Free TV became popular, but cake makers are not traditional manufacturers



Recently, the Chinese liquid crystal display (LCD) supply chain has been discussing the provision of free LCD TVs as a strategic marketing tool. The reason for this discussion is that Alibaba may plan to launch Ali-TV in the future as a platform for e-commerce network sales. The most intriguing thing is that Ali TV may be free!

It is well known that subsidies for telecommunications providers provide free smartphones. Will this happen in LCD TVs in the future? In fact, the prices of smart phones and LCD TVs are very similar in recent years. The digging of China's e-commerce industry has changed the structure of the TV value chain, which in turn has brought pressure to TV brand manufacturers. Many smart TVs sell at a discount of 25% or less when sold through e-commerce. The number of TVs currently sold online in China accounts for more than 20% of total television sales.

The television production business has attracted many newcomers to join. Internet service providers, network content providers, and even telecom operators have joined in. They no longer focus solely on the TV hardware itself, but are more optimistic about the business opportunities behind the TV industry. development of. These emerging companies have entered the market for platforms, content, terminals, advertising, applications, and broadband services, bringing more intense competition to traditional TV brand manufacturers. Traditional TV brand manufacturers have always focused on increasing TV value by improving display performance.
Alibaba focuses on the development of a global e-commerce model. Its business covers multiple areas including shopping, search engines, electronic payments, financial management, and cloud computing. If Alibaba decides to stimulate the growth of business in other fields by providing low-cost or even free Ali TV hardware, the impact, opportunities and challenges of the industry supply chain may be as follows:

The supply of LCD TV panels in China is becoming more and more abundant. BOE announced that it will build two new LCD panel factories, which are 10.5-generation and 8-generation. Taiwan and China already have many TV foundries competing fiercely with each other. Simplifying the supply chain and effectively reducing TV manufacturing costs are inevitable trends; the integration of displays and TVs has progressed rapidly, such as LCD TVs, open cell + backlights, modules, etc. System (Backlight/Module/System, BMS) manufacturing and business model.

Many LCD TV panel factories are entering the end of depreciation. The depreciation cost of LCD TV panels accounts for about 15 to 20% of the total cost, while the LCD TV panel cost accounts for 70% of the cost of LCD TV systems, so this will help reduce the cost of TV manufacturers. LCD TV panel makers have been working hard to develop new specifications to increase added value such as 4K, curved surfaces, wide color gamut, and 3D. However, there are still consumers who only use TV as a display for playing media or content, ie they do not need to Too much intelligence. TV industry competition is heating up, and soaring panel prices have affected the profitability of TV brand manufacturers. A new business model launched by Internet service providers rather than traditional TV brand makers may change the ecology and supply of existing TV industry. Chain competition layout.


Based on the above factors, if Alibaba really wants to launch free TV in the future, it can be achieved by optimizing off-the-shelf supply chain resources. The question is whether this is good or bad for the entire LCD TV supply chain.

Free TV is bound to bring impact on traditional TV operators. Traditional television brand manufacturers sell smart TVs with brand value and hardware as the selling point, while free TV is a completely different business model. TV is used as a tool to promote other services (such as online shopping). For television panel makers, free TV is not necessarily negative, because it will accelerate the demand for panel updates, and vendors such as Alibaba will not tightly tie the price of TVs to panel prices. IHS DisplaySearch predicts that the TV life cycle will be shortened, and that panel supplier shipments that choose this business model will likely grow rapidly.

Free TV model depends on what profit?

What about the characteristics of Ali TV? IHS DisplaySearch estimates that Ali TV will have a large display screen of 40 inches or more and 4K resolution (60Hz/T-Con MEMC combination). Most of the hardware is installed inside the box and is independent of the monitor.


E-commerce launched the impact of free television on the television and display industries.

The concept of smart TV has been developed for many years. Some consumers realize that they need a huge monitor and higher picture quality, so they are willing to pay for a premium; while some consumers only need a cheap and large monitor. As e-commerce companies may launch ultra-low-cost or free TV in the future, they will see a new type of TV ecology model that combines hardware, platforms, content, terminals, advertising, applications, and broadband. Free TV cash flow will be generated by software, and hardware is only the carrier of software. IHS DisplaySearch predicts that this will bring a new round of changes to the television and display industries as shown in the figure.



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