July 5, 2017 / 12:06 PM / 2 months ago

Tencent makes smart TV push in joint venture with China's biggest TV maker

A sign of Tencent is seen during the third annual World Internet Conference in Wuzhen town of Jiaxing, Zhejiang province, China November 16, 2016.Aly Song

HONG KONG (Reuters) - Tencent Holdings, China's largest social media and gaming company, agreed on Wednesday to feature its video content on the smart TVs of China's biggest television maker TCL Corp to expand its content dominance from mobile phones to living rooms.

Under an agreement announced on Wednesday that followed Tencent's capital injection into a TCL unit, Tencent will pre-load its entertainment content onto TCL's internet-connected, or smart TVs, which feature voice control and customized search recommendations.

On Monday, Tencent agreed to invest 450 million yuan ($66.18 million) in TCL subsidiary Shenzhen Thunderbird Network Technology, making Tencent the second-largest shareholder with a 16.67 percent stake in the subsidiary behind TCL's FFALCON brand internet TVs.

This is Tencent's second investment in smart TVs in a month. On June 6, it invested 300 million yuan for a 7.71 per cent stake in Coocaa, a smart TV subsidiary of TCL competitor Skyworth Digital Holdings.

TCL shipped 20 million LCD TV sets in 2016, half of them smart TVs. That makes it the world's third-largest liquid crystal display TV maker behind Samsung Electronics and LG Electronics, according to IHS Technology.

Tencent would work with TCL on extending its advantage in delivering online content to delivering so-called over-the-top services, said Zhao Gang, general manager of the living room products department at Tencent Video.

Zhao was referring to content services, such as movies and video, provided by internet companies beyond the media transmitted by traditional telecommunications companies like cable operators. Streaming content provided by Netflix Inc and through Apple Inc's Apple TV devices are examples of over-the-top services.

Zhao was also emphatic that the TCL investment did not mean Tencent was moving into manufacturing hardware.

"We would never touch hardware production. We want to be a supporter and enabler of our partner," said Zhao.

Tencent's Tencent Video unit is China's largest online video streaming website, according to the company. It has 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.

Reporting by Sijia Jiang; Editing by Christian Schmollinger

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