In 2018, as the market competition began to heat up, brands like Music, Storm, Watch, Small Whale, Popular, Millet, Cool Open, and Love Mango were all facing a tough winter. The root cause of this struggle lies in the fact that many internet companies have only focused on creating a presence in the market without developing the core capability to sustain themselves — what we call "self-blood" or internal growth.
Recently, an Internet TV brand called Micro Whale faced backlash from offline dealers within the home appliance industry. These dealers accused the brand of failing to fulfill its previous promises and criticized its "market management" as being excessively aggressive and unprofessional. The brand's approach to dealing with businesses and customers was seen as contradictory and damaging.
Prior to this, Internet TV brands had already been exposed for issues such as layoffs, salary cuts, and delays in paying suppliers. These problems were caused by poor management and further fueled concerns among both the market and retailers about the sustainability of these brands.
In fact, since this year, many Internet TV brands have encountered similar challenges. When the market first opened up, these brands promised great things, made bold moves, and showed strong momentum. However, within just six to nine months, they quickly faded from the spotlight. As a result, offline dealers suffered from various aftereffects, including delayed rebates, unpaid advertising fees, and poor product service support.
Clearly, when it’s too late, many realize they were naive and reckless. This is a true reflection of how Internet TV brands have performed in the Chinese market over the past few years. It also represents the biggest confusion for distributors who wanted to invest heavily in these brands with the hope of quick profits.
Although this year hasn’t seen the mass failures some media described as “a large area of death,†more than 80% of Internet TV brands are still struggling. Sharp drops in investment, rising costs, and continuous losses are undeniable facts.
Currently, there are three major issues within the Internet TV brand sector. First, the lack of a leading brand has allowed Xiaomi to grow rapidly by leveraging its strengths. However, Xiaomi itself is not positioned to lead the entire Internet TV industry. Its business model is limited, and it can't be the driving force behind others. Most brands are trying to follow in Xiaomi's footsteps, but the real success of Xiaomi lies in its restraint rather than aggressive expansion.
Second, many Internet TV brands haven't found a second path beyond financial expansion. Due to their short development time and rapid growth, many have grown in a chaotic way, lacking the system and ability for sustainable market cultivation. Even the business model of "hardware loss and content charging" isn’t viable in the traditional TV industry. A new way must be found to support and nurture the market.
Third, the mindset of many Internet TV brands is flawed. Instead of focusing on creating high-quality TVs, they're obsessed with gaining users and traffic. Many entered the TV market for the living room dominance and the potential cash flow from sales, as well as cross-device interactions. But they ignore the family-oriented nature of TVs and the characteristics of durable goods, which puts them at a disadvantage in the industry.
So far, no company in the Internet TV space has found a clear path forward. While Xiaomi continues to operate in its current state, LeTV has recently launched several new products in an attempt to make a comeback. Storm also announced plans to invest heavily in the Internet TV business in 2018. However, these efforts haven’t yet alleviated the ongoing “dangerous signals†in the industry.
For all Internet TV brands, returning to the basics and finding the right path is essential. They must truly position themselves as TV companies, deeply understand the industry and market, and coordinate factors like product design, distribution, user experience, and pricing. Only through superior products, content, and services can they win customer loyalty. Additionally, they must abandon the old strategy of burning money and find a balance between hardware and content profitability, ensuring that hardware supports content rather than the other way around.
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