We believe that TV terminals will gain greater distribution value as more centralized traffic portals. In addition, the value of traffic portals is not only distributed, but terminal companies can also conduct advertising operations, data mining, and television e-commerce platforms. Current operating income is showing an outbreak of growth, and it is expected that follow-up operational data will continue to exceed market expectations.
The television internet has developed rapidly and hardware terminals will gain huge incremental value through user operations. We estimate the market space from two perspectives: based on the overall market size, the overall market space for end-user operations is expected to reach 300-400 billion yuan in the long-term; for a single platform user value estimation, the long-term market share for leading user companies is expected to approach 10 billion in the long-term. level.
The development of the smart TV industry chain is faster than expected, the business model has entered an inflection point, and hardware value revaluation is expected to take the lead. Combining sales volume and stock market share, smart TV field layout and promotion, A-share black leader TCL Group and Hisense Electric are particularly recommended, focusing on Shenzhen Konka A. The leading company's stock price still has a large upside, and it is expected that the continuously exceeding-expected operation data and in-depth cooperation on content + hardware will become the follow-up catalyst for the sector.
The number of PC users and mobile Internet users encountered bottlenecks, and traffic growth gradually slowed down. The development of the Internet in China has experienced two major eras: PC Internet and mobile Internet. Twenty years ago, China joined the global Internet family for the first time, and the PC Internet era officially set sail. Today, China has become the world’s largest number of Internet users, and has nurtured a number of Internet companies with worldwide influence. In 2007, the launch of the Apple iPhone triggered the development of the mobile Internet market. After several years of rapid adoption, China has more than 550 million mobile Internet users, and the market size is 210 billion yuan. However, as the number of users gradually reaches the bottleneck period, the growth of traffic and market scale has gradually slowed down.
TV Internet into the big break point <br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br><br> 2014 was the first year of heavy sales for China's smart TVs. The penetration rate of smart TV sales exceeded 50% for the whole year, and the cumulative stock of the industry was close to 30 million units, and the penetration rate of existing users reached 5%. In 2015, smart TV penetration rate is expected to reach 70%-80%. The penetration rate of TV Internet users will soon exceed 10%. The leading company will activate more than 10 million terminals, and the average daily active users will surpass 5 million to achieve scale operations. starting point.
With the popularity of users and the surge in traffic, the TV Internet economy has entered a period of great eruption. Let us recall what happened when China's mobile Internet user penetration rate went from 10% to 30%. The large-scale outbreak of the application market, the rapid formation of various types of profitable business models, the gradual transfer of the mature PC Internet ecology, and the acceleration of the giants to seize the mobile Internet portal, all without exception, will appear in the TV Internet economy. The TV Internet economy has grown from nothing. The long-term market scale is as high as hundreds of billions and the space is vast.
1. The market size of video services will reach 100 billion yuan (including TV video advertising and content payment services). The value of China's traditional TV ecology market is about 200 billion yuan, including 130 billion yuan in traditional TV advertising and 70 billion yuan in cable TV viewing service fees. As the user's viewing time and traffic are gradually transferred to the smart TV, the market value will also shift. At the same time, all types of internet innovations are expected to increase users' willingness to pay for premium content, and the market size associated with television internet video will develop rapidly. In the long term, it is expected to reach a scale of 100 billion.
2. The total market size of video game and application business is expected to reach 50 billion in the long-term. TV games: At present, the global video game market is worth US$30 billion, which, excluding hardware sales, the game payment market is about US$20 billion, accounting for a stable 20% of the global game industry. According to the forecast of iResearch, in the long run, the scale of China's game industry will exceed 200 billion yuan (in 2014, 110.8 billion yuan). Assuming that video games will start from scratch, the percentage will reach 10% to 15%, and the market scale will reach 200. - RMB 30 billion. Other types of applications and derived advertising businesses, such as online education, music, and social networking, will have an estimated market size that exceeds the billion-dollar level.
3. The conservative estimate of the shopping scale of the TV market will reach 3,000-500 billion. In 2014, the scale of China's online shopping market reached 2.8 trillion yuan, with a growth rate of 50%. According to iResearch, China's online shopping market is expected to exceed 7 trillion yuan in the long-term. As the TV payment system matures and users are accustomed to the transfer, assuming that the proportion of shopping on the TV side will reach about 5% in the future, the market size is expected to reach 3,000-500 billion yuan.
Terminal + operating system is the most important traffic entrance
The entrance of the mobile Internet presents a diversity of features, and the pattern is scattered. The bottom line is the hardware + operating system. By creating a closed or semi-closed mode, a strong user stickiness and traffic import role are formed, such as Apple + iOS, Xiaomi + MIUI. Followed by a pure operating system level, such as MIUI and other customized operating systems. At the application store level is an application distribution platform such as 91 assistants and 360 mobile assistants, and the APP hierarchy is a super-app such as WeChat, Baidu map, and public comment network.
Due to the closed nature of television systems, fragmentation of hardware technology standards, and user operating habits, the entrance to the TV Internet will be concentrated at the terminal + operating system level, where the operating system is the core of operations. The fragmentation of technology makes the combination of the terminal and the operating system very tight, and the operating system is firmly controlled by the hardware manufacturer. Because TV hardware has different technical standards and models, and it needs to provide live signal support at the same time, the TV operating system needs to be combined with different chips and hardware as the bottom layer, and it is difficult to develop and maintain. Hardware manufacturers have experienced many years of exploration in the R&D of operating systems before they have formed a unified operating platform. We believe that the operating system is the key to the operation of the user. The mainstream manufacturers will not pass the control of the operating system to a third party, and the difficulty of the flashing of the TV system will be very high. The control of the user will be firmly controlled by the hardware manufacturer.
Closed supervision of television systems gives hardware terminal options. The content of the TV screen is subject to strict supervision by the SARFT. The choice of the content provider is transferred from the consumer to the terminal enterprise. The application of the APP is also required to be reviewed by the terminal enterprise for registration by the licensee. Meanwhile, the SARFT requires the terminal to be prohibited. Provide users with ways to install APPs such as USB flash drives and SD cards. Therefore, the power of users to independently select content is greatly reduced, and television manufacturers essentially grasp the content and the right to choose the APP through the control of the operating system and become the most important traffic entrance.
The user's operating habits determine that the EPG has a strong traffic import effect, and the third-party platform has a smaller living space. The user's operation requirements for the TV are simple, and they do not carry out multi-level self-exploration like the mobile phone. Therefore, the TV EPG has a strong traffic import effect, and the third-party application platform and the super-app can hardly become the traffic and application distribution platform in the television field. For example, TCL and iQIYI's two cooperation modes, the first one is to add iQiyi Standard Edition APP to the application interface, the other is to launch iQiyi TV+, and to integrate Iqiyi content in EPG, both of which are active. The user rate difference is more than 3 times.
Traffic portal centralized terminal value highlights
The distribution rate of various types of mobile internet application stores is as high as 30%-50%. Due to the extreme decentralization of the development side of the mobile Internet, major mainstream application distribution platforms have a high level of discourse, and the ratio is as high as 30% to 50%. Taking Xiaomi as an example, millet's distribution ability is extremely strong thanks to the semi-enclosed ecosystem created by Xiaomi's mobile phone + MIUI system. In July 2014, MIUI’s monthly revenue for the first time reached 100 million yuan, of which more than 60% came from game distribution. MU mime on the MIUI line recharged RMB 26 million on the first day and MIUI’s revenue reached RMB 3 billion in 2015. the above.
The concentration of TV Internet traffic is more prominent. With the continuous growth of sales of smart TVs by mainstream TV manufacturers, smart TV terminals will form several major distribution platforms in the future and have a strong voice. We predict that some of the leading TV manufacturers will obtain 10%-20% of their share in the video content field, and obtain more than 30% worth of value in video games, TV education, and various types of application terminals.
Short-term video advertising will be the first to fall into the pattern, and video games and other application markets are waiting for the outbreak. Youku Tudou and iQiyi will start on-line TV-end video advertising business this year, and their annual targets will exceed 100 million yuan. It is expected that some black-capped leading companies will receive tens of millions of video advertisement revenues in 2014. With respect to video games, when the scale of the industrial stream enters the outbreak, major game companies such as Tencent and Xishanju have begun to enter the game development on the TV side. The development of the future video game market is worth looking forward to.
The value of traffic portals is not only divided into
The value of innovative business and advertising operations is highlighted. First share two data, 1, TCL global broadcast business after two months of trial operation, the current user size reached 300,000, daily revenue of more than 30,000 yuan, of which two-thirds of advertising revenue. We expect that the global broadcast will reach 5 million users by the end of 2014, and as the content of the film continues to improve, its operational capacity will also increase substantially. In 2016, it is expected to contribute more than RMB 200 million in revenue and tens of millions of yuan in net profit. 2. Skyworth Digital’s direct Hollywood business has reached 30 million in revenue in 2014, of which Skyworth is more than 60%, and we expect its direct Hollywood business revenue in 2015 is expected to reach 60 million yuan.
The advertising business market is huge. The product form of the smart TV allows TV manufacturers to add advertisements on the display interface of any video and application. With the continuous enhancement of the hardware platform effect, the rapid outbreak of advertising business will bring about a considerable income scale for hardware manufacturers. In the simple form of boot advertising alone, the current market value has reached tens of millions of dollars. Once television manufacturers form a daily active terminal with a level of tens of millions, their advertising value is no less than a medium-sized television station.
Data Operations - Precision Marketing Gold Mine. Through the control of the operating system, television manufacturers can obtain user's viewing information. On the one hand, through the analysis and aggregation of viewing data, an accurate rating report can be formed to provide guidelines for television stations, advertisers, and content producers. On the other hand, as users continue to collect data for viewing, feature portraits of each user will be formed, laying the foundation for accurate marketing and service delivery. At present, Huaneng Technology, a joint venture of TCL, Changhong, and Broadband Capital, and Coolcom, a subsidiary of Skyworth Digital, have started data operations.
E-commerce shopping platform - to do Taobao TV field. TV e-commerce market has a vast space and can cooperate with TV content and advertisements to create a new shopping experience. At present, some of the leading companies have tested the water TV shopping business on their smart TVs, and they have obtained 1%-3% share of sales or sales profits. We believe that as the number of terminal companies in leading companies grows, their platform effects will continue to increase, and they will have the basis for the development of a TV e-commerce platform, with a long-term potential.
Rapid increase in traffic concentration, black power leader speaks significantly
In the future, there will be a situation in which concentration of smart TVs concentrates on TV concentration. At present, the market share of black-lead LCD TVs is about 15%, while the smart TV market share is close to 20%, and the share of foreign brands has shrunk dramatically. As the penetration of smart TVs continues to increase, some low-end brands will gradually withdraw from the market. With the lack of smart TV content, foreign brands will continue to decline in their share, and the leading market share is expected to continue to increase. In addition, leading manufacturers have explored the field of smart TV users for many years, and the actual operational terminals have outstanding stocks. They will take the lead in realizing scale operations, and it is expected that the concentration of traffic in the TV field will far exceed market expectations.
Leading hardware manufacturers will continue to increase their voice in the industry chain. Due to the existence of certain thresholds for black-box manufacturing and distribution, and not years of accumulation, it is difficult for an entirely new brand to reach sales of more than 3-4 million units in the short term. Mainstream black manufacturers will quickly reach 20-30 million active terminals within 2-3 years, forming a large number of active users. Not only does it constitute a barrier to distribution, it also greatly enhances the stickiness of content landing on the platform and further enhances the attractiveness of the platform. Therefore, it is expected that the leading hardware manufacturers will continue to increase their voice in the industry chain.
Content, hardware and strong capital integration trend
The smart TV ecosystem competition is the integrated operation capabilities of hardware + content. As the number of mainstream black-box manufacturers continues to increase, the difference in comprehensive operating capabilities will determine the future competitive landscape of the industry. How to better mine user value and increase ARPU is the key to maximize the platform effect. Under the new industry environment, content and hardware will be integrated and developed. High-quality content will attract users, realizing the value of realizing traffic, and enhancing the attractiveness of hardware. The hardware faces the user as the entrance of content channels and traffic, and the content is rapidly distributed. Guarantee, and can consolidate the content stickiness, realize the real control to the user.
The rapid maturation of the new model is inseparable from the promotion of capital and the Internet. It is expected that the in-depth cooperation at the equity level is expected to become a new trend in the industry. The cooperation of content providers, Internet companies, and hardware terminals at the service level is only the beginning. The rapid maturation of the new smart TV model is also driven by the strength of external capital and Internet. At present, leading hardware manufacturers have established independent subsidiaries or teams responsible for smart TV business, and some of them have started independent financing. With reference to Xiaomi Investment iQiyi, we expect that further financing and the introduction of external partners to promote business development will become new trends in the industry.
Dr. Peng has already released barley television. We do not expect that companies will continue to get involved in the terminal business in the future. However, we are firmly optimistic about the value of the powerful ecological chain. There will still be new players in the industry chain extending to the hardware terminal based on their own business advantages. They hope to create their own traffic entry platform. This just reflects the core entrance position of the hardware terminal in the TV Internet. However, in the next 2-3 years, it is a precious time window for the development of the TV Internet. The Internet giant has had no time to explore TV manufacturing. Choosing a leading black power company with scale advantages is the right choice. Let professional people take charge of professional affairs. We firmly value the value of strong ecological alliances.
Terminal valuation system innovation sharing television Internet value feast
The television internet market has a huge space, and the valuation system of the black leader is expected to innovate. With the continuous accumulation of terminal inventory size and number of users, the revenue and profit of black power leading from user operations will grow rapidly, and the long-term space will be broad. With the change of profit model, the corresponding valuation system is also expected to innovate to the overall market size. According to calculations, the market space for end-user operations is expected to reach 300-400 billion yuan in the long-term. According to the scale of the TV internet economic market and the proportion of black power taps, the value of black-net industry users is expected to reach more than 35 billion yuan in the long-term.
Based on a single platform user value estimation, the leading company's user operation market space is expected to approach 10 billion for a long time. We assume that leading manufacturers have long reached 50 million active terminals, which are calculated at an ARPU value of 150-200 yuan per terminal, corresponding to a value of 7.5 billion to 10 billion yuan.
Focus on A-share black power leading enterprises
The penetration rate of smart TV is about to exceed 10%, which is the starting point of the TV Internet economic explosion. At this stage, the revaluation of the terminal hardware value is the most flexible, and it is a firm recommendation for the black power leader. At the end of 2014, China’s smart TV stock accounted for 5% of TV inventory. According to the sales volume, we expect smart TV penetration rate to exceed 10% this year. The number of active terminals for leading companies will exceed 5 million units, and the scale of smart TV operations will increase. At the beginning, the business model stepped into the outbreak and maintained firm recommendation for the black power leading company.
Combining sales volume and stock market share, and smart TV field layout and promotion, A-share black leader TCL Group, Hisense Electric, Hong Kong stock TCL Multimedia, Skyworth Digital, and Shenzhen Konka A are the key recommendations. The current stock price of the leading company is still about 10-15 times that of 2015 PE, and it still has a large upside. Continuing higher-than-expected operation data and in-depth cooperation on content + hardware will become the catalyst for the follow-up of the sector.
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