Why did the State Administration of Radio, Film and Television forcibly "castrate" Internet TV?

"The OTT box industry is dying" and "Internet TV exists in name only"... These are pessimistic comments from the outside world on the ban by radio and television.

In 2014, Radio and Television was very busy.

Since June, the State Administration of Radio, Film and Television has frequently issued documents requesting the removal of video apps in the Internet TV box (OTT box). As of last week, the ban finally took effect, and major video websites removed their TV apps. Although they are reluctant, there is no choice, because if they do not obey the instructions, they will face the risk of having their Internet audio-visual licenses revoked. Under this pressure, it is certainly wise to abandon TV and protect PC.

It is worth mentioning that at first, the State Administration of Radio, Film and Television wanted to achieve its goal through seven major licensees, naming Huashu and BesTV to show its determination to rectify, but the video website was unmoved, or refused to remove its name, or changed its name to play a marginal role. This made the State Administration of Radio, Film and Television quite angry. At the end of September, it finally took a heavy blow and "threatened" with Internet audio-visual licenses to truly implement the ban, which had been issued for more than three months.

"The OTT box industry is dying" and "Internet TV exists in name only"... These are pessimistic comments from the outside world on the ban by radio and television. Live broadcast and playback of TV programs and American dramas are not allowed. These previous restrictions on OTT terminals imposed by the State Administration of Radio, Film and Television have made the content available on Internet TV very limited. This time, the complete removal of video websites has completely reduced Internet TV to an empty shell.

In this context, criticism against the State Administration of Radio, Film and Television is rampant. So, what is the reason that the State Administration of Radio, Film and Television has to bear the blame and forcibly "castrate" Internet TV? If we don't take action, what crisis will the radio and television system face? Exploring the answers to these questions will be of great benefit to judging the trend of the Internet TV industry.

Channels lost.

The units directly under the State Administration of Radio, Film and Television include television stations at all levels, television network companies, and a large number of relevant institutions in the film, TV series, and broadcast industries. The "China Radio, Film and Television Development Report 2014" shows that the total revenue of the national radio and television industry in 2013 reached 373.488 billion yuan.

For more than ten years, the open and secret strife between radio, television and telecommunications has never stopped. Initially, radio and television and telecommunications each built a set of networks. Although repeated construction resulted in huge waste of social resources, the television business and the communication business went their own way and did not interfere with each other. However, with the rapid popularization of the Internet, more and more TV programs are being moved to PCs, PADs, and mobile phones. Rich video resources and more convenient interaction methods have caused many users to leave their TVs and become telecom operators. customer.

For example, video websites such as Youku Tudou, Sohu Video, iQiyi, and LeTV come from the radio and television system, but the network facilities carrying these massive video services are the broadband networks of telecom operators. The arrival of the Internet TV craze will make the radio and television system lose its last screen, television.

If the State Administration of Radio, Film and Television allows the OTT industry to develop freely, the result is easy to imagine: more and more users will choose telecommunications broadband and abandon cable TV. At that time, the large-scale cable TV network of radio and television will lose its use, and the inability to master the channels and terminals will gradually erode the content advantages of the radio and television system.

You should know that the operating income of the three major operators of China Mobile, China Unicom and China Telecom in 2013 was as high as RMB 630.2 billion, RMB 295 billion, and RMB 321.6 billion respectively. The overall scale is beyond the reach of the radio and television system. If we were in a completely free competitive market, there would be no doubt that the radio and television industry would be defeated steadily.

Therefore, Radio and Television needs time to comprehensively integrate and unify the cable TV network to enable it to have broadband communication functions, helping Radio and Television become the fourth largest telecom operator and compete with China Mobile, China Unicom and China Telecom. This is also the country's proposal of "triple play". The original intention. Imagine that if progress is fast enough, cable TV users will be able to realize broadband Internet access through the SARFT network, which is very valuable for the value-added of SARFT's existing assets and the continuation of its business model.

However, the rapid development of the OTT industry has made this task infinitely urgent. Under the joint attack of Internet video companies and telecom operators, radio and television can only use policy barriers to gain a time window. In May this year, China Radio and Television Network Co., Ltd., a subsidiary of Radio and Television, was officially launched with the purpose of integrating cable TV networks across the country. However, these networks have a long history of division and separatism, and their interests are intertwined. The task of integrating them is more than arduous.

A radio and television insider told Caijing that since the establishment of China Radio and Television Network Co., Ltd., company leaders have gone to various places to conduct research and discuss feasible integration plans. They are extremely busy and have not much time left for them.

Therefore, delaying the development speed of the Internet TV industry is actually a helpless move by radio and television to protect its own channels.

Business Model Crisis

In addition to facing the danger of being replaced by telecom operators in terms of networks, SARFT's fear of the OTT industry also stems from the huge threat that the latter's business model may pose.

Commercial advertising has long been the revenue pillar of the radio and television system. Television stations purchase content from film and television production companies and generate revenue through copyright distribution and advertising. This model has long been followed by major video websites. Moreover, in the competition for high-quality content, these video websites have gradually become competitors to TV stations. They not only compete with TV stations for film and television works, but also establish their own film and television companies, develop homemade dramas, and actively infiltrate upstream.

Take LeTV as an example. Its cooperation with sports events such as the Super League and NBA has enabled it to have a large number of high-quality sports programs; take Sohu Video as an example. The large number of American drama copyrights it has purchased over the years are also resources that TV stations do not have. In addition, companies including iQiyi and Youku Tudou are actively "poaching" people from TV stations, and a large number of outstanding program producers are breaking away from the system and embracing Internet companies.

It can be said that in the past, TV stations and video websites were clearly separated. TV stations dominated cable TV networks, and video websites dominated the Internet. But the Internet TV industry has put the two on the same platform. To be precise, it has led the "wolves" of video websites to the living room. Having been bound by the system for a long time, Radio and Television is simply unable to compete head-on with video websites.

What is even more terrifying is that the self-built ecosystem of video websites represented by Le Le looks like Internet companies have established one television station after another independent of radio and television. They have channels, can be on-demand, are rich in resources, and have more control over the terminal. If left to develop, it will be sooner or later before advertisers will be snatched away by LeTV. After all, advertisers follow users.

The State Administration of Radio, Film and Television has always wanted to control the entire OTT industry through seven major licensees, but the fact has not developed as expected. For the sake of interests, many licensees turn a blind eye to the practices of terminal manufacturers, putting the State Administration of Radio, Film and Television increasingly in a passive position. Therefore, in rectifying the OTT industry, the State Administration of Radio, Film and Television chose to start with the licensees first. Through the license system to strictly control the OTT industry, Radio and Television wants to ensure its dominance in the Internet TV industry, while Internet companies can only become content providers to participate in the share.

As for how Internet companies respond and whether they will accept this affiliation, it depends on the future game between the two sides.

What is certain is that the strict control of the State Administration of Radio, Film and Television will continue. It is related to its own life and death, and more space and time must be gained for reform. But in addition to control, how to pull users back to the TV through internal innovation is a more important issue that needs to be considered. Otherwise, these bans will make no sense other than to wipe out an innovative industry.