Wang Zhonglei: Optimistic about the development potential of the real-life entertainment sector will focus on industrial films in 2017

American blockbusters, Japanese anime, Indian song and dance, etc., all have distinctive characteristics and temperament in their cultural and creative industries. China is an ancient civilization and a cultural country. However, from culture to cultural creativity and even creative economy, what is lacking? At the 2017 Annual Conference of the Boao Forum for Asia, Wang Zhonglei, Vice Chairman and CEO of Huayi Brothers, shared his thoughts,"There are two things to build the competitiveness of the cultural and creative industry: good content + industrial chain."

Huayi Brothers is a leading enterprise in content manufacturing in the film and television industry. Judging from the 2016 annual performance report disclosed by the company, although the revenue of the film and television entertainment sector and the Internet entertainment sector fell short of expectations, the brand licensing and real-life entertainment business performed well, achieving revenue of 248 million yuan in 2016, a year-on-year increase of 346.67%. For the cultural and creative industry, the biggest derivative is real-life entertainment. 2016 can be regarded as the first year of real-life entertainment in China. The three major theme park giants-Disney, Universal Studios and Six Flags Amusement Park have all entered China. Against this background, how will Huayi Brothers, the local film and television entertainment company, plan and develop? What competitive advantages does Huayi Brothers have in developing real-life entertainment? At the 2017 Boao Forum for Asia Annual Conference, the reporter had a dialogue with Wang Zhonglei.

Optimistic about the development of the real-life entertainment sector, transforming its own movie IP into an immersive play experience and forming a new model of "movie + cultural tourism" will be a new development direction leading the entire domestic real-life entertainment industry. In terms of real-life entertainment and theme parks, Disney, one of the six major film companies in the United States, is the benchmark. Disney's 2016 financial report shows that the theme parks and resorts sector accounted for 30.5% of total revenue, higher than the film and television entertainment sector.

Huayi Brothers should be said to be the earliest film and television enterprise to enter live entertainment in China. According to the 2016 annual performance express disclosed by the company, the brand authorization and live entertainment plate are steadily advancing. In 2016, 3 new projects were signed, and the total number of signed projects reached 16. This sector achieved revenue of 248 million yuan in 2016, a year-on-year increase of 346.67%. Huayi Brothers Film World in Suzhou and Huayi Brothers Film Town in Changsha are expected to open in 2017, which will bring stable cash flow and revenue contribution to the company.

Wang Zhonglei said: "Huayi Brothers 'theme parks or real-life entertainment are based more on our home-made movie IP." The creative source of Huayi Brothers 'real-life entertainment is "movie + regional cultural characteristics", which combines movie IP with local culture, which is Huayi's characteristic.

It is reported that in the Huayi Brothers Film World Park in Suzhou, there are seven Huayi Brothers movie IPs, including "If You Are the One","Assembly" and "Di Renjie's Heavenly Empire", which have been transformed.

Wang Zhonglei is optimistic about the development potential of the real-life entertainment sector. He said: "Real-life entertainment is a huge derivative of content IP, especially offline derivatives, focusing on the combination of film and television and cultural tourism. Cultural tourism is a major sector in culture and entertainment, generating 3.9 trillion yuan in revenue in 2016."

The planned "five blockbusters in the next three years"

require high-quality content if real-life entertainment will generate derivative value and continue to realize it. Huayi Brothers has always been committed to producing high-quality film, television and entertainment content. In 2016, the company's total revenue was 3.473 billion yuan, and the film and television entertainment sector achieved revenue of 2.569 billion yuan, accounting for 74%. It is still the most important piece of Huayi Brothers 'revenue.

However, in 2016, Huayi Brothers 'film and television entertainment sector revenue fell by 9.3% compared with 2015. The company stated in its 2016 annual performance report that during the reporting period, the film and television entertainment industry experienced shocks and the growth rate was lower than market expectations. The company's film and television entertainment sector and Internet entertainment sector revenue fell short of expectations, and its performance fell compared with the same period last year.

In 2016, Huayi Brothers participated in the investment and distribution of the main films included "Lu Yao Know Ma Li","Rock Tibetan Mastiff","I am Not Pan Jinlian" and "The History of the Death of Romantic", as well as two high-box office films in 2015,"The Quest for the Dragon" and "Lao Pao 'er". Box office revenue settled in the New Year. However,"I am Not Pan Jinlian" box office 480 million yuan, and the New Year movie "The Death of Romantics" box office 120 million yuan, both lower than expected and also affected the profits of the film, television and entertainment sector.

Wang Zhonglei said frankly that this is due to the differences caused by different film types."Among the films in 2016, Huayi's main genres are relatively more literary and artistic drama films. From the perspective of a film company's productions, they should be more comprehensive, and at the same time There should be commercial films produced." "The Quest for the Dragon" box office was 1.37 billion yuan (New Year's Eve movie, here only refers to the 2015 box office), ranking 7th in the 2015 box office list. This is a standard industrial film system work and has also achieved commercial success. Perhaps, based on the contrast in market profits brought by different film genres in 2015 and 2016, Huayi Brothers will focus on films in the industrial system in 2017. Wang Zhonglei said: "This year, there will be" Di Renjie: The Four Great Kings "directed by Tsui Hark," Eight Hundred "directed by Guan Hu, and series of commercial films such as" Yin and Yang Shi "will be filmed."

Films in the industrial system are something Huayi Brothers has always preferred to develop. Wang Zhonglei said: "The large commercial film system is the pillar of the entire industry. Faced with domestic films with a relatively weak film industry system, this has always been needed to develop." Not long ago, Huayi Brothers teamed up with Kung Fu Pictures to launch a super movie plan of "Five blockbusters in the next three years", including many industrial-level films such as "Di Renjie: The Four Great Kings" and "The Prequel of Painted Skin".

Reporter: Recently, China companies have launched diversified cooperation with Hollywood, investing in individual films, joint ventures or initiating mergers and acquisitions. Huayi has an early layout in this respect, such as cooperating with STX Company and establishing a joint venture company with Russell Brothers in the United States. What kind of demands does Huayi hope to achieve through such cooperation?

Wang Zhonglei: These two cooperation are still based on Huayi's international layout. Among Huayi's three strategies, internationalization is a very important layout.

International cooperation based on film and television is diversified, and institutions are becoming more and more complex. Both purely film and television institutions and financial institutions are doing it. Huayi International's investment is mainly based on two levels. One is the content level. STX and Russell are both based on content ontology and jointly develop and launch global films. They are not entirely based on capital investment. For example, they must acquire some companies, because Huayi is not an investment company; Secondly, high-tech companies help upgrade the film industry. For example, the investment in VR companies in Silicon Valley in the United States completed this year. VR companies are R & D companies committed to solving the problem of technology between VR and film and television shooting. This is also based on an international strategy. All investment content must have good interaction with the industry.

Reporter: China and the United States have launched new negotiations on imported films. Public opinion believes that China's film market will be more open. What changes do you think this will bring to China's imported film market? For example, will the quota for imported films increase?

Wang Zhonglei: This year is the beginning of a new round of film negotiations in the WTO. The negotiations still have a long time and will not be too fast. The market changes in the past year or two are different from before. Nearly 100 imported films have been released in commercial theaters, more than half of which have been released simultaneously globally. From 2016 to the first quarter of 2017, China is already a relatively open film market. If it opens up in the future, there will be no more room, because basically all commercial series in the United States are available in China. More quotas for imported films should be high-quality drama films. As a supplement to the film market, it will have a positive effect on improving the audience's appreciation level and good market division.

But what I value more is the preparations made by domestic films in this situation. Domestic films have inherent advantages, the demographic dividend is continuing to expand, and the number of people and frequency of movie viewing are increasing. The benefit of domestic films lies in cultural affinity. Domestic audiences like domestic films, but are not satisfied with the level of existing domestic films. China film companies and creators respect the market, audience, and their own profession in this regard, and make films well. What just said is not a burden.

Reporter: Huayi mentioned that it will speed up the layout of theaters. Last year, four new theaters were opened, and the high-end brand "Huayi Brothers Film Collection" was launched. It also participated in the fixed increase of Dadi theaters. Next, what other measures will Huayi take in terms of theater layout? How much market share do you expect to occupy in the theater market?

Wang Zhonglei: Investment in movie theaters has been laid out since its listing. The reason why the layout is more cautious is strategic considerations. Is Huayi committed to theaters or focuses on creative content development and publicity? At present, capital mergers and acquisitions in the theater market are not particularly market-oriented. The transaction price, target value, and price-to-earnings ratio all exceed the market by too much. Therefore, Huayi's investment strategy in cinemas is more focused on managing output and building cinemas, as a head resource. Huayi's brand is better matched with cinemas in mainstream cities. It does not excessively pursue the number of screens, but the input-output ratio of a single theater. Although there are only 19 cinemas now, the profitability is very strong, with more than many of them owning 100 or 200 cinemas. A theater company, this is Huayi's important strategic direction in cinemas. Our goal is to hope that Huayi's film investment companies and theater companies will enter the top ten and become mainstream theaters within 3-4 years.

Editor: Nancy