Ren Zhonglun: Film is a reliable developing industry. In addition to box office, it also needs a new indicator

On November 25, the "2016 Fifth China Listed Company Leaders Summit" was held in Chengdu. At the meeting, Ren Zhonglun, Chairman, Party Secretary and President of Shanghai Film (Group), delivered a keynote speech.

On November 25, 2016, the "2016 Fifth China Listed Company Leaders Summit" was held in Chengdu. At the meeting, Ren Zhonglun, Chairman, Party Secretary and President of Shanghai Film (Group), delivered a keynote speech. The following is a transcript of the speech:

I am particularly interested in this theme,"Focus on supply-side innovative capital path." In my understanding of the supply side, the key is to solve the structural contradiction faced in the current economic situation. This contradiction exists in other industries. I compared it and compared it, and I think it actually exists in our film and television industry., I think it is also very experienced. The direction of supply-side reform is undoubtedly to solve the problem of supply and demand. The goal to be achieved is to develop from a low-level balance of supply and demand to a high-level balance of demand. While I was waiting for the plane, my friend sent a photo to me. There is a shop with a slogan hanging in this photo. To say,"Store closures are harmed by e-commerce, and all are sold, except for the boss lady", which means that we need holistic, revolutionary and subversive changes in the entire supply-side reform. I think there are also some protective conservatism. I don't know if this shop owner is a personal tragedy, will he cry for the whole family or will he cry all the way? If we cry all the way, then it is worth our relevant departments to study how to support and formulate some effective measures during the entire industrial transformation to ensure its orderly development. If a family cries, there is no doubt that it will be a personal tragedy and a theme, but in the end it will also be a comedy, because except for the landlady, she is still a great favor to the family.

I come from the film industry and have worked in this position for nearly 40 years. I increasingly realize that film is an influential global industry and its impact is huge. Everyone is currently proud of the scale of the entire film industry, but it is not large. Even if the box office reached 44 billion yuan last year, the output value of a company may far exceed it for other industries, but it has huge influence. At the end of last year, Obama went to Hollywood in the United States and delivered a speech to these Hollywood bosses. I was inspired by reading it. He said that the United States is different because of Hollywood. Many people around the world have never been to the United States, but through American movies, they have recognized American values and American way of life. I don't know if he exaggerated the influence of American films, but what he said was a basic fact that this industry has huge influence. I often meet some comrades who will say one thing when talking about Shanghai Film. I grew up watching Shanghai Film Studio, and this is its influence. Second, movies are actually essentially a fusion of art, commerce, and technology. From the very beginning of movies, about 120 years ago, they relied on technology to drive the development of the entire film form and format. From the perspective of the supply side we talk about, the most fundamental and thorough thing is to promote consumption through creation, promote consumption, or lead consumption. Movies have had ups and downs over the past 120 years, but they still exist today. The important reason is that they continue to innovate. I met Ang Lee in New York in September. Ang Lee photographed the loyal soldier. He was also exploring technology. 3D, 4K, and 120 frames. He was troubled to complete this exploration, but the global screening system could not support him. So I immediately agreed to him that I was in Shanghai, China, and I would give you the world's first screening system in our studio. It was 3D, 4K, and 120 frames. At that time, the entire configuration cost more than US$1 million. We later discussed renting it. The rent was more than 1 million yuan, and the box office of one hall reached more than 17 million, which is 1/10 of the global box office of Ang Lee's film. This is the charm of the movie. It has been creating new demands and meeting new demands. Once creativity is lost, movies will fall. In May, I also went to see VR, which everyone is very concerned about. I watched three VR companies. Everyone was discussing that VR might not replace traditional movies. I watched it and had some of my own feelings.

The film industry seems to be an industry that makes products for the masses, but in fact it is an aristocratic industry. It needs money. It needs a steady stream of profits created by companies to support or maintain simple production and expanded reproduction. It needs money. Especially now in the film industry in China, I think the cost of film production in China has increased 100 times in the past 30 years. Thirty to five thousand yuan to make movies felt luxurious 30 years ago, but making movies with thirty to fifty million yuan is now just an ordinary investment. Therefore, movies also need supply-side reform and also need to think about capital innovation. I think of three sentences that are my understanding of the current status of movies. The first sentence is that no matter how tall a tree grows, it will not grow into the sky. My words are based on the current situation and discussions of the films that appear this year. There are two views in the China film industry. One view is optimistic, and that China films have entered the golden period of ten years. One view is the pessimist. The pessimist gradually formed after the second half of the year and its voice gradually became louder. The reason is to see that the box office of China films in the second quarter of this year fell by 4% compared with the same period last year, and the third quarter fell by 10%. This suggests that China films have entered an inflection point, and China film companies, especially some independent film companies, should store grain for the winter. For me, I am a cautious optimist. Where is the optimism? In the past ten years, the growth of China films has been healthy, or exciting, judging from the box office tree. 2003 was the low point of China films, with the national box office of 900 million yuan and the number of movie-goers was about 75 million. Last year, it reached 1.26 billion yuan, and the box office reached more than 44 billion yuan. The average annual compound growth rate in recent years has exceeded 36%. Last year was another high, with a year-on-year increase of more than 48%. It should be said that this benchmark shows that the entire China film industry has been developing rapidly in the past decade, indicating the figures of relevant industries. For example, screens, China now produces 17 screens every day. In 2003, there were 3000 effective screens, and today it basically reaches 37000, more than 10 times. What is the number of screens in the United States? One theory is 42,000 yuan, and the other theory is about 40,000 yuan. I talked to the chairman of the Motion Picture Association of America, and he thought that 40,000 yuan was more reliable. The difference between us and the United States was only 3000 yuan. The number of viewers in China is also increasing, from 75 million to 1.26 billion, and the number of visitors increased by 12% from the first quarter to the third quarter of this year. Therefore, from this perspective, film is still a reliable and developing industry. Of course, some new situations have emerged in movies this year, so some pessimists have put forward some ideas. Whether you are pessimistic or optimistic, you focus on a tree, that is, the box office is reduced. Looking at the prosperity and decline of a company based on the growth and decline of box office, I personally think that a new indicator system is needed for the industry. No matter how high a tree grows, it cannot grow to the sky.

The second thing I want to say is that we must build a forest. The American film industry definitely does not put industry indicators on the box office. It has a complete industrial system. There is a complete production system, a complete technical production system, a complete sales system, a complete financial support system, and a complete education system. Let's put aside so many systems, let's talk about the figures that can be compared recently. In terms of the production system, the United States has been in a stable period in recent years. The entire domestic box office is about US$10 billion, and the overseas box office is more than US$10 billion. However, there is also one number that we often ignore. Studios basically make about 38 billion yuan a year in the copyright market, and the total amount of other film production industries should be about 60 billion yuan. In the past two years, we have been very excited and said that we have caught up with the United States. We have only used the box office of the local market with the box office of the United States. We have ignored or intentionally or unintentionally omitted the 10 billion yuan overseas market or copyright market of the United States. Our overseas income is about RMB 12 billion, so China films have a long way to go, and the structural adjustment of China films has a long way to go.

The third thing I want to talk about is that we must all be the tallest tree in China's film industry. This is what I read about Forrest Gump when I was a teacher in college. It said that every era has a forest. There is always the tallest tree in the forest. The tallest tree always represents the highest achievement of this industry. Because of time constraints, I would like to say that Shanghai Film (Group) is willing to work hard with its peers to be the tallest tree. Thank you all!

Editor: yvette