Magazine article Screen International

China: Revolutionising Content

Magazine article Screen International

China: Revolutionising Content

Article excerpt

The three internet companies known collectively as BAT are having a major impact on the Chinese film industry. Liz Shackleton reports on what the major players are producing and why they want to sit across the entire value chain.

While China is transforming the global film business, there's a force within the country that is reshaping its internal film industry: the digital triumvirate of Baidu, Alibaba and Tencent.

Known collectively as BAT, these internet giants emerged from different corners of the digital universe - Baidu from search, Alibaba from ecommerce, and Tencent from its WeChat and QQ messaging platforms and online games - but all three are now diversifying away from their core businesses in an attempt to remain competitive. All three are also moving aggressively into film production.

Earlier this year, Alibaba bought out Hong Kong-listed film and TV producer China-Vision for $804m, later renaming it Alibaba Pictures and installing former China Film Group number two Zhang Qiang as CEO.

'We aim to act as a catalyst along each segment of the value chain'Allen Zhu, Youku Tudou and Heyi Film

A few months later, Baidu-owned streaming platform iQiyi announced the launch of iQiyi Motion Pictures, which plans to invest in eight films a year, starting with Jiang Wen's Gone With The Bullets; rival Youku Tudou, in which Alibaba owns a 16.5% stake, set up Heyi Film; and Tencent announced the launch of film production arm Movie Plus.

Alibaba's film plans hit a speed bump when it discovered "accounting irregularities" at ChinaVision following the acquisition, but has brought in PwC to sort out the issues and is pressing ahead on plans to work with talent such as Wong Kar Wai, Peter Ho-sun Chan and Taiwanese director Giddens Ko.

Most recently, the company said it would establish a joint venture with Hengdian World Studios, the huge facility just a few hours away from Alibaba's headquarters in Hangzhou. "We believe our collaboration will make us more competitive and help raise our game in terms of content innovation, investment, production and distribution," said Zhang Qiang, when announcing the deal.

These new outfits join Le Vision Pictures, the film affiliate of streaming platform LeTV, one of the first Chinese internet companies to see the value in moving upstream in the content value chain. Le Vision, which recently set up offices in Los Angeles, has produced films such as Zhang Yimou's Coming Home and teamed with Youku Tudou on Old Boys: The Way Of The Dragon, based on a short film that became an internet sensation.

Sohu, which also has a streaming platform, has so far been quiet on the production front, but recently acquired a 6.4% stake in Korean talent management company KeyEast.

The value of IP

Much like Netflix and its other US counterparts, these companies are using original content to attract subscribers and advertisers, scale back on high acquisition costs and achieve economies of scale. "If we have our own IP, we can use the same property to produce movies, TV series, animation and games," explains iQiyi founder and CEO Gong Yu.

These companies plan to work with traditional film studios while they learn the ropes, and eventually want to be involved in every part of the business. "We aim to act as a catalyst along each segment of the value chain," says Youku Tudou senior vice-president and Heyi Film CEO Allen Zhu. "As a newcomer in this space, we'll focus on script development, paying equal attention to those incubated on our platform and those from outside partners. We'll also focus on investment, marketing and product placement."

Most of these companies already excel in film promotion and marketing. Although they're streaming content through their online platforms, they also handle marketing and sell tickets for theatrical releases - all part of the much-touted online-to-offline (O2O) concept of using the internet to drive sales in physical outlets. …

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