A Samsung smart TV. (Internet photo)
Even though the internet television market in China has been hot in 2013, its development is facing three major bottlenecks: high bandwidth costs, similar content and lack of core competitiveness.
High-quality broadcasting remains the mainstream in the internet TV market and is likely to continue to boost bandwidth costs during the next few years.
Online video channels are barely profitable because of the high costs stemming from bandwidth consumption, according to Sina's news portal. The advent of internet TV has only further boosted bandwidth costs for online video channels.
LeTV, one such internet TV provider, will only turn profitable after selling 200,000 internet TVs. The production costs of those 200,000 TVs, however, runs close to 300 billion yuan (US$49.1 billion), stemming from the high consumption of bandwidth.
The second obstacle is the lack of differentiation in content.
Online video streaming relies on solid content to attract customers, but the range of content is similar across different platforms. To make matters worse, current regulations on movies stipulate that movies can only be streamed after their release in cinemas, making the content dated.
The core competitiveness of internet TV still lags far behind its competitors in the traditional TV market. Companies will need to strive create products and services that separate themselves from the traditional experience of cable and satellite in order to convince audiences of their worth.