Leshi Internet Information & Technology (hereinafter
referred to as LeTV) just launched its third generation TV sets, Super TV in September,
2015. It has been the third year that Letv has stepped into the TV production
industry as an online video platform since 2013. However, is it wise for LeTV
to existing “Red Ocean” in the TV production market? Is it too ambitious for
LeTV aiming to be the market leader in China?
The world has witnessed the popularity of new
media, since people nowadays spend more and more time on new media, rather than
traditional media. As the essential medium influencing people’s life before, TV
industry now inevitably experiences the heavy loss of audiences. According to a
report from We Are Social, it indicates that in 2015, people in China spend 1
hour and 24 minutes averagely per day, making up only 1/6 of all the time that
people spend on PCs, tablets and smartphones. What’s worse, many viewers are taking
part in “second-screen” media when they are watching TV at the same time. Therefore,
the TV market share is coming down and the competition is getting stronger.
In order to
regain consumers, smart TV, which is the integration of TV set and computer has
been widely produced by some TV manufacturers. The chart below from Lenovo
& Display research, shows that the market of Smart TV is boosted in China,
from only 0.4 million TV sets were sold in 2010 to 32.4 million in 2015, 4.8
million more than the sales volume of traditional TV. The future of smart TV
seems brighter than
As a new comer to TV industry, LeTV made the
top 10 in Q1 of 2015 China’s TV market, with 5.4% of market share, according to
data from Systun, a Chinese research firm. It also tells that LeTV accounted
for the top five of the sales on eccomerce sites, making the market share of
1.51%. Though the market share of LeTV is
not ideal, it has been a profit surge comparing with the 0.6% market share in
2013.
To find out whether LeTV
can create new value in their products, the author utilizes the blue ocean
strategy canvas to study the competition between LeTV smart TV and traditional
TV. From the canvas, it is shown that LeTV implements a low-cost pricing strategy to attract
more consumers, ranging from 1,999 to 8,499 RMB, as the company wants to get
the profit from the content on its online video platform. However, many people
have got used to the way that when they turn on the TV, they can watch the
program directly and change channels within a few moves. On the contrary, smart
TV is harder to control, as it contains different functions, especially for
elderly people, who are not so familiar with digital technology.
Since LeTV is
Wi-Fi enabled and able to connect to its own online video platform, there are
various TV programs available for viewers. LeTV is also the first TV that can capture
users’ motion through the sensing camera placed on the TV set.
With this function, users can control the TV by body movement and play motion
sense game on the big screen. Moreover, users are allowed to control the
function on TV through their voice. Those are the functions that traditional TV
is lack of.
The selling point of LeTV, which makes it surpass
traditional TV and other smart TVs, is its ecosystem. LeTV has created an
ecosystem, platform + content + device + application for content creation,
distribution and consumption. Established as an online video website at the
beginning, LeTV has its own platform to deliver content, and also as a film production
company, LeTV creates its own content, it dose not have to cooperate with other
media company searching for content. Unlike traditional TV manufactures, the
relationship between consumers and LeTV dose not end after the consumption. Instead,
the relationship just begins with the distribution of content and services. Users are able to get connection among the LeTV products, smartphone, car, smart TV and cloud computing. At
the same time, users can apply to different video, game Apps. The LeTV video cloud
enables users to store programs without time and place restrictions and enjoy
the program without waiting.
The market share of LeTV in TV industry is unfavorable, but it is making progress in attracting more consumers by various functions and content it provides to consumers. Its uniqueness is LeTV ecosystem, which includes the creation, distribution and consumption of content, making it different from other TV manufacturers. However, the ecosystem is not mature enough for LeTV to dominate the market. If LeTV want to beat down all the other strong competitors, it has to improve its ecosystem by offering flawless connection among the products and distribution channels of content. At the same time, it is essential to recreate intimate relationship between people and TV.
