Whole House Smart Save Smart TV?

What really matters is not the television set, but the content played on the TV set, Chinese people's habit of watching TV, which has been cultivated by decades of infrastructure and content construction, which is an extremely valuable social resource wealth, and its business logic has been established on this basis. Before the Internet era, television, as the most efficient medium, had a profound impact, but today, the limitations of its content make it difficult for consumers to find a reason to watch TV.

From black and white to color, from analog to digital, from 720P to 4K, from mono to panoramic sound... Since its inception, television has made several great strides in vision and hearing, making hardware technology close to the ceiling and the transformation has turned to intelligence. It can be said that smart TVs and traditional color TVs are already two very different species, although they maintain similar morphology and family ecological niches, but the function and connotation of carrying have diverged at some point.

One of the most obvious examples is that mobile phone manufacturers have entered the smart TV, Xiaomi, Redmi, Huawei, Honor and OPPO, etc., all of which are ambitious players in the field of smart homes. In the author's opinion, the smart TV battle of mobile phone manufacturers has risen to another dimension.

The illustrations are from Canva Paintable

Mobile phone manufacturers grab beach smart TVs

Since LeEco opened the era of smart TV, as of the second quarter of 2021, the overall penetration rate of smart TVs in mainland China has reached 53.3%, and it can be said that the development of smart TVs in China has been at a mature level.

However, at present, the large-screen content ecology can no longer meet the needs of consumers. With the spread of trends such as time fragmentation, atomization of life and the Internet access of the elderly, consumer groups represented by young people seem to need smart TVs more and more, so that after the market is basically saturated, its overall shipments have begun to decline continuously.

According to Aowei Cloud Network data, in the first half of 2021, the total shipment of Chinese TV brands TOP7 was only 14.64 million units, a year-on-year decrease of 16.1%, and the actual number of cable TV users is also shrinking. According to the National Bureau of Statistics, from 2015 to 2019, there were 239 million, 223 million, 220 million, 214 million and 212 million households. A set of data released by TCL in 2019 also shows that young people turn on TVs less and less frequently: in 2017-2019, the daily switching rate of TVs fell from 70% to 30%.

In contrast, in 2020, the national production of television programs was 3.2824 million hours, down 5.02% year-on-year. At the same time, short videos are harvesting a large number of these consumers' free time, and even the middle-aged and elderly people are gradually attracted by the fast trembling. The data shows that as of December 2021, the scale of short video users in the mainland is 934 million, the usage rate is 90.5%, and the average daily short video time per capita has reached 87 minutes.

This market environment, which changes due to changes in basic material conditions, has put the wave of digitalization and intelligence of television into an embarrassing situation: technology is advancing, but demand is shrinking, resulting in the inability to land production capacity. As a result, the "TV" thing either dies or develops into a new thing - smart TV is very lucky, and the opportunity for its transformation is the "whole house intelligence" that sprouted in 2012, which is also the fundamental reason why mobile phone manufacturers enter the smart TV, they see commercial value.

As far as smart TVs themselves are concerned, their commercial value can be divided into two: one is from consumers, and the other is generated after consumers gather. In short, the former is hardware revenue and the latter is value-added income. After the hardware determines the cost price of smart TVs, consumer demand for content and the attention resources generated by consumer aggregation constitute the second and third profit certificates of the enterprise, but what price should be set for it is still determined by the company's business strategy.

Regardless of the Internet era, the logical starting point of commercial advertising is to gather social resources (capitalization) and sell them (monetization). In this process, the mutual game between the capitalization and monetization of social resources and the consumer's "bear paw and fish (low price and no wide) can not be combined", making the smart TV appear two basic paths, that is, high price and parity.

In the mobile phone manufacturers that have entered the game, what makes people immediately think of them is Xiaomi and Huawei. In the following narrative, we reduce the game described earlier to a model of "hardware price vs. advertising choice", and then discuss the characteristics of the high price path and the parity path.

Huawei's smart screen values scene penetration

Huawei's flagship products always give people the impression of high prices, in fact, it is true, its smart TV flagship "Huawei smart screen V98" is priced at 29999 yuan, although the price is much lower than other brands such as Samsung, Sony and other products of the same size, but among a number of cross-border mobile phone manufacturers, it has been regarded as a "luxury". The reason is that Huawei not only needs the profits of the smart TV itself, but also needs to use it to cultivate new usage scenarios and usage habits.

Although the color TV industry as a whole is in a trough period, according to the data of Aowei Cloud Network, in 2021, China's smart TV is gradually evolving from small size to large size with 65 inches as the dividing line, of which the market share of 65-inch smart TVs reached 21.8%, an increase of 3.9% year-on-year. That is to say, "big screen" or some kind of trend, then in the context of digitalization and intelligence, rethinking the functions and usage scenarios based on large screens has become the top priority.

After the idea of "whole house intelligence" is opened, smart TVs have become completely different from traditional color TVs in the past. In principle, Based on hardware and Harmony OS, Huawei has strengthened the public attributes and social attributes in smart TV entertainment, and strengthened the application of the Internet of Things in it, so that it can realize the linkage of different functions at the hardware level, and the main service object is "consumers", re-emphasizing the importance of people in family life.

Based on this "humanistic thinking", smart TVs have been upgraded in an all-round way from the use of scenarios to the way of interaction. In Huawei's vision, smart TVs are the core of the whole house's intelligent media and audio-visual entertainment system, including but not limited to immersive home theaters, large-screen K songs, and AI fitness – which is why Huawei has long called smart TVs "smart screens".

There is no doubt that the more services are offered, the more value-added items are available for a fee. In addition to the most basic film and television library, Huawei Smart TV needs to charge different fees according to different platforms, and AI fitness, K song functions, and call services need to be purchased separately.

However, the ads added by Huawei to smart TVs may destroy consumers' experience when providing the above services. According to the "2021 Smart TV On and Off Advertising Survey Report", 59.09% of the respondents attach the most importance to "whether there is a switch on and off advertisement", and 72.73% of them say "can't stand it for a second" to the boot advertisement. Therefore, in the process of improving the whole house intelligence in the follow-up, Huawei should rethink the dialectical relationship between "advertising" and "value-added services".

Xiaomi focuses on cost-effectiveness

Xiaomi products have always been synonymous with high cost performance, such as August 10, 2021, Xiaomi launched a new product "Xiaomi TV 6 OLED" at the autumn new product conference, and its "55-inch 4999 yuan, 65-inch 6999 yuan" launch price has significantly lowered the lowest price of OLED TV in the industry, once again sitting on the title of "price butcher", setting off another round of "price war" for OLED TV.

Compared with Huawei, cost performance is the lifeline of Xiaomi, because its most basic business logic is "profit after a large number of customers". The process is as follows: First, use hardware that is extremely cost-effective to acquire a large number of customers. This hardware is often a Xiaomi mobile phone, so most of them are deeply bound to the MIUI system, as of December 31, 2021, MIUI global MAU reached 509 million, an increase of 28.4% year-on-year, and the number of connected devices on the Xiaomi AIoT platform was 434 million, an increase of 33.6% year-on-year.

Second, relying on the more convenient Internet of Things ecology, attract consumers into other cost-effective AIoT hardware, such as bracelets, stereos and smart TVs. From the Xiaomi financial report, it is known that the number of users with five or more devices connected to the Xiaomi AIoT platform (excluding smartphones, tablets and laptops) reached 8.8 million, an increase of 40.4% year-on-year, at the same time, Xiaomi TV shipments increased against the trend, reaching 12.3 million units, which has been the first in the country for three consecutive years.

Finally, rely on other value-added services to complete the closed loop of profitability. But under such business logic, there are bound to be two results: one is high sales, and the other is low gross profit. A hammer transaction makes the gross profit level of Xiaomi's smart hardware significantly lower than that of its peers, but the pressure of the capital market requires Xiaomi to seek profits to rise, the number of these smart hardware is so large, it is more necessary to a "reservoir" to release the pressure of profitability, so adding advertising, collecting membership fees and other "value-added services" has a natural attraction to Xiaomi.

Such business practices are only on the surface, that is, the price level is friendly to consumers, after the end of the purchase behavior, consumers immediately feel the cost behind the "high cost performance", black cat complaints about the "Millet TV" a total of 3450 results, corresponding to the "smart screen" of 346 results - after undergoing rectification, Xiaomi smart TV can finally use the "back button" to withdraw from advertising, all products only one OLED screen of the Millet TV has no advertising.

It has to be said that although the Xiaomi TV has achieved temporary glory with high cost performance, the linkage between smart TVs and other smart hardware is still inferior to Huawei's harmony OS. At the moment when the smart TV industry as a whole is in a period of decline, mobile phone manufacturers have no technical advantages over traditional players, so they have to break through from the side. Whole house intelligence is a good direction, xiaomi is also a deep layout in this regard, so millet should rethink the relationship between "people" and "things" based on smart homes.

Finally, it must be pointed out that the terms "high-price path" and "low-price path" do not fully explain their connotations, but are actually just descriptions of the salient characteristics of different business strategies. Cheap does not mean that there must be advertising, OPPO's 4 cost-effective smart TVs have no ads; in the same way, expensive does not mean that there must be no advertising, Xiaomi's "transparent OLED TV" is priced at 49999 yuan, but there are also boot ads. It can only be said that those with ads are not necessarily cheap, and those without ads are usually expensive.

Whole House Smart Save Smart TV?

If the early launch of smart TV is to seize the living room economy in order to seize traffic, then now, it has become an important part of the smart home scene layout, more and more is regarded as the intelligent control center, "around the smart TV, you can build a complete smart home ecological chain, and then create a scene-based life service." So the question arises: How many consumers are willing to trade their privacy and attention resources for the convenience of life? If so, to what extent should ads be intruded?

On the surface, this problem is a consumer's awareness of their own privacy and the trade-off between their own rights and interests, as well as the balance between the user experience and advertising revenue of smart TV manufacturers, but in essence it is a question of "who will pay the fee".

In the short term, the two paths of high price and parity will be determined by "who pays the fee" to develop more smoothly. To put it simply, in the construction of the whole house intelligent application scenario, consumers' willingness to buy high-priced smart TVs has increased, and they have paid more than advertisers, so smart TV manufacturers cannot but think of ways to improve the user's experience in order to protect the revenue; on the contrary, related companies will protect the existing advertising revenue, and users who buy affordable smart TVs must accept the further flooding of advertising.

On March 15, the China Consumer Association released the "Top Ten Typical Cases of Consumer Association Organizations Maintaining Consumer Fairness in 2020-2021", which includes issues related to smart TVs. As of March 14, the black cat complaint platform has as many as 33,858 complaints about television, of which more than 70% of the complaints about boot advertising, false publicity and automatic deductions, and most of them have occurred in the past two years - it can be seen that consumers are actually tired of endless advertising, but advertising will not be transferred by personal will.

In the long run, the capitalization and monetization of social resources will increase and deepen, and the contradictions between buyers and sellers will further develop, so the two paths of smart TVs will coexist. As mentioned above, no matter before and after the Internet era, the logical starting point of commercial advertising is the capitalization and monetization of aggregated social resources (attention resources), but today's smart TV manufacturers have integrated audio and video resources at the same time, so they have the right to share advertising revenues.

In this process, consumers always want to get more services at a small cost, but the ability to pay is different for different consumers, and in this gap, commercial advertising also has a living space. It can be judged from this that as long as there is still a gap between the rich and the poor, then the "content + advertising" type of goods represented by smart TVs will continue to exist in the two appearances of high prices and low prices.

In summary, the smart TV that firmly occupies the ecological position of the living room, although it is an important part of the "whole house intelligence" concept, is actually not completely changed by the overall change, and the advertisement should still have it. In short, in the "convenience + privacy + security" whole house intelligent triangle model, advertising and low price are contrary, but according to the different commercialization strategies of various companies, advertising will increase or decrease due to how much money is spent.

Text/Financial Reference, ID: Jrwaican