Licenses of Internet TV licensees, licenses and no content

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Recently, when you watch programs on Internet TV boxes, you find that common video software is disappearing one by one. Please don't be surprised, this is a video site active offline application. According to incomplete statistics by the Securities Times reporter, as of now, websites such as Tencent, iQiyi, PPTV, LeTV.com, and Phoenix have all been banned from Internet TV platform applications. The video application violates current Internet TV regulations.


At present, the State Administration of Press, Publication, Radio, Film and Television has adopted the “integrated service + content service” management model for Internet TV. All Internet audio and video content must be broadcast on seven institutional platforms that have “Internet TV integration service licenses”; but in the short term, this Seven companies are facing embarrassing situation of less content.

Integrated license scarcity
This round of Internet TV applications has been largely abandoned and related to the rectification activities of the SARFT. According to the current management model, the content broadcast on the Internet box must be provided by the content service license agency and must be audited and managed by the integrated service license agency before it can be broadcast.

At present, there are 7 agencies that have obtained Internet TV integration service licenses, namely China Internet TV, BesTV (0.00% Funds Research Report), Hua Digital Media [0.41% Funds Research Report], South Media, Hunan TV, China Radio International, Central People's Radio. The seven institutions mentioned above, plus seven radio and television agencies such as Jiangsu TV station and movie satellite channel programming center, have Internet TV content service licenses.

Among them, integrated service licenses have scarcity. Luo Jianhui, director of the Network Audiovisual Program Management Division of the State Press, Publication, Radio, Film and Television Bureau, said that the integration service license will no longer be issued, and the content service license will encourage broadcasters at or above the provincial level to apply.

Analyst Kong Xiaoming of Huatai Securities [-0.23% Funds Research] said that this round of SARFT regulation continued the previous “No. 181 Document” concept. This policy has once again promoted the status of the licensee’s protection and gave it a strong license. Build, consolidate, and promote the platform. Among the 7 licensees, BesTV and Hua Digital Media are the most powerful licensees and are likely to become platforms. They are the best beneficiaries.
"No. 181 Document" refers to the "Operational Management Requirements for Holding Internet TV License Organizations" issued by SARFT in 2011, which regulates the Internet TV market and establishes a license system. However, after a large number of copycat boxes appeared in the market, Internet video websites gradually gained a large market share in market competition, resulting in that the institutions that obtained the licenses did not grow as expected.

Content disadvantages to be remedied
The data shows that in 2013, the sales volume of China's Internet TV boxes exceeded 10 million, but only less than 2 million of them were products that were certified and sold by licensees.
Shenzhen Internet TV box manufacturer told reporters that the current Internet box solutions are more, mostly based on the Android system, with the advantages of system stability, openness, as long as 2 million yuan can create a brand. Due to the low price, most of the individual profit of the cottage is about RMB 20 to RMB 30. If you want to become a “regular army,” you need to pay a license fee ranging from RMB 15 to RMB 30.
However, for large companies, obtaining a license is a prerequisite for continuous product sales. In order to obtain license resources, most video sites will take the initiative. For example, millet, LeTV, Huawei, and other best sellers cooperated with CNTV (China Internet TV); the previously-announced and criticized Lynx Box and Xiaohong Cool Box belonged to Hua Digital Media and BesTV.

An evaluation report of Zhongguancun [0.00% Funds Research] online shows that more than 5,000 film resources are available on traditional video websites such as PPS and PPTV. In most of the above-mentioned seven major licensing agencies, most of the content is lacking, and only BesTV’s brother company, which is also part of Shanghai Media Group's popular network, can achieve this number.

Kong Xiaoming pointed out that after the recent reorganization, weak licensees must rely on their own development or seeking joint procurement to establish their content advantages, or strengthen their competitiveness through cooperation with cable networks.
CCID Consulting [4.76%] Wen Yong, deputy general manager of the Internet Industry Research Center, believes that SARFT does not want to completely ban third-party video sites to provide content, but wants to control the content source in their own hands by providing a platform. The source of supervision will naturally strengthen.

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