Smart TVs are displayed at the 2017 Appliance & Electronics World Expo in Shanghai. (Photo provided to China Daily)
Internet TV brands will expand rapidly in the next five years even though traditional markets are already saturated.
Industry insiders point to partnership deals involving TV manufacturers and online companies to develop smart content.
Dong Min, general manager at consultancy All View Cloud, or AVC, in Beijing, stressed that manufacturing and content companies in the industry are starting to march to the same tune.
"It shows the era of smart TV is coming and that consumer demand is now more diversified," Dong said.
Last week, TCL Corp, one of China's largest home appliance and TV manufacturers, announced plans to link up with Tencent Holdings Ltd.
Under the terms of the agreement, Tencent will pre-load video content onto TCL internet-connected or smart TV sets.
The Shenzhen-based tech behemoth will also take a 16.67 percent stake in Thunderbird Network Technology Co Ltd, a subsidiary of TCL, for 450 million yuan (.2 million).
This will make Tencent the second-largest shareholder of Thunderbird Network, which makes smart televisions.
"We expect to bring Tencent's games, films, social media and other entertainment resources to TCL's smart TVs through this deal," said Guo Tong, vice-president of TCL Multimedia.
"We hope this will increase the membership base and raise Tencent's revenue from users paying for content," he added.
Last year, TCL sold 20 million TVs globally with half of them smart sets.
The Chinese group is now just behind South Korea's Samsung Electronics Co Ltd and LG Electronics Inc when it comes to worldwide sales.
Still, linking up with a content provider makes sense as there are about 20 internet TV brands in the country.
"And that market is set to grow," reported China Market Monitor Co Ltd, an industry research firm.
Figures released by consultancy AVC showed that internet TV brands managed to grab 18.9 percent of the total television content business in China last year, a jump of 8 percent compared to the same period in 2015.
The research company also showed that TV sales here totaled 50.89 million units, worth 156 billion yuan, an increase of 7.8 percent from the previous year.
But the overall picture was mixed as television manufacturers suffered a downturn in the first quarter of this year, with major players reporting a drop in net profits and sales.
This goes a long way to explaining new partnerships with internet TV brands.
Back in February, e-commerce titan Alibaba Group Holdings Ltd bought a 25 percent stake in Haier Multimedia for 657 million yuan.
Qingdao Haier Co Ltd, the listed arm of home appliance giant Haier Group Corp, also paid 525 million yuan for a 20.2 percent share in the company.
"Last year, internet television brands grew rapidly, but their sales were down in the first quarter," said Sun Taitong, an analyst from industry watcher China Market Monitor.