Comparing China's internet companies with their U.S. counterparts, it's clear that Chinese firms tend to focus more on business model and marketing innovations, while American companies emphasize technology and product-driven advancements. Chinese internet companies often adopt a "marketing-oriented" strategy, whereas U.S. companies typically follow a "science and technology-led" approach.
Over the past four years, the Chinese color TV industry has experienced significant upheaval, largely due to the involvement of internet companies. The market became highly competitive and exciting, but this period also marked the beginning of a turbulent journey for internet-based TV brands. The turning point came in 2013 when LeTV launched its Super TV, which quickly dominated the market. However, after four years of rapid growth, the industry faced a major downturn, leading to what many called an irreversible decline.
Interestingly, this so-called "turning point" led some to believe that after four years of challenges, the traditional TV brands were finally being replaced by disruptive internet brands. But according to data from market research agencies, in the first half of 2017, the retail share of traditional TV brands dropped slightly to 69.1%, while internet TV brands saw a sharp decline to 12.0%. This marked the onset of a difficult period for internet TV.
From a high-growth phase to a steep fall, the fate of internet TV changed almost overnight. Some media even described it as a "survival or death" stage. In fact, I had predicted early this year that 2017 would be the pivotal year for internet TV. My prediction was based on several key factors: no industry can sustain high-speed growth indefinitely, consumer interest in internet TV has waned, the LeTV crisis deepened public skepticism, and there was a lack of real technological innovation behind the so-called "innovations."
Looking at the industry from both a business and consumer perspective reveals a mixed picture. From the industry side, internet TV disrupted the traditional hardware-only profit model and introduced a dual-profit model of "hardware + software." However, from the consumer angle, internet TVs are not fundamentally different from traditional models. Their content and services have not surpassed those of conventional TVs, and without clear differentiation, they lost consumer trust.
In reality, much of the earlier excitement around internet TV was fueled by aggressive marketing and PR, creating a false sense of prosperity. The fundamental issue lies in the inherent weaknesses of Chinese internet TV—lack of R&D capabilities, reliance on third-party manufacturing, and limited innovation. While some brands like Xiaomi and Coolpad offered better products, most struggled to match the quality and reliability of traditional TV manufacturers like Skyworth, Hisense, and TCL.
The rise and fall of LeTV is a prime example. Despite reaching sales figures close to traditional brands, its success was built on heavy financial losses. Without sustainable profitability, such growth was unsustainable. Other internet brands also faced similar challenges, struggling to maintain momentum.
The truth is, traditional TV brands have long-standing technological expertise and product development capabilities that are hard to replicate. Internet brands may have disrupted the market, but they lacked the depth to truly innovate. As a result, the internet TV boom has now turned into a crisis, with signs pointing to further difficulties in 2018.
In summary, the key takeaways are: traditional TV companies have strong product advantages, and real industry change comes from technological breakthroughs, not just new business models. For internet TV brands, the path forward requires building stronger hardware foundations and focusing on genuine innovation rather than just marketing gimmicks.
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