MTC acquires Fengxing Online, and the transformation to the Internet becomes a trend

On August 13, Shenzhen MTC announced that it plans to acquire 63% of the equity of Beijing Fengxing Online Technology Co., Ltd. (hereinafter referred to as Fengxing Online) for RMB 967 million. According to the reporter, the acquisition is a strategic investment for the company's rapid strategic transformation and sustained and rapid development after the transformation.

Public data shows that in June this year, Shenzhen MTC announced a 3.67 billion yuan additional issuance, with Oriental Pearl, SMG Group and Qingdao Haier participating. In the future, Oriental Pearl will provide licenses and content, Shenzhen MTC will provide terminals and joint operation platforms, and Haier will provide online and offline sales channels, and the three parties will work together to create a closed loop of Internet TV ecology.

The acquisition of Fengxing Online is undoubtedly a further effort by MTC in the field of Internet TV content operations. The company will transform from a traditional TV manufacturer to an Internet TV operator.

Entering Internet TV

Public information shows that after years of development, Zhaochi shares has now grown into a leading domestic LCD TV ODM (original equipment manufacturer) company with a production capacity of tens of millions.

According to data from Aowei Consulting, the retail volume of color TVs in 2014 was 44.61 million units, a year-on-year decrease of 6.6%. The retail volume decreased year-on-year in nine months of the year, and the retail sales amounted to 146.2 billion yuan, a year-on-year decrease of 14.5%. All these signs show that the bottleneck period for home appliance companies, especially TV manufacturers, has arrived.

In order to get rid of the label of OEM manufacturer, it is reasonable for MTC to enter the Internet TV market. In June this year, Oriental Pearl, SMG Group and Qingdao Haier participated in MTC's additional issuance of up to 3.67 billion yuan. MTC will work with Oriental Pearl and Qingdao Haier to create a closed loop of Internet TV ecosystem.

In the announcement, Zhaochi shares stated that by acquiring video resources through the acquisition of Fengxing Online's equity, it will quickly build a reserve of advantageous content resources. At the same time, combined with the joint operation of Internet TV business, it will continuously promote the continuous research and development and technological innovation of hardware terminals; starting from home TV, it will give full play to the platform advantages and expand the application of TV interactive shopping, game entertainment, smart home and other aspects.

While solving the hardware and channel problems, MTC's acquisition of Fengxing Online means the introduction of a mature Internet TV platform operation team in the industry. It also stated that it will build a cloud open platform for video resources, which will first bear fruit on Fengxing's 30 million daily PC and mobile users, and will be expanded to Fengxing's Internet TV platform users in the future.

Guosen Securities analysis believes that "Zhaochi shares will adopt the Internet TV sales model in the future, focusing on four mainstream sizes, and strive to achieve the most competitive price-performance ratio in the market through various sales methods such as prepaying the subscription fee and giving the TV away, and selling the bare machine. It is expected to go on sale in October."

In fact, the low-price sales strategy that MTC is about to adopt, similar to LeEco, has been controversial recently. Last year, LeEco sold TVs at close to cost and with low gross profit in exchange for users and market share, resulting in a loss of 503 million yuan despite operating income of 4.107 billion yuan.

Traditional manufacturers collectively exert their strength

The reporter found that Zhaochi shares is not alone in entering the field of Internet TV operations. Other traditional TV manufacturers such as Skyworth, TCL, Hisense, etc. have successively invested in TV operation services.

In May this year, TCL Group's "Global Broadcast" platform obtained the qualification to operate cinema chains on the TV platform. Previously, Tencent also invested in TCL Group and Changhong Group's Huanwang Technology. Industry insiders believe that with the addition of Tencent, TCL and Changhong's Internet TV ecosystem will mature faster; and the number of smart TVs activated by Hisense Electric, another giant in the color TV industry, has exceeded 10 million. At the same time, Jiaduobao and Mengniu have invested 10 million yuan in advertising with Hisense, and its large-screen monetization value is highlighted. It is expected that Hisense's advertising revenue in 2017 will exceed 100 million yuan.

Yang Dongwen, president of Skyworth Group, said earlier that "2015 can be regarded as the first year for TV manufacturers to provide operating services to users, and the revenue is expected to reach 80 million yuan in the next three years."

"Regarding Internet services, our service revenue based on smart TVs is expected to reach 50 million yuan this year. Judging from the current progress, we should be able to achieve this revenue. As for the revenue service method, it is relatively complicated, and we are indeed still actively exploring it." On August 14, TCL Group Chairman Li Dongsheng said.

Although traditional TV manufacturers are now moving towards TV operations, how to make profits will still be a common problem faced by these manufacturers. Hong Shibin, executive chairman of the Marketing Committee of the China Household Electrical Appliances Association, said that although the disruptive impact of Internet companies on TV manufacturers has not yet been felt, the profit model based on services and operations will be the future development direction.

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.