Alibaba Pursues New Smart TV OS To Grow Its E-Commerce Play

Chinese e-commerce giant Alibaba has joined the smart TV race, unveiling a smart TV OS and set-top box today.

It hopes to create its own ecosystem of TV-related assets that will give it a foot in the digital content door, letting it provide a platform for users to share content with mobile phones and other devices.

The new OS will also allow users to shop and pay bills via their TVs. This is a big potential catalyst for more growth for the company; if users warm to the OS, it should pull more over to Alibaba’s e-commerce assets, which include Juhuasuan, Taobao and Tmall. They’ll also pay via Alipay, Alibaba’s payment gateway.

Alibaba has been aggressively pursuing other avenues of growth for its business, and in particular finding ways to make Alipay more relevant to the growing e-commerce market in China. In January, it unveiled a mobile app for Alipay, and in April showed off a way for Beijingers to pay with their phones at vending machines using sound waves.

The Chinese e-commerce market hit $120 billion in 2012, and was driven significantly by mobile users, according to the China Internet Network Information Center (CNNIC).

Alibaba’s new set-top box will be called Wasu Rainbow, built by fellow Chinese company, Wasu Media Holding, which operates digital TV and IPTV networks in the country. Wasu Media was one of the first companies to obtain an Internet TV license from the government, and claims to have the largest user base in China with 8 million users.

Alibaba said in a statement that other large Chinese manufacturers have agreed to incorporate its OS into their devices. These include Skyworth, Haier, Changhong. Additionally, the company has rounded up some large names in the tech and entertainment business, which include Cisco Systems and video-processor makers Amlogic and Allwinner.

Dominant tech companies like Samsung and Apple already make smart TVs and connected set-top boxes, and as prices come down, the fight for audiences is expected to heat up as smart TVs take over living rooms. According to IHS iSuppli, smart TV shipments climbed 27 percent in 2012 to hit 66 million units. And we can expect smart TVs to cross over the halfway mark of global shipments by 2015, said the analyst firm in February.

And China, in particular, appears to be a much hotter market for smart TVs compared with Western markets. According to a GfK study published in August 2012, China has the highest usage of smart TVs, at 44 percent penetration. Comparatively, the US and UK are at just 11 percent, which was attributed in part to the prevalence of legacy TVs in the more developed markets.

Alibaba’s new TV OS was designed by its AliCloud subsidiary, which developed the Linux-based Alibaba mobile OS (dubbed AMOS) in 2011. Users will be able to use their mobile phones to control Alibaba TVs, and connect with TVs to stream content to the handsets.

The company plans to have an app store for video games, and will incorporate its Xiami music streaming service into the TV ecosystem as well.

Other Chinese tech firms have also been eyeing the Internet TV space in the country in recent months. The largest search engine in China, Baidu, confirmed its acquisition of online video provider PPS for $370 million in May. It plans to merge PPS with its own iQiyi video platform, making it the country’s largest online video provider.

Chinese smartphone maker Xiaomi produced a set-top box called Xiaomi Box, earlier this year, and has said it plans to market this aggressively.