Lao Duan said: Intranet OTT is just a dream

In 2013, the media model of Internet TV, that is, "free plus advertising", became a hot spot overnight for many technology companies, terminal companies, channel companies, and equipment companies. Some provincial and municipal cable operators also built intranet OTT platforms based on cable networks, trying to copy the development model of digital TV value-added services, treating licensees and video websites as CPs, and developing intranet OTT on cable networks through the "no purchase, only profit sharing" approach.

But I think this kind of OTT model, like the data broadcasting of the past, has no future and is purely for self-entertainment. The reason why cable networks think this way is because of the inertial thinking that they have monopolized TV screens for decades. Until now, TV channels have to pay landing fees to cable networks every year. Every year, a provincial cable network receives landing fees of hundreds of millions. Only CCTV's 3, 5, 6, and 8 free channels dare to say "no" to cable networks. But in IPTV, TV channels not only do not need to pay landing fees, but can also collect program fees from telecommunications. A careful analysis of this seemingly contradictory and ridiculous model is in line with business logic. This logic is that cable networks have a monopoly in the field of live TV channels, and are the mainstream or even almost the only transmission channel. The monopoly position in policy, scale, service, and brand has led to it becoming the maker of business models and game rules, with absolute pricing power. In order to enter the mainstream video market, live TV channels must pay the price of landing fees, otherwise they will not reach mainstream audiences. In the field of IPTV, TV channels are strong and the rules of the game are set by TV channels.

However, in the field of OTT, the monopoly of cable network in the field of cable live channels no longer exists. If a user wants to watch OTT, the OTT services currently provided by cable network are not as good as those of telecom operators, nor as good as those of video websites and TV manufacturers in terms of scale and quality. Cable network has become a laggard in the field of OTT, and does not have the ability to formulate industry rules of the game, let alone pricing power. Therefore, in cooperation with licensees, TV manufacturers, and video websites, cable networks try to bring other people's content and other resources into the network for OTT operation and become the leader and controller of this business. Video websites, licensees, and terminal vendors will not and do not need to play the OTT game according to the rules of the game set by cable networks. Therefore, in the end, cable networks either compromise, or cable network OTT can only aggregate inferior resources from upstream and downstream of the industry chain, thus becoming an OTT with relatively low cost performance. It can be expected that in 2 or 3 years, all TVs will be intelligent and Android-based, and will have built-in various video services, comply with license supervision and legal operation, and can use the content and CDN of video websites. This is lower in cost and better in experience than the APK with built-in OTT in cable digital set-top boxes, and has a more advanced business model. Therefore, the cable network's intranet OTT model, its business model and operating structure are not attractive to content and terminals, and cannot obtain support from high-quality resources upstream and downstream of the industrial chain.

The essence of the Internet is openness. OTT is not a technological revolution in essence, but a revolution in the business model of applying the Internet model to the TV screen. Therefore, if OTT is placed in a closed network for closed operation, it is a regression in technology and operation. Just as you see that all operators are regionalized, and all video websites are not regionalized, you cannot see a network operator that operates uniformly across the country, whether it is cable or telecommunications, they are all provincial models. Similarly, you cannot see a regional video website such as iQiyi, Youku, PPS, PPTV, etc. that only serves Beijing or Guangdong. Opening up will cause the industry's profit margin to decline, accompanied by a significant reduction in comprehensive operating costs, content procurement costs, and network technology costs. Therefore, the unit comprehensive operating cost of regional cable networks will definitely be higher than that of video websites and telecommunications operators. In addition, the scale economy effect of video website advertising sales will be lost due to regional operations. Therefore, the cable network's intranet OTT has a relative disadvantage in the two most critical links of comprehensive cost and advertising revenue.

The in-network Internet, which was once favored by network operators, has completely failed as a model. In the future, it will be proved that in-network OTT is just an illusory dream. Cable network OTT has been up early but late, but fortunately, it is not too late to make up for the loss. There is still an opportunity to continue to use the advantages of live broadcasting. Regardless of the intranet or the extranet, occupying the entrance to OTT is the most important cable network OTT strategy. The free plus advertising media model must adopt an open mind and cooperate with licensees, video websites, and terminal companies to firmly control the operating model of paid members, because cable networks as operators have a long-term relative service advantage in the paid operating model compared with video websites. Of course, some cable networks are hesitant about OTT because of the existing VOD business, especially those cable networks with good VOD business operations. They know that OTT represents the future but are reluctant to give up VOD, and they clearly feel that the ARPU value of OTT in the future will be lower than VOD. This kind of entanglement is actually very representative and is a typical monopoly thinking. However, in the process of Internetization of all traditional industries, the principle followed is "If you don't subvert yourself, you will be subverted by others."

Therefore, my OTT prescription for cable networks is:

"Adopt a defensive strategy to gradually convert VOD into OTT paid packages, and adopt an offensive strategy to use the advantages of live broadcast to quickly occupy the OTT entrance of external network TVs and set-top boxes." That is, a maintenance strategy is adopted for VOD based on the IPQAM technology system, and the new system adopts the OTT technology system. Gradually transfer "VOD and playback" as a whole to OTT paid services and increase paid movie content and vertical paid packages (because the current VOD and paid operation model of OTT are the same in terms of business model), so that the cost-effectiveness of cable network OTT paid packages will have a relative competitive advantage in the future. In the TV terminals and retail channels that were previously out of control, adopt an open mind and cooperate extensively with upstream and downstream of the industrial chain, and quickly occupy the OTT entrance through the advantages of live broadcast. The value of this prescription is not only good treatment effect, but also small side effects, especially for the future cable network broadband development strategy, there are almost no side effects.

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.