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  • Aug 29, 2014
  • Updated: 9:05pm
Corporate China
PUBLISHED : Wednesday, 11 September, 2013, 11:53am
UPDATED : Wednesday, 11 September, 2013, 11:53am

Alibaba joins internet TV crowd

Alibaba's Internet TV tie-up with Skyworth could stand a good chance of success if it can build up a strong alliance of content and technology partners.

BIO

Doug Young has lived and worked in China for 15 years, much of that as a journalist for Reuters writing about Chinese companies. He currently lives in Shanghai where he teaches financial journalism at Fudan University. He writes daily on his blog, Young’s China Business Blog (www.youngchinabiz.com), commenting on the latest developments at Chinese companies listed in the US, China and Hong Kong. He is also author of a new book about the media in China, “The Party Line: How the Media Dictates Public Opinion in Modern China.”
 

Internet TV is fast becoming the flavor of the day for China's leading Internet and gadget companies, with word that e-commerce giant Alibaba has now entered the field through a new tie-up with TV maker Skyworth (0751.HK). The news comes just a week after online search leader Baidu (Nasdaq: BIDU) announced its own similar tie-up with TCL Multimedia (1070.HK), another leading TV maker, and following other similar recent product roll-outs by names like smartphone maker Xiaomi, video content provider LeTV (Shenzhen: 300104) and PC giant Lenovo (0992.HK).

This sudden explosion in Internet TV products is the result of a number of factors, including the advent of new technologies and Beijing's desire to breathe new life into the stodgy TV industry. But with so many new players and products piling into the market so quickly, I would expect we'll see a few major flops in the next year or two, with perhaps just one or two of these new initiatives standing any meaningful chance of success.

All that said, let's take a look at the latest news from Alibaba, which comes in the announcement of a Skyworth tie-up that will roll out three new smart TV models in October under the new Kukai brand name. The tie-up will include 2D and 3D models, with the cheapest priced at 1,999 yuan (HK$2,513). This news is the extension of Alibaba's July announcement of a set-top box product in conjunction with Wasu Media.

This new product launch comes amid other recent market talk that Alibaba was close to a deal to purchase some or all of PPTV, one of China's leading video sharing sites. That particular deal, which was reportedly close to finalization in August, looks particularly interesting as it would see Alibaba make the purchase together with Hunan Satellite Television, one of China's leading broadcasters.

Based on all these developments, it looks like Alibaba is forming a series of alliances to power a product that offers both compelling TV programs and TV-based Internet shopping services. This kind of an integrated approach looks smart to me, as it brings in lots of different players that are leaders in their field. The major drawback could be the complexity of the alliance, which could easily fall apart if one or more major partners disagrees with the overall direction.

By comparison, the Baidu initiative is relatively straightforward, combining its own iQiyi video sharing service with TCL's TVs. Xiaomi's tie-up should also be more straightforward since it is developing its own TVs, though it will probably have to team up with third parties to provide content for the product. Likewise, LeTV has strong content connections and is teaming up with TV makers for its product.

Internet TV hasn't really taken off in the west so far despite efforts by big names like Apple (Nasdaq: AAPL), mostly because cable TV companies already offer very competitive products with many of the same functions. But in China the market is far different due to a high degree of fragmentation among cable TV operators and lack of compelling products. That means the market could be ready for a strong new Internet-based TV product, and that one or two of these new initiatives could ultimately succeed.

If I were betting, I would probably place my money with LeTV or perhaps this new Alibaba initiative. LeTV has the advantage of being one of the earliest entrants to the field and seems to be gaining some traction. Alibaba seems to have assembled a strong alliance of players with the necessary resources and expertise to make such a product work. Industry watchers should stay tuned, as I'm sure we'll start to get some clearer signals of who is succeeding and who is failing in the next 1-2 years.

Bottom line: Alibaba's Internet TV tie-up with Skyworth could stand a good chance of success if it can build up a strong alliance of content and technology partners.

To read more commentaries from Doug Young, visit youngchinabiz.com

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