Tang De Film and Television: The negotiation price for the single episode of "Suzaku" is 20% higher than that of "Wu Mei Niang"

Three movies will be launched next year, and 6-8 TV series will be confirmed next year. At present, the company's main source of income is TV dramas. In the future, it is expected that the ratio of TV dramas to movies will be 5:5;

Yesterday, Tangde Film and Television held a research and exchange meeting to provide answers to the company's current operating conditions and future development plans. The main core points include:

1. Three movies will be launched next year, and 6-8 TV series will be confirmed next year. At present, the company's main source of income is TV dramas. In the future, it is expected that the ratio of TV dramas to movies will be 5:5;

2. Large-scale IP "Suzaku" and "Donggong". Among them,"Donggong" is currently uncertain when to start, and it is possible to develop online dramas."Suzaku" will start in March next year, and the filming and production cycle will take about 6-7 months. However, due to the long post-production cycle, it may be broadcast as early as Chinese will be broadcast in December next year, and it is unclear whether revenue can be confirmed next year;

3. The company currently has more than 30 IPs for film and television adaptation rights, and will focus on the development and operation of original IPs in the future, and has established a joint venture company to specially create scripts and commission creations;

4. The cooperation with Chinese Online adopts a bidding method to develop IP, and there is no exclusion agreement;

1. The company's current operating situation and prospects for next year. The

company's current main source of income is still TV dramas, and the ratio of TV series and movie revenue can be 5:5 in the future. Looking at the fourth quarter, the main revenue comes from the TV series "The Moon Embracing the Stars","Riving Knife with the Left Hand" and "Tianlun"."Tianlun" is scheduled to be premiered on Beijing TV in February next year. It also includes assistance from "The Hunger Games" and "Conan". However, the specific release time of the movie "The Escape of the Jedi", originally scheduled to be released on December 24, has not yet been determined. The postponement is mainly due to the simultaneous global release of the film. At present, preparations in some areas have not been completed and cannot be released simultaneously, which may cause losses to some partners who have purchased copyright, so adjustments have been made. Looking at next year, the movie "Unearthed Cupid" will be completed before the end of the month and is expected to be released in the second half of next year. TV series "Political Commissar","Feng Zicai","Why Get Married", etc. are in the filming stage, and the TV column "Dream Building China Plan C" plans to cooperate with Da TV in a coastal area. In terms of quantity, there are 6-8 TV series that will confirm revenue next year, three of which are scheduled to start after the Spring Festival. There is also a relatively large TV series that may not end next year and will need to be aired in the first round the year after. Three films are scheduled to start next year.

2. Q & A Session

Q1: What is the company's current IP reserves? How to operate in the future?

A: The company has reserved a lot of IP and continues to reserve high-quality IP resources. Compared with outsourced IP that only has the rights to film and television adaptation, the company is more inclined to develop its own original and commissioned customized IP, fully develop the IP value, and fully tap the IP value in accordance with the plan of "movie first, TV series first, movie sequels, online series, TV series sequels, games, and peripheral derivatives".

Large-scale IPs in the future mainly include "Suzaku" and "Donggong". We will invest heavily in production to create these two dramas. Among them,"Donggong" is currently uncertain when it starts."Suzaku" will be launched in March next year. Production of some sub-scenes has already begun in Huairou, Beijing. The on-site shooting and production cycle takes about 6-7 months. However, due to the long post-production cycle, it may be broadcast as early as December next year. Whether it can be confirmed next year is temporarily unknown.

At present, the company has more than 30 IP reserves with film and television adaptation rights, including both outsourced and original. For example,"Suzaku" is our original IP, while "Donggong" is a outsourced IP. The cycle of purchasing and hoarding IP in large quantities has passed, and now more and more competition has begun to take place in the company's screenwriting, production, and operation capabilities. At this point, we have no doubt an advantage, who have always adhered to the high-quality line. In the future, we will focus more on the development and operation of original IP, because for original IP, the company generally only has the right to adapt, and the completion of filming means the end. The company does not have the right to permanent development, and the IP can be resold, and the value is always in the hands of the original author. Our creation of IP is more three-dimensional, and we must gradually build it into a series with a long life cycle, a relatively independent world view and many storyline elements. Based on these factors, we will focus more on original works in the future and establish a joint venture company to create scripts and commission creation. This model is considered to be better.

Q2: What impact will the TV drama policy changes have on the company?

A: The TV drama policy has changed from the original "four stars for one drama" to "two stars for one drama", which will not have a great impact on Donde. As far as TV dramas are concerned, the first round of broadcast rights accounts for the largest proportion of revenue. Judging from Tang De's layout, he insists on following the route of high-quality and exclusive broadcast. For example, Hunan Satellite TV bought the exclusive broadcast rights of "The Legend of Wu Mei Niang" with 2.5 million single episodes. If it had multiple stars, it would not be possible to achieve such a high price. In fact, the price of 2.5 million single episodes has not yet reached the price ceiling, and there is still room for growth in the future. At present, TV stations only use about 20% of their advertising revenue to purchase TV dramas. As long as the quality of the dramas is good, TV stations are willing to pay higher prices. For dramas of the same genre as "The Legend of Wu Mei Niang", such as "Suzaku", the current price negotiation is at least 20% higher than the price of "The Legend of Wu Mei Niang".

Q3: Judgment on the growth of next year's performance?

A: The increase in revenue mainly comes from the number of TV dramas. The first-round revenue of "The Legend of Wu Meiniang" was confirmed in 2014, while in 2015, only the revenue of the second and third rounds was confirmed, which will not account for too large. The company's 2015 performance is no longer supported by "The Legend of Wu Meiniang". Looking at next year, the revenue of films such as "Escape from the Jedi" and "Unearthed Cupid" will be confirmed for next year, as well as the column "Dream Building China Plan C" that is expected to be broadcast next year. Not limited to traditional TV series, movies and online dramas will be arranged. Some large films such as "Suzaku" are produced, and some small and medium-sized projects are also being carried out.

Q4: What is the cooperation between the company and front-line video websites?

A: At present, most online dramas are still sold through copyright buyouts and basically do not participate in member click sharing. Most companies cooperate with LeEco, especially before 2014, when they basically cooperate with LeEco. At present, the company also cooperates with Xunlei, iQiyi, and Youku. For example, Xunlei will have some needs for customized dramas. For online dramas for new media, we have "Suzaku" and "Donggong". The shooting method will continue the method of TV series, and it is possible to turn "Donggong" into an online drama.

Q5: The development of the company's major businesses?

A: When the company was first established, it was limited by its scale and its ability to resist risks was small. Therefore, it mainly filmed dramas from the Anti-Japanese War to Liberation, and the approval risk was small. Starting from "The Legend of Wu Mei Niang", we have tried costume dramas. A number of modern dramas have been filmed this year and some will be filmed next year. Therefore, from the perspective of theme development, the company still adheres to a diversified approach. The columns that the company has begun to try to produce will have more room for imagination in the future. The TV drama business is relatively stable, always bringing positive cash flow to the company, locking in a gross profit margin of about 40%, and there will be no explosive growth caused by movies. The company's core team is a filmmaker. Movies are what the company is good at. The company also has a very rich reserve of movie scripts. Although it was limited by its low anti-risk ability and rarely involved, TV dramas and movies will account for revenue in the future. It is expected to reach a 50 - 50 split. As for original variety shows, the company will definitely work hard to do, but the company does not have much experience in variety shows for the time being and is in the exploration and trial stage.

Q6: Is there any cooperation with Chinese Online? Is the current market layout of copyright operating companies valuable?

A: The editor-in-chief of Chinese Online will regularly screen IP addresses to identify those that can be adapted, and then package the detailed information and send it to the company. However, this process is not exclusive. Chinese Online will send it to both Tang De and Huace, etc., and use bidding to sell it. In this process, Chinese Online is more of an intermediary and agent, and the IP is actually more in the hands of the author, so there are still certain risks. At present, there are no particularly strong copyright operating companies in the industry, and there are not many good ones. The most important ones are their discernment and resource reserves, which have certain value.

Q7: The development of the Hong Kong subsidiary established by the company?

A: The company has established a subsidiary in Hong Kong and has three main purposes for overseas layout: first, it hopes to co-produce films with some foreign companies; second, it expands its own TV series channels so that it no longer has to complete foreign distribution through agents; third, it expands resource channels through overseas entities, completes "going global" and "bringing in" high-quality content, expands overseas layout and platforms, and gradually tries to introduce overseas high-quality IP.

Q8: Will the company prefer costume dramas in terms of theme selection?

A: The company will choose more diversified themes. For the selection of themes, a planning team will check the content entrance and score the content at multiple levels; in addition, an evaluation team will come to conduct evaluations; at the same time, we will listen to the opinions of the people responsible for purchasing films at the TV station and grasp the market taste.

Q9: The company's previously launched game "The Legend of Wu Mei Niang" has received only moderate market response. What are the reasons? Will we continue to adhere to the strategy of linking movies, TV series, and games in the future?

A: First of all, the previous game of "The Legend of Wu Mei Niang" did not work very well. On the one hand, this was because we did not have enough experience in the game field and would work hard to strengthen it in the future. On the other hand, the main purpose of making this game at that time was to promote this drama. However, doing linkage itself is very meaningful. This is not about consuming IP, but about creating IP more three-dimensional and comprehensive around high-quality content. It was also mentioned in the previous planning and layout that we put games and derivatives last. We must first build the IP well and then gradually explore it.

Q10: Is the company copying Hualu Baina's development route?

A: Both Tang De and Hualu Baina started by creating high-quality content, but their development paths are different. Hualu Baina basically does not make movies, and its TV drama business is also declining. However, Tangde's system is more flexible. TV dramas are Tangde's foundation. The company bases itself on the foundation and gradually expands other businesses, growing and developing steadily.

Q11: How does the company set the price for selling TV dramas to satellite TV? Why can gross profit margin remain in a relatively stable state?

A: The price is determined by the distribution team to formulate the corresponding distribution plan, including the price of the first round and the price of the second and third rounds. The gross profit margin is relatively stable because the TV station has a clear understanding of production costs, the company and the TV station understand each other, and the pricing is reasonable.

Q12: Where do the main driving forces for the company to achieve rapid growth come from? Film business?

A: Not only the film business, but also the TV drama business will grow. The company's current TV drama business is far from saturated and there is still room for development. Because the box office of movies is highly uncertain, we are more expecting the relatively stable TV drama business to drive growth.

Editor: yvonne