The "IP enclosure movement" is at the right time: Huan Rui and Ci Wencheng are major IP players

"Nirvana in Fire" made Tianshen Entertainment popular, driving its share price to rise by nearly 30% within a month; Huanrui Century and Ciwen Media received ultra-high premiums in the capital market with "Tomb Robbing Notes" and "Hua Qiangu" respectively.

Since the beginning of this year,"IP" has undoubtedly become the most popular investment theme in film and television stocks in the secondary market. "Nirvana in Fire" made Tianshen Entertainment popular, driving its share price to rise by nearly 30% within a month; Huanrui Century and Ciwen Media received ultra-high premiums in the capital market with "Tomb Robbing Notes" and "Hua Qiangu" respectively. These popular IP dramas adapted from online texts have almost become money printing machines for the film and television companies behind them.

"Since the end of last year and the beginning of this year, IP has encountered crazy price increases. There may be a mentality in the market: If I don't buy (IP) now, it may be gone in 2016, and the boat will rise. Moreover, I have some reserves on hand for two or three years, and I can resell it." Wei Huan, an analyst at Yien Consulting, told reporters.

In the past, purchasing the rights to adapt literary works and film works was just one way to develop scripts. Now,"developing high-quality IP" has almost become a strategy for each company. The "IP enclosure movement" is at the time, but what are the stocks of major film and television companies that hold high the "IP strategy"?

Established TV drama companies:

Early deployment of rich types

such as Huanrui Century, Huace Film and Television, Ciwen Media, etc. They started out by producing TV dramas, and it is reasonable to hoard good scripts. Therefore, they have advantages in both the amount and type of IP reserves.

"The realization of film and television dramas adapted from high-quality IP copyright has great certainty and can better support Huanrui Century's future business performance."* ST Xingmei explained Huanrui Century's high valuation in response to an exchange inquiry. Huanrui Century currently has rich IP resources, such as "Xian Xian", the pioneering work of the Xianxia novel, the popular martial arts "Kunlun","Canghai", etc. At the same time, the company deeply integrates film and television and games through IP authorization, independent research and development and diversified operations to form a business model integrating film and game.

Ciwen Media, which is also a backdoor listing, is similar to Huanrui. Ciwen Media, which has been deeply involved in the television industry for many years, achieved great success this year with its "Flower Thousand Bones" and contributed most of the company's performance. Its A-share backdoor target Hexin shares has also been hotly speculated in the market. After the backdoor plan was announced, Hexin's share price soared from 9.19 yuan to 41.26 yuan. The company said that it currently has more than 40 copyrights in reserve, including more than 20 adaptation rights for original novels (including online novels), with key IPs such as Guo Jingming's "Jue Ji".

Huace Film and Television is also a major IP storage company, and has access to almost all types of IP such as youth idols, ancient martial arts, and spy wars. At the beginning of this year,"How to Sheng Xiao Mo" produced by the company's Kedon Media was popular and successfully leveraged derivative businesses such as T2O e-commerce, which also gave Huace a taste of sweetness. The company subsequently proposed the concept of a "super IP drama product matrix". In order to obtain the source of super IP, the company has built a big data platform, IP development center, IP evaluation system, script development system and multiple super IP drama professional production teams. The IP dramas currently stocked by Huace include the youth idol genre "Smiling is Beautiful" starring Yang Yang and Zheng Shuang, and the workplace love genre "Translator" starring Yang Mi and Huang Xuan.

Leading film companies:

The situation is divided and each has plans

to refer to overseas markets. IP films have become the mainstream of the American film market, such as "The Lord of the Rings" and "Harry Potter" and other series films. In terms of literary IP transformation, there is still huge room for development in the domestic film market.

Enlight Media has reserved a large amount of IP this year. From the perspective of genre, because Enlight is good at creating youth love movies, it relies more on the adaptation of best-selling literary works. It also prefers youth literary IP in terms of IP reserves. Looking at movies such as "To Us" that have been produced by the company,"Youth That Will Be Gone" and "That Year in a Rush", they have achieved good box office results. The company currently plans to produce "Accompanying Anthony through the Long Years","Passing Through Your World" and the best-selling children's literature series "Charles IX" in China.

Huayi Brothers, another film industry leader, seems to be less enthusiastic about participating in the competition for popular literary IPs. They pay more attention to the development of "big IPs" and the continued creation of their own series of branded films. Analyst Wei Huan believes: "Huayi prefers large-investment and large-production films, such as cooperation with Hollywood. Maybe their understanding of IP includes the company's stars, directors or the development of derivative products of existing film and television dramas. It is not limited to content copyright. From a larger perspective, it is not necessarily said that Huayi is lagging behind the light."

Reflecting the value of IP:

How did IP development in the entire industry chain

become a money printer for a film and television company?

It is important to hoard high-quality IP, but it makes sense to attach circulation value.

"IP is a currency in circulation." Analyst Wei Huan put forward new concepts. "Take" Hua Qiangu "as an example. Judging from the IP copyright attributes, its Baidu index was not high in the past. The success of" Hua Qiangu "is more due to the transformation behind its copyright, from core fans to pan-audience. IP has a fan effect and reflects value in the process of circulation and communication. It should be said that when copyright is finally developed, developed and produced to complete an IP drama, the value of IP is finally reflected. If the understanding only stays at the copyright level, IP cannot become a money printing machine."

In fact, the development of IP is a process of the entire industry chain, and it is the mutual circulation of pan-entertainment. The upstream is IP reserves (literary works, songs and other products), the midstream is the production and operation of film and television dramas, and the downstream is the market for derivatives such as games and real-life entertainment, which is related to how to realize it. It is worth noting that due to limitations such as the long investment cycle of film and television dramas and its own financial strength, many IP inventories of listed companies cannot be produced and launched to the market in a short period of time.

Regarding the development of the entire IP industry chain, China Merchants Securities believes that online literature, the most upstream of the industry chain, has reached the scale of 10 billion, the midstream film and television drama market is moving from 100 billion to hundreds of billions, and the downstream derivatives market looks from a narrow perspective. It will soon reach the scale of 100 billion. Enterprises in a certain link of the industrial chain will enter a larger market if they continue to extend the industrial chain downstream. The higher the industrial chain, the more powerful the company has, not only has the stronger control over scarce IP resources, but also has the more advantages it has to extend the industrial chain downstream. It predicts that with the outbreak of online dramas in the next few years, many film and television drama companies with a market value of tens of billions will be born in the middle reaches of the industrial chain, and companies that open up upstream, middle and downstream links and continue to develop based on the best quality IP will have a market value reaching hundreds of billions.

Editor: yvonne