OTT Box Market Analysis Summary and Forecast Report in the First Half of 2017

Policy: The OTT industry is a policy-oriented industry. Since the sudden “OTT concept” in 2012, the first round of regulatory policies has emerged, and new and successive policies have been issued. In 2015, the strict management policy began to rise to the legal level. The current policy has entered the regulatory period.

In terms of economy, residents’ income has been continuously improved, and smart consumer products’ involvement in households has increased. Both urban and rural residents maintain a relatively rapid growth rate, and the income gap between urban and rural residents will continue to narrow. From the per capita disposable income of the country’s residents, we can see that people’s living standards have been increasing, their spending power has also gradually increased, and they have the ability to consume smart products. Similar products have a higher level of involvement.

Social: In the current "Internet +" shock, smart TVs and smart boxes are entering millions of households, representing the advent of the living room smart age, widely favored by consumers. The average duration of a single terminal of an Internet TV reaches 5 hours per day, which is much higher than 4 hours per day for a single terminal of a conventional TV.

Technical aspects: OTT box products have been basically established. The main parameters of the current status of products are CPU quad-core, UHD resolution, memory 1GB, and flash memory 8GB. Most of the new products listed on the model are conservative products, and only a few of the large and medium-sized brand products are introduced.

Benefiting from strong underlying network capabilities, bundled marketing strategies, and gradually liberalizing policy barriers, IPTV experienced good momentum in the first half of 2017 after undergoing rapid progress in 2016. According to relevant data, as of June 30 this year, the number of IPTV box tenders reached more than 2,800, of which 18 million were for telecommunications and collective procurement; 7.76 million for mobile local procurement; and 2.36 million units for local procurement; and mobile and China Unicom In preparation for large-scale preparation...

What about the OTT box retail market situation? Ovid Cloud Network (AVC) analyzes the entire industry chain of OTT boxes through the overall market, product status, chip vendors and licensees, and policies, and forecasts the future OTT box retail market. The trend is as follows:

The overall market

The amount has declined. In the first half of 2017, due to regulatory compliance, companies that rely on hardware to make profits cannot support the situation. Secondly, strong corporate products in content and application can cater to users' needs. Niche brands and products with uneven content quit the competition. . The sales volume of OTT box retail market was 5.934 million units, down 16.5% year-on-year. The sales volume of OTT box retail market was 1.36 billion yuan, a year-on-year decrease of 15.8%.

The market price trend is stable. OTT box retail market price segment between 100-299 yuan, accounting for 77.4%. The average retail price of the OTT box is 223 yuan; the average price of the Android box is 268 yuan; the average price of the Ali box is 189 yuan; the average price of other boxes (such as Baidu, windows, etc.) is 247 yuan.

The development momentum of medium-sized brands is good. In the first half of 2017, the share of OTT Box TOP4 brand accounted for 71.4%, down 0.7% year-on-year. The sales share structure of brands such as Huawei, Skyworth, Haimeidi, Tianmin and Kaiboer all showed upward momentum.

The number of brands and models sold has decreased significantly. In the first half of 2017, the OTT box market saw a significant decrease in the number of brands sold and models sold. The number of brands sold was 87, a decrease of 36 compared to the same period last year. In terms of the number of 497 models sold, the number of products decreased by 76 compared to the same period last year.

Product Status

Operating system: The sales volume of the YunOS for tv operating system box fell, and the sales share decreased by 4.9 percentage points; the sales volume of the Android operating system box rose by 4.8 percentage points.

CPU Audit & Resolution: The basic parameters of the product have been finalized. The number of CPU cores is mainly quad-core, and there is no major change in the eight-core products. Resolution is dominated by UHD (3840×2160).

RAM & ROM: Storage capacity is on the rise. The memory (RAM) is mainly based on 1GB, 2GB bulk capacity has increased, and the sales volume has increased by 5.2%. The flash memory (ROM) changed from 4GB to 8GB, the 16GB capacity increased significantly, and the sales share increased by 19.3%.

Number of listed models: In the first half of 2017, the number of newly-listed models was 76, a decrease of 26 models year-on-year.

New listing strategy: Most of the new products listed on the market are conservative products. In the first half of 2017, the new products listed on the market were mainly the Kaibol Q10 PLUS, Kaibul Q6 PLUS and Haimeidi HD920B models. The product parameters of the listed models mainly focus on quad-core, UHD resolution, 1GB of memory, and 8GB of flash memory.

Chip Dealers & Licensees

In terms of chip vendors: In the first half of 2017, OTT box procurement chipmaker Jing Chen still holds half of the box; MTK is the only rising chip in TOP5 chip makers. In the OTT10 mainstream chip TOP10, Chenchen S905X accounted for 14.1%; among them, the share of MTK8685A rose a lot, up 8.6 percentage points year-on-year.

On the side of licensees: Hangzhou Huada has the highest share in OTT box co-licensors with its advantages in terms of platform, content, etc. Liberator CIBN has made frequent efforts in content strategy, and its share has grown fastest. Seven licensees have already accumulated a certain number of users. Among them, Hangzhou Huadian, Mango TV, and CNTV rely on their rich content resources, multi-channel cooperation, and comprehensive service programs to attract many users. Licensors have stepped up their efforts to build their own, each with different content style strategies.

Policy and Trend Forecasting

OTT industry policy development direction:

1. Start-up period: The predecessor and origin of the policy. Orders No. 39 and No. 56 were issued and implemented, and in the following period, they became the policies implemented on Internet TV.

2. Exploring period: The first round of policy supervision came. The formation of the Internet TV license system; and the most far-reaching document No. 181, has detailed rules for content integration, content services, operations, and terminal management.

3. Growth period: The policy strictly controls and starts to exert force. OTT concept of fire broke out, not only box brands have emerged, LeTV and other Internet brands television began to enter the stage of history. The market OTT is very excited and the chaos is difficult to avoid. The General Administration of the People's Republic of China has for the first time sternly put forward issues such as the “withdrawal mechanism for licenses” and the “black box”. It also formed a joint “Jianwang Action” with four ministries and commissions that lasted for four months.

4. Supervision period: The policy strictly controls the rise. The Directorate-General of the Licensing Agency has conducted interviews, self-examinations, and inspections for licensees to make continuous efforts to rectify the situation. At the same time, the TV versions of the major brand online videos have gone offline. Since then, video aggregation applications have also been rectified and have been affected so far.

5. Regulatory period: Policy supervision rose to the legal level. Severe rectification has gone from being large in scope to long-lasting and rising to a higher level – not a violation of rules and regulations, and it is an illegal crime. According to the fact that the circumstances are light and heavy, the issuing unit of Circular 229 is the Supreme Law, the Supreme People’s Procuratorate, the Ministry of Public Security, and the General Administration of Radio, Film and Television. The box began to take a forced upgrade of the broken wrist.

Policy-oriented OTT box life cycle: Understand regulatory policies, and have a future within the scope of legal compliance

1. Decline. In the first half of 2017, Tmall's box suddenly went offline. For Ali, who is a big family, the external propaganda "is short of supplies due to the supply chain parts of the product, the Tmall box is temporarily out of stock." Persuasively weak. If the policy influence predicts that the OTT box will go into recession.

2. Stable. At present, OTT box manufacturers make strategies such as product refinement and channel transfer. If OT boxes are not taken into account, the OTT box will continue to develop steadily.

3. Develop again. Judging from the implementation of past regulatory policies, Tmall's box implementation is strong and thorough. The second half of the year is the key period for the development of the OTT box. Promotional festivals will continue. The launch of the Tmall box and the launch of new products will create even greater glories.

Trend Forecast: 2017 is the Key Period for OTT Box Development

1. Brand changes: In the second half of the year, the top spot of the OTT box retail market will be replaced. In the first half of 2017, the Tmall Box remains in the lead; from July, the position of the top spot will be replaced by Xiaomi due to the demolition of the Lynx Box. In July, online monitoring data showed that the Lynx Box had only a few shipments on other sites, and Tmall Mall had no shipments. Currently, there are still shipments under the Lynx Box line, which are still available for purchase by consumers.

2. Forecast One: Due to the fact that Lynx's box could not be put on the shelf in the second half of the year, other brands were slightly affected. The retail volume of the OTT box market was 9.73 million units.

3. Forecast two: According to the current policy to enter the standard period of stable development, and regardless of the case of Lynx box off the shelf, the retail volume of the OTT box market was 14.69 million units, an increase of 7.1%.