China Broadcasting Corporation (CIBN) for everything from content to advertising operations, which is equivalent to 'two skins' and is certainly not as smooth as Mango TV operating in one system." Another Internet TV industry insider analyzed.

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.