Until quite recently, online video streaming sites purchasing copyrighted content from film and television producers was the only connection between internet companies and the entertainment industry. But now this case is changing. A flock of Chinese internet companies are making major pushes into the entertainment industry to take a piece of China’s booming online consumption market. By harnessing big data and their sizable traffic, domestic internet companies are becoming major players in high quality film and TV production.
China’s movie market, already the world’s second largest market after that in the U.S., is maintaining its robust growth. Box-office revenues are expected to surge 88% from US$3.13 billion in 2013 to US$5. 9 billion in 2018, according to report by PwC. Moreover, China’s more than 600 million internet users are becoming increasingly voracious online video consumers, especially via smartphone. Here are how Chinese tech companies are looking to exploit this growing market.
Chinese e-commerce giant Alibaba Group launched an investment spree in 2014, injecting huge amounts of capital in film and TV program production companies, including ChinaVision Media Group (renamed Alibaba Pictures Group), Huayi Brothers, state-backed digital content provider Wasu Digital TV Media, Beijing Enlight Media, and more. Partnerships with overseas production studios like Lions Gate Entertainment were established to beef up its entertainment menu.
Although the films Alibaba Pictures Group has invested in like So Young (by actress-turned director Zhao Wei, who is also a major shareholder of the company) and Tiny Times (by popular writer Guo Jingming) have recorded remarkable box-office revenues, the company has yet to turn a profit, with a net loss of HK$443.54 million for the first half of last year.
In order to have a streaming platform for its content, Alibaba spent US$1.22 billion to buy an 18.5% stake in video service Youku Tudou. In addition to film and TV production, the company has also invested in local media and digital music sectors, so as to find new avenues for growth beyond e-commerce.
Alibaba also rolled out the investment-themed project Yelebao in March last year, allowing users to invest small sums in a range of development-phase games, movies, and TV shows, in exchange for certain perks, ranging from fixed rates of return to more interaction opportunities with film production teams.
Like its competitors, Tencent’s entertainment efforts have mainly focused on bringing its most popular online games, cartoons and novels to the theater. The company rolled out “Movie Plus” last year in a bid to commercialize its intellectual property. Tencent plans to work on the same-name film versions of popular online games, including QQ Race Car, Roco Kingdom, and so on. The company will also adapt novels of Mo Yan, China’s first Nobel Literature Prize winner.
Baidu & iQiyi
Baidu is also moving to the big screen. Already working on a series of TV shows, the company’s online video streaming portal iQiyi launched its film production studio iQiyi Pictures last year. The studio plans to co-produce seven domestic films and one Hollywood movie within 2015.
As one of the first internet companies to enter the entertainment industry, LeTV set up its in-house movie production company way back in 2008. The company was branded as LeTV Films in 2011. In 2014, the studio has produced or published 15 films, snapping up over RMB3 billion in box-office revenues, according to the company.
Starting as a mobile game developer, LineKong Entertainment was listed on HKEx Growth Enterprise Market at the end of last year, and acquired stakes in chain theater operator Stellar MegaMedia and online ticket sale marketplace 228.com this month.
In addition to local rivals, foreign internet companies like Netflix are setting eyes on China’s burgeoning entertainment market.
Image credit: ShutterStock
Editing by Mike Cormack (@bucketoftongues)