COMPANY REPORT

Internet TV Provider PPTV, China

HDTV with IPTV Provider PPTV

Offers more than 100 TV channels as well as hundreds of thousands of programming hours for download Can only be received domestically in China Large IPTV provider with more than 100 million users Expansion into the OTT market for TVs and receivers HDTV is an area of growth and makes PayTV possible

In the Zhangjiang

Microelectronics Port, an office complex directly at the Zhangjiang High-Tech Park station of the #2 Metro line, youll find PPTVs headquarters. 500 people work here; in the branch office in Beijing are another 300 employees and at their third location in Guangzhou are yet another 100 employees.

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COMPANY REPORT

Internet TV Provider PPTV, China

Chinas Largest IPTV Provider is Expanding with HDTV

With more than 100 million unique users per month, the Chinese IPTV provider PPTV - from what we know - is the largest IPTV provider in the world. With the expansion into HDTV (High Definition TV), PPTVs programming packages are also becoming interesting for receiver manufacturers. We met up with PPTVs Vice President and General Manager of the Multiple Terminal Business Unit, Steven Shan, at the companys headquarters in Shanghai to find out more about what they are planning. PPTV was founded in 2004 by Bill Yao. Bill Yao was born in 1980 and that made him only 24 years old when he started PPTV! His idea was to take all of the new satellite channels from the Chinese provinces and make them available for everyone via the Internet, in other words, stream them. The idea caught on and in 2006 Bill Yao expanded PPTVs offering to include video-on-demand and since then PPTV has climbed its way to the top of the Internet TV and video ladder with ease. For Chinese speaking viewers inside of China, PPTV (www.pptv.com) is the first website to go to when it comes to TV and video via the Internet. The reason that PPTV is concentrating on the domestic Chinese market has to do with the companys business strategy: PPTV is free; explains Steven Shan, it is financed through advertisements that appear before the start of a video and through banner ads as well as other ad methods such as pop ups. PPTVs ad customers have no interest in making their ads available to viewers outside of China or paying for it. On top of that there are copyright issues. Since we concentrate on domestic ads, we dont have to worry about - with just a few exceptions - the rights involved with showing TV channels or videos outside of China. The IP address of every viewer is checked (Geo location); if the IP address lies outside of China, PPTV only shows videos cleared for foreign transmission. How can you see PPTVs TV channels and videos? We have a solution for every situation, declares Steven Shan. PC and laptop viewers simply need to go to our website to view the channels directly. Or you can download our own PPTV software. Its available in all the different formats: for Windows and Mac operating systems plus there are special versions for the iPhone and iPad as well as the corresponding Android versions for Smartphones and tablets. For each terminal PPTV provides the matching user interface; this explains the term Multiple Terminal Business Unit that Steven Shan runs and that is responsible for the matching of the

Shanghai

Bill Yao is Founder and

President of the IPTV provider PPTV

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software for each type of interface. And now it gets exciting. Depending on whether the picture is displayed on an iPhone, a laptop or a big-screen TV, different data transfer rates are required. Our software automatically adjusts itself to the users display, we learn from Steven Shan, We deliver nine different speeds. Steven Shan lists them for us: 50 kB is the streaming speed for simple mobile telephones known by PPTV as Feature Phones. The picture quality is sufficient for the small display screens used by mobile phones 150 kB is for simple Smartphones with larger displays 300 kB is for real Smartphones 500 kB is used if the viewer is watching PPTV channels on his laptop or PC 800 kB is used for iPhone or iPad users

1.4 MB is used for TVs with normal sized TV screens 2.3 MB is used for big-screen TVs 4 MB for HDTV 8 MB for big-screen HDTVs The last four categories are the most interesting for us since these involve OTT. These high data transfer rates are only used if the PPTV software is already integrated into the TV. In 2009 PPTV began developing this OTT technology and in 2010 the first TVs began appearing on the Chinese market integrated with PPTVs OTT function. In 2011 there were already 2.5 million of these OTT compatible TVs on the market; for 2012 PPTV is expecting this number to increase to 6-7 million. The entire market in China accounts for roughly 40 million TV sets each year, 10% of them will be OTT compatible. When it comes to HDTV, PPTVs business model looks a little bit different

compared to its SD video offerings. With these high data transmission rates, weve entered into cooperation with Internet service provides, explains Steven Shan to us. For this reason with HDTV we are switching to a PayTV model. PPTV is making HDTV available as a PayTV service. Most ISPs can still handle data speeds from 1.4 to 2.3 MB. Faster speeds requite a fiber-optic connection. PPTV founder Bill Yao has found an interesting strategy here: you start with free services, offer more and more value to the services until you reach a point where the customers are willing to pay for the services. Its a strategy that many Internet startups have used. The Japanese investment firm Softbank has recognized the potential with PPTV; in 2011 Softbank acquired a 35%
1. Vincent Tao has been CEO of PPTV since 2009. Before that he worked at Microsoft. 2. Steven Shan is Vice President and General Manager of PPTVs Multiple Terminal Business Unit. Hes showing the PPTV application on an iPad; theres also a matching version for the iPhone.

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PPTVs receptionist
in Shanghai

stake in PPTV. Softbank is also involved with two other top Chinese Internet firms: the sales platform Alibaba and the social network service renren. By the way, the Chinese government also owns a stake in PPTV. PPTV has a huge investment in all of this: We operate around 5000 servers at more than 200 locations all over China. This guarantees that every user in China can obtain the best possible bandwidth for downloading TV channels and VoD services. PPTV has very impressively shown how an Internet startup managed to climb to the top of the ladder in a new market segment in just a few years. Its a segment that, with the steady increase in high speed Internet connections, is an important addition to the programming offered via satellite or terrestrially. PPTV shows that the integration of Internet services (OTT) is an important task for manufacturers of TVs and receivers.

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1. A look into the Marketing department. The posters on the walls and ceiling remind the workers to always be strong and to work towards PPTVs success. 2. An example of TV reception on a laptop using the PPTV software. More than 100 channels from China are streamed by PPTV. They can only be received if the users IP address is located inside China. 3. Crystal Xu is PR supervisor and is standing in front of the P from PPTV

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