Does Tencent, which is late to the game, still have a chance in OTT?

In July this year, Tencent launched a major internal adjustment. On the basis of the original video content, it further strengthened the deployment of copyrights, terminals and other links, and established the Video Copyright Cooperation Department, Video Platform Operation Department, Video Product Technology Department and Living Room Product Department. The industry generally believes that the establishment of the Living Room Product Department indicates that Tencent Video has also begun to enter the OTT industry, so as to make its business chain complete and more scalable.

However, half a year later, Tencent Video finally announced yesterday that "one of our focuses next year will be the development of OTT business and seizing opportunities in the emerging OTT market."

In 2014, when OTT business was developing rapidly, what was Tencent Video thinking?

BAT: No one can be left behind

Compared with the other two of the BAT three major Internet giants, Tencent is undoubtedly the latest to enter the OTT field.

In November 2012, Baidu completed the full acquisition of the money-burning video website iQiyi by purchasing the iQiyi shares held by private equity Providence Equity Partners, and became the sole shareholder of iQiyi.

In May 2013, Baidu acquired PPS's video business for US$370 million and merged the PPS video business with iQiyi to further consolidate its existing advantages in the video field.

In September 2013, Baidu released its first hardware product in the field of Internet TV, Baidu Video Stick; soon after, Baidu Video Stick 2, Baidu Video Stick 2S, and Baidu Video Stick 3, which were based on the Baidu Video Stick concept, were released one after another. Although Baidu did not get involved in the production of integrated smart TVs, it has quietly tried its hand at Internet TV applications such as TV assistants and game platforms.

Alibaba, which "can do whatever it wants because it has money", has been making big moves one after another. In April this year, Alibaba and Yunfeng Capital invested US$1.22 billion in Youku Tudou. In May, it launched its first Internet TV hardware product, Tmall Magic Box. In November, it joined hands with Haier and Gome to launch the first smart TV with online shopping function.

Although Alibaba entered the Internet TV industry relatively late, each of its actions can be described as a big move, especially the Tmall Magic Box, which it has been promoting, achieved an amazing sales record of 180,000 units on Singles' Day. With the SARFT's rectification policy still in place and the Internet TV industry's development still unclear, such sales results are undoubtedly a shot in the arm for the development of the entire OTT industry.

As a member of BAT, Tencent has no reason and no possibility to sit idly by and watch the other two Internet giants invest in OTT business one after another. Especially when seeing Alibaba spending money everywhere to buy half of China's Internet, Tencent has finally re-recognized the true charm of OTT business.

A new round of OTT industry explosion is imminent

The SARFT's rectification measures, which lasted for more than half a year, have led to a tightening of policies that have affected the development of the entire OTT industry. The chaotic industry may face a reshuffle. With the involvement of the three major Internet giants BAT and the diversified business models brought by the OTT market, the Internet TV industry has become the entry point for the next explosive market.

At the same time, in the field of smart home, which is widely favored, after the smart router is denied as an entry point, smart TV is undoubtedly the next reference point. As the third screen after PC and mobile phone, the imaginable space of smart TV has been infinitely magnified. Especially large Internet companies need such an intelligent platform to establish a complete industrial ecological chain of their own. At the same time, they can take advantage of the trend of the Internet TV industry to circle and attract users, develop video payment model, game payment model under a stable and sound ecological system, and even control the entrance of the entire smart home.

Like other video websites, Tencent Video has been stuck in the long-term "burning money" of the video industry in the past two years. Although social software platforms have supported Tencent's important position in the Internet industry, the corporate development strategy of favoring one over the other will not last long. Tencent still needs to establish a full industry chain ecosystem where content and terminals go hand in hand. In this regard, Tencent Vice President Sun Zhonghuai said, "First, Tencent Video must deepen upstream content investment and production to occupy the leading content supply in the market."

Although Tencent Video is a latecomer in the OTT industry, the industry's openness has led to a very low threshold for the OTT field. Tencent, which has an advantage in content, wants to get involved directly, which is not difficult. However, there are a lot of companies involved in the OTT industry, so how to use its own advantages to clean up the industry garbage and become the industry leader is the key issue.

The policies that OTT faces today are exactly what IPTV experienced in the past. How to effectively utilize policy advantages and avoid policy risks is also an issue that Tencent Video urgently needs to think about and solve.

Tencent's entry into the OTT industry shows that the current development of the OTT industry is not guided by users, enterprises, or government departments, but by the commercial interests of the industry. Therefore, only those who find their own position in the OTT industry in a timely and accurate manner will be the ultimate winners.

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.