Date
20 November 2017
Online video site and internet TV box maker LeTV is seriously hit as regulators tighten their grip on the industry. Photo: Hexun.com
Online video site and internet TV box maker LeTV is seriously hit as regulators tighten their grip on the industry. Photo: Hexun.com

Tighter censorship threatens to strangle internet TV business

For internet television players, this summer is particularly harsh. Chinese media regulators have been rolling out waves of regulations to clean up the sector and limit their business. 

Seven internet television and TV box makers have been ordered to filter content through new guidelines issued by the State Administration of Press, Publication, Radio, Film and Television (SARFT). This came after restrictions were put in place in the industry last month.

The licensed providers were ordered to shut down content from commercial online video websites and remove unauthorized foreign movies, short films and other video products before July 21, according to industry sources. 

They were also barred from entering into business deals with telecommunication operators, unlicensed TV box makers and companies placed under investigation by the media watchdog.

The seven firms are the lucky ones, actually. Their unlicensed peers will be more seriously affected as a large part of the content they provide will be removed under the new rules.

One player that is likely to be affected much is the fast-growing online video site and TV box player LeTV. The news has triggered panic selling among its investors; the counter has tumbled over 19 percent in the past two days.

LeTV has reportedly stopped selling its two TV box models through its official website. The move is apparently aimed at convincing regulators that it is behaving well, since selling TV boxes through the internet is a violation of SARFT’s regional restrictions, according to National Business Daily.

Because it has yet to secure an internet TV license, LeTV is teaming up with licensed providers to sell video content.

The group is one of the most successful online video platforms and content providers in China. It invented the “content + advertisement + hardware + commission” business model, which bundles up the TV box, TV sets and personal computers with other mobile devices like smartphones and tablets to enlarge its viewer base, enabling the company to earn hefty advertising income.

The strategy enabled LeTV to issue a strong half-year report card. Its operating revenue surged 270 percent while its net profit grew 28 percent from a year ago. However, the sterling performance is unlikely to repeated in the wake of the new regulations.

Although licensed internet television and internet TV box makers such as CNTV, Wasu Media and Hunan Television will also be affected by the regulators’ tightened grip, they will be facing less competition from now on.

Industry expert Wu Chunyong explains one advantage given the licensed players. “SARFT removed the replay function from unlicensed over-the-top content providers, which means licensed players can now exclusively roll out playback functions for their viewers,” the 21st Century Business Herald quoted him as saying.

– Contact the writer at [email protected]

BT/CG

EJ Insight writer

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