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Why Intellectual Property Is Now Hot Property In China Tech
The term ‘IP’ has emerged from general obscurity in the Chinese tech market to become one of the hottest buzzwords over the past few years.
While China has historically been notorious for weak intellectual protection, tech giants and startups alike are beginning to tap into the all-valuable IPs behind gaming, film, TV and a wealth of other copyrighted content. It’s reflective of two emerging trends in the Chinese market: tech companies are expanding aggressively into entertainment or cultural sectors, and good content is scarce and in high demand.
China’s gaming industry was of the first to know the importance of IP. A handful of big tech companies, including Tencent, Sohu and NetEase, have seen a large portion of their revenue generated from a small number of game titles in the past years.
By 2015, established Chinese tech companies, especially the giants, have entered almost all entertainment sectors including book publishing, television, film production and distribution, online video production, and anime & cartoons.
While online piracy is still a big problem on the Chinese web, companies are increasingly taking legal or other measures to protect the rights to their originally developed or licensed content.
Tencent: From Gaming to Every Other Sector
So it’s not surprising that Tencent, the social network giant with gaming accounting for its largest revenue source to this day, was one of the first tech companies to tout the importance of intellectual property. If gaming can monetize on hundreds of millions users, adaptations based on already-popular games are a no-brainer.
In recent years Tencent tapped into almost all other non-gaming entertainment sectors, including the movie market which has been growing rapidly alongside the competing effort from Alibaba.
In September 2014 Tencent unveiled the Movie Plus program (our translation) to adapt popular games, books and anime titles of their own to movies by partnering with Chinese film production companies and other industry institutions. The program started with seven titles, four games, an anime, Roco (a role-playing social network for children), and one novel by Nobel laureate Mo Yan, which was signed by Tencent’s online publisher.
In 2015 Tencent unveiled two companies, Tencent Pictures and Penguin Pictures, for producing and distributing movies and online videos. Tencent Pictures’ in-house studios produce movies adapted from games. Penguin Pictures, which is managed by Tencent’s online video division, produces online shows. The first online drama series to be launched is based on Ghost Blows Out the Light, a best-selling novel first published on online publishing platform Qidian.com.
Tencent poached core team of Qidian.com, who created the online fiction publishing model which is widely adopted across China, in 2013. The company would later acquire Cloudary (or Shanda Literature), the largest online original works publisher consisting of Qidian and several other online publishing sites, in late 2014.
Apart from exploiting copyrighted materials of its own, Tencent also acquires rights to and develop games based on movies, television series, anime and even variety shows. The company has developed a social music game based on reality singing competition show The Voice of China, which is part of The Voice franchise. In 2013 the company hired Peter Chan, a well-know Hong Kong film director, to help develop a game based on Tian Ya Ming Yue Dao, a popular Wuxia novel.
LeTV: Exploiting Existing Rights
LeTV, one of the leading online video and smart TV companies, granted game developer LineKong exclusive rights to develop online games based on some of its drama TV series in which the former owns rights.
LeTV is well known for acquiring a large number of TV drama series rights at relatively low prices before online video became mainstream in China. The company now also produces original drama series and other shows.
LineKong has developed a game based on The Legend of Zhen Huan, a hugely popular TV series that had brought LeTV a lot of money by simply reselling it to television stations and other online video sites.
In early 2015 LeTV announced that LineKong would begin developing a game based on a new drama series, which was still under production at the time, by the same team that produced The Legend of Zhen Huan.
(Update: LeTV has recently rebranded as LeEco.)
Huayi Brothers: from Movie to Gaming
Huayi Brothers, one of the leading film production companies, has invested in a bunch of game developers since 2010 that include OurPalm, YINHAN Games and Yingxiong.
After Shen Mo, a game developed by YINHAN Games in which Huayi Brothers has a controlling stake, began generating meaningful monthly income, Huayi Brothers started production on a movie spin-off.
The company saw over one third of its total revenue in the first three quarters of 2015 from online entertainment, primarily from gaming.
Conventional Drama & Film Production Industries: Extra Money
Developing a television series and a game in unison is a model that has been accepted by many in the conventional television and film industries.
Now it’s common to see a drama series or variety show being promoted together with an identically themed game. Online viewers are able to download the accompanying game through ad links, and TV viewers can scan a QR code shown on the screen to find it.
Image Source: Mi Yue Zhuan, an online game based on an identically-themed TV Drama.