Will You Pay for the "Living Room" Economy?

In December 2016, the global blockbuster war drama Hacksaw Ridge was released to the Chinese mainland. The movie was soon available on various digital TV platforms, allowing Chinese consumers to watch this most popular movie at home. In addition to movies, digital TV platforms provide gaming, shopping, and a great variety of other services. As the "living room" economy booms, TV is transforming from a one-way medium to a hotspot for two-way communications, interactivity, and multimedia.

Large-screen TV has become the gateway to the "living room" economy, and entertainment video services are thriving

Rapid advances in Internet technology have intensified the competition for home entertainment, introducing significant changes to the video industry. Digital TV, smart TV, and IPTV, as the major large-screen home devices, are playing an indispensable role in people's lives. As the number and level of engagement of TV service subscribers continue to increase, video content, applications, and value-added services on TV represent huge potential for profits. A "living room" economy ecosystem revolving around TV is taking shape.

According to market research firm Analysys, by 2018 the Chinese "living room" economy, with large-screen TVs as the pillar, is expected to reach CNY230 billion. Telecom operators have also quickly expanded into the household market with IPTV. By virtue of the triple play service bundles (comprising telecommunications network, radio and television transmission network, and Internet services), the major three Chinese operators had attracted 867.3 million IPTV subscribers by the end of 2016, with the annual growth rate exceeding 35%.

Video services for communications will be another opportunity for the "living room" economy

Most consumers view TV as a medium to present traditional programming and entertainment videos. TV has failed to play the key role of enabling interactions between family members. With the rapid growth and availability of mobile Internet, consumers expect their needs to be satisfied without ever stepping out of their front door. They want their TV to become a family interaction center that supports a wide range of functionality, including one-on-one coaching, medical advice, and shopping. In the new Blue Ocean of the "living room" economy, people have a strong demand for all TV services, including gaming, music, entertainment, education, fitness, healthcare, and customer service, to be bundled with video communication service. This demand has created a larger market space.

Operators build "Video+ living room lifestyle"

Over the past several years, global telecom operators have made video more of a strategic focus than ever before. Video services are at the core of household services, and they are the basis for the "living room" economy. A combination of video communications with traditional industries will not only deliver high-quality lifestyles to domestic consumers, but also help to upgrade information consumption. This will ultimately make "Video+ living room lifestyle" a reality. IPTV has enabled interaction between media content providers and consumers, and TV video calling has brought family members closer together. The two services have laid an important foundation for building the "Video+ living room lifestyle" and achieving strategic transformation.

In the future, operators will expand their video capabilities in the communications field to every walk of life. The future will see large-screen TV act as the key medium, supported by home broadband and real-time audio. Operators will develop traditional one-way video webcasts and on-demand services into value-added applications through partnerships across multiple fields. As this happens, living rooms will adapt to consumer needs by becoming cinemas, distance learning classrooms, fitness centers, gaming centers, and shopping malls. Operators strive to build a new economic trend characterized by "Video+", thereby increasing user loyalty, reducing user attrition, and ultimately achieving sustained revenue growth.

For example, in 2015 China Telecom Sichuan launched their "Missing Home" application. With cameras installed on interactive TV (ITV) set-top boxes, this application allows users to have HD video calls between TVs, and between TVs and smartphones. Originally, China Telecom Sichuan offered Missing Home services to enable video calls between family members, relatives, or friends. Users could be from any walk of life, and included businesspeople, laborers, and students. Later, the company expanded the application of Missing Home services to other fields, such as the primary selection of "super girls" in the Super Girl Singing Contest Promo organized by China's Hunan TV, Chinese eGovernment initiatives, and family doctor based medical care. To date, Missing Home video call services have more than 5.3 million subscribers. This is a huge success for China Telecom Sichuan.

1. Video for communications + education

With the rapid growth of mobile Internet, online payment for small amounts has been quickly adopted and popularized amongst consumers. Consumers are gradually becoming more receptive to online education. Parents and students are the two groups who are most interested in education, and up to 24% of them are willing to pay for educational apps. It is estimated that the online education market in China will hit CNY198 billion by 2017.

For example, on an online education platform, a teacher called Wang Yu holds physics classes and charges just 9 Chinese yuan for each class. However, he had 2,617 students enroll in his class and he earned 18,842 yuan in a single hour after the 20% commission for the online education platform.

As an alternative device for online education, TV has become more popular amongst consumers. Approximately 20% of those attending online education courses do so via TV. Evolving video technologies, including real-time HD video based on large-screen TV, group calls, whiteboard video, and video filming provide strong impetus for innovation in Internet education. This innovation will maximize the utilization of high-grade educational resources and benefit both students and teachers.

2. Video for communication + healthcare

The Chinese government is developing more robust medical and healthcare systems and increasing their capacity. The aim is to offer the public easier access to more affordable medical services. Family doctor consultations and remote diagnosis services offered through large-screen TV have rapidly been accepted by the healthcare market and households.

On December 28, 2016, Sichuan University inaugurated its West China Women and Children Online Hospital. With the online hospital, patients can receive diagnosis services at home, and doctors are able to issue electronic subscriptions. Pharmaceuticals can also be directly delivered to patients.

In addition to education and medical treatment, social networking, shopping, entertainment, and other services are quickly becoming integrated into video, and they are becoming increasingly popular among households. TVs have now become an important gateway to the "living room" economy.

 

Huawei and telecom operators are working together in the field of home video. With Huawei's help, operators are opening up the video capabilities of their networks, and providing multi-screen, interactive video connections through fixed-mobile converged networks. They are positioning themselves as the gateway to the living room, and bringing in industry applications to bolster the video ecosystem. Partners' innovative services will enable operators to deliver unique experiences. As user demand increases, the "living room" economy will become the next opportunity for rapid industry growth. Operators who own the living room will win the future.

The era of the "living room" economy is here! Are you ready?