With the State Administration of Radio, Film and Television’s “serial punches”, is there still hope for TV boxes?

The fate of Internet TV boxes (commonly known as OTT boxes) has been completely rewritten. In the past two years, OTT boxes with powerful video resources and good user experience have expanded rapidly. Statistics show that in 2013, the sales volume of smart TVs in my country was about 26 million units, and the sales volume of Internet TV boxes was more than 10 million units. However, two years ago, there were only 3 million users of Internet TV set-top boxes in China, which shows the speed of its development.

Recently, OTT box users have discovered that the operating system and even the product content of the boxes have undergone subtle changes. The original functions such as live broadcast and playback are no longer visible on the interface, video resources have quietly decreased, and even some video apps have disappeared from the app store.

All this stems from a ban. In June this year, the State Administration of Radio, Film and Television launched a series of "serial punches" that pushed the booming Internet TV industry into a dead end step by step.

Change

This is the strongest regulation the TV box industry has ever encountered, and Internet TV has suffered heavy losses. Since mid-July, LeTV boxes have been displayed as "suspended" on the reservation page of LeTV Mall. At that time, some people speculated that LeTV took the initiative to stop selling boxes to show goodwill to the radio and television. However, the real reason for the suspension of LeTV boxes is that it violated the policy restrictions of the radio and television department that boxes are not allowed to be sold outside the three-network integration pilot areas. According to the requirements of the radio and television, all boxes are not allowed to break through geographical restrictions.

In fact, the relevant regulations were issued by the State Administration of Radio, Film and Television as early as October 2011. Document No. 181 issued at that time stipulated that the Internet TV terminal products selected by Internet TV integration agencies for cooperation can only be connected to the Internet TV integration platform. The terminal products must not have other channels to access the Internet and must not be connected to the relevant management systems and databases of network operators.

However, before July this year, most license holders did not strictly follow the regulations. This round of rectification is essentially a further implementation of relevant regulations.

LeTV's emergency announcement showed that the State Administration of Radio, Film and Television required LeTV Box to make rectifications. Before it complies with relevant regulations, other licensees except CCTV will suspend cooperation with LeTV. After the rectification is completed and accepted, other licensees can continue to cooperate normally with LeTV. Zhang Te, secretary of LeTV's board of directors, told Global Entrepreneur that LeTV has submitted a rectification plan in accordance with the requirements, but he did not disclose the time when LeTV Box will resume sales.

Various rumors were also rampant in the industry. LeEco even issued clarification announcements on July 18 and August 25, saying that it had not received any notice from the regulatory authorities that the company's TV UI was in violation of regulations or laws. However, LeEco, which resumed trading on August 25, still suffered a setback. At the close of the day, its stock price fell by 4.94%.

In early August, "Tmall Magic Box", which was criticized by the State Administration of Radio, Film and Television, also deleted third-party software such as Xunlei Kankan, Baidu TV Cloud, iQiyi, Sohu Video TV, and Youku in the background.

The latest news is that on August 20, the State Administration of Radio, Film and Television again met with the seven major licensees, reiterating that TV UI must be launched by the licensee to be legal, and specifically criticized Xiaomi Box, Xiaomi TV's MIUI and LeTV UI. For a time, all video websites were like frightened birds, and Tencent Video even urgently announced that it would shut down its TV application service on August 27.

Gaming

Although LeEco was forced to suspend the sales of its boxes, LeEco's Secretary Zhang Te told Global Entrepreneur that the policy changes had no impact on the business model of LeEco's boxes, and LeEco would continue with its previous payment and advertising models. Although in the short term, during the policy rectification period, there will be a certain impact on the sales of boxes. "In fact, the short-term impact will not last long, at most two or three months, because the rectification will be completed soon, and our rectification report has been submitted."

Zhang Te also said that in the long run, this round of rectification is conducive to the healthy growth of the industry. "All uncopyrighted, pirated, and pornographic content can be removed from the shelves. These are rogue companies in the food chain. They do not contribute or have any value. For users, they should enjoy safe and genuine excellent content." For LeTV, the content it provides should obtain corresponding commercial value and returns. After the rectification is completed, the profits that were originally occupied by the copycat manufacturers will be released again, so this is still beneficial in the long run.

Xiaomi, another company that was criticized, seemed somewhat innocent. Xiaomi's public relations director Liu Fei told Global Entrepreneur, "From the beginning to now, the content of both the TV and the box has been produced by the licensee. The company is only responsible for hardware, after-sales and customer service, not content. All the company's content complies with regulations and is also provided by the licensee." Liu Fei also said that Xiaomi has not yet received specific rectification requirements from the licensee, and will immediately rectify as required once it receives them.

Ouyang Xinzhou, a senior industry analyst at the Prospective Industry Research Institute, told Global Entrepreneur that because the license holders are under the jurisdiction of the State Administration of Radio, Film and Television, it is easier to control them, while Internet companies and TV manufacturers are more under the jurisdiction of the Ministry of Industry and Information Technology, making it more difficult for the State Administration of Radio, Film and Television to control them. The rule that TV UI must be launched by the license holder to be legal makes it easier for the State Administration of Radio, Film and Television to control the content broadcast on smart TVs in the future. For the entire industry, smart TV terminals or Internet box terminals will work closely with the license holders, which will strengthen the license holders' voice and the State Administration of Radio, Film and Television's regulatory power.

At present, there are seven major Internet TV licensees in China, namely Future TV, CNR Galaxy, China Media Group, BesTV, Mango TV, Wasu, and Southern Media. The State Administration of Radio, Film and Television has also firmly stated that it will not issue any more licenses.

Therefore, after this round of rectification began, video websites began to save themselves and seek in-depth cooperation with licensees. Among them, LeTV acquired a stake in licensee Chongqing Cable on July 23 this year; Youku Tudou announced its acquisition of a stake in licensee China Media Group on July 30; and iQiyi established an Internet TV operating joint venture company, Galaxy Internet TV Co., Ltd., with a subsidiary of China National Radio, China Radio International New Media Co., Ltd., and Jiangsu Television the year before last, becoming the first video website to hold an Internet TV license.

Although the rectification has lasted for two months, the market believes that it has not promoted the positive development of the industry. Wang Ningyuan, an industry researcher at China Investment Consulting, told Global Entrepreneur that Internet TV has not yet established a healthy business model. Internet TV licensees need to continue to strengthen content construction. On the one hand, they need to enrich their own content through exclusive broadcasts, copyright purchases and other channels. On the other hand, they also need platform operators and high-quality content providers to carry out more in-depth cooperation.

On the contrary, the biggest impact may be on users, because for users, the original benefits of Internet TV will disappear. With the introduction of relevant regulatory policies, copycat boxes may be completely banned, and users will only be able to buy Internet TV boxes from regular channels. Even if they are allowed to continue selling, the functions of their products will be limited, and the content that can be watched will be strictly controlled by the State Administration of Radio, Film and Television.

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.