China's largest social media and gaming organization, will enter the domain of the 'smart TV' sector following the announcement that it has reached an agreement with TCL Corp. Tencent Holdings has agreed to allow its video content to be streamed on TCL's 'smart TVs' - which will expand its content dominance from mobile phones to living rooms.
The agreement was publicly announced this week and some of the details of the collaboration have been revealed. Tencent capital injection into a TCL unit will allow them to pre-load its entertainment content on TCL's 'smart TVs' which feature voice control and customized search recommendations.
Earlier this month, the China gaming giant invested 450 million yuan ($66.18m) into TCL subsidiary Shenzhen Thunderbird Network Technology, which subsequently made Tencent Holdings the second-largest shareholder with a 16.67% stake in the subsidiary. This latest move, represents the second invest Tencent has made in 'smart TVs' in the last number of months. In June, it invested 300 million yuan for 7.71% equity in Coocaa, which is a smart TV subsidiary of TCL's main competitor Skyworth Digital Holdings.
It has been further disclosed that TCL has shipped 20 million LCD TVs in 2016 - but almost half of them are 'smart TVs'. According to research conducted by IHS Technology, these figures mean that TCL is the world's third largest display TV maker behind South Korean conglomerate Samsung Electronics and LG Electronics.
General Manager of the living room products department at Tencent Video, Zhao Gang expressed his delight at the agreement that has been brokered, and claimed that his firm would enable TCL to extend its advantage in delivering online content to delivering OTT services. In addition, Zhao also expressed his delight that Tencent was not entering the complex process of manufacturing hardware. He said: "We would never touch hardware production. We want to be a supporter and enabler of our partner."
Tencent Video is China's biggest and most popular online video streaming website, which boats a library of entertainment and live sports content with copyright, and also makes its own productions. Tencent Video and TCL hope the tie up will increase their membership bases and raise their revenue from user spending on content, said Tony Guo, chief executive of FFALCON Technology. TCL says it currently has 20 million users for its smart TVs.