Chen Hang, China's cultural industry: Investment considerations in the era of pan-entertainment

Focusing on new developments in the pan-entertainment industry and exploring new trends in pan-entertainment integration, the 2016 China Pan-Entertainment Innovation Summit hosted by Art was held as scheduled at the China World Hotel on November 29. This year's summit has the theme of "Touching the Future". Within two days, four major venues and a special event for the promotion of the Arts and Arts Fair will be dedicated. The venue will include a total of 13 roundtable discussions and 30 wonderful speeches. After six years of development, the Arts and Entertainment Summit has become an important platform to focus on industry hotspots and explore future trends. ENAwards has also become the most authoritative pan-entertainment award in the industry.

Chen Hang, President of China Cultural Industry Investment Fund Management Co., Ltd., delivered a keynote speech on "Investment Thinking in the Pan-Entertainment Era" at the meeting. Chen Hang's previous investment in logical thinking, the movie "Charlotte Worry" and WeChat ticket purchase have all been great success. Regarding the regularity of the cultural industry in the future, Chen Hang shared four trends: high-quality content, diversification of channels, upgrading of business models, and changes in organizational thinking. When talking about the trend of business models, Chen Hang believes that the Internet payment model is the current trend. He said that "paying for premium content is the best way to save time." "The logic behind the Internet payment wave is actually to cherish time more and more and exchange money for time. This is the current social change." At the end of the speech, Chen Hang concluded,"In the next 3-5 years, we believe that if we seize the changes in high-quality content, channel diversification, business model upgrades, and organizational thinking, we will be able to invest in the cultural industry. Take the lead."

The following is a transcript of the speech:

Chen Hang:

I am very happy to have an exchange of investment and sharing with you today at such a grand event. Let me ask you a few small questions first. First, please raise your hand if you often think logically, 40%. Last year, there was a movie called "Charlotte Worries". Please raise your hand if you have seen it, 60% have seen it. Please raise your hands if you have used WeChat to buy movie tickets. We invested in all three of the above. Thank you very much for assisting me in investing.

At such a grand event today, everyone is very concerned about how we view it from an investment perspective. We have thought about the regularity of the cultural industry in the future and felt that there are four trends that we can communicate with you.

First of all, let's talk to you about the first one. The current content of the cultural industry is towards high-quality products. Why do you say that? You can feel that two or three years ago, the film industry had some reliable IPs. If some more reliable actors were piled up, this IP might succeed. Some time ago, we communicated with some colleagues. The post-90s generation is no longer like brainless fans. They will definitely pay for whatever IP they bring. Last year, there was a movie called "Pokemon Go", which didn't have a lot of box office. This movie turns out to be a very popular IP, why does it only have a box office of 300 million yuan? In the process of IP transformation, my own analysis believes that IP transformation actually requires some experience. In fact, there are some companies who transform profound cultural connotations, rather than simply believing that a reliable animation can be adapted into a reliable game. There is no inevitable connection between this. There is also another movie this year,"Jue Ji", a movie by Teacher Guo Jingming. It includes Yang Mi and Wu Yifan. It relies solely on some calculations of the project and the entire technical treatment, not on the story itself. If there is no effort, it will be difficult to truly impress the audience. Therefore, we can see that three works, one is "Charlotte Worry", the other is Japan's "Pokemon Go", and the other is "Grand Ji". Through this, you can see that the true artistic form is from angle to dazzling technology, and the arrangement to reach the heart.

Today, we must think that it is no longer a simple IP, but it is actually very profound. We can see that the production costs of online dramas such as "Tomb Robber Notes","Old Nine Gates" and "Remains of Sin" have also increased significantly. In the past few years, the production cost of online dramas has been very low, ranging from more than 1 million yuan to 2 million yuan, which is similar to the cost of creating a TV series. Later, front-line production companies also began to devote themselves to the production of online dramas. Companies such as Tang Dynasty that create traditional TV dramas have entered the content of online dramas, improving the quality of online dramas. We thought that none of us could simply use a general content to meet the needs of brainless fans.

The second trend is channel diversification. We can see that technology is a very important factor in the revolution of channels. Through this PPT, we can see that channels have changed in the past few decades. Television has developed from analog TV to digital TV, to Internet TV, or to VR TV. Analog movies, book movies, and 3D movies are developing towards VR movies. All things, including thinking about some problems in the past, are thinking with a traditional linear way of thinking. Today we want to see that the application of technology is making profound changes to channels. For example, in the future, we will take the traditional movie theater channel as an example. With the rapid development of smart TV in the future, home theater is likely to become a channel. The development of smart TV is likely to synchronize the speed with which movie theaters are launched and can also be seen at home. The development of VR will also make home theater a channel. In addition, let's look at it again. The live broadcast industry has developed in the past year or two. Mobile live broadcasting is a rapidly developing industry. There are many online anchors in this area who also regard anchors as a main channel. From an investment perspective, on the one hand, we must think about exploring some reliable and excellent content companies in terms of content, rather than simple IP companies. What we pay close attention to in the channel is whether some innovation channels are generated driven by technology. We pay close attention to this field. Content and live broadcasts are some situations that we are very concerned about.

When it comes to channels, there is the promotion of technology. Artificial intelligence is playing a very important role. Currently, we are communicating with Today's Headline. Headline is the top channel for modern news dissemination, and artificial intelligence plays a very important role in this company. For example, in some news retrieval, they use artificial intelligence technology. The amount of reading that an editor takes three months to complete can be completed by artificial intelligence in only 40 minutes. Therefore, in terms of information screening, their efficiency is many times that of people.

In addition to information screening, artificial intelligence also plays a very important role in pushing information. Tell a story. A China international student in the United States. He is from Hunan. This brother went to his hometown in Hunan to celebrate the Spring Festival. After returning to the United States, he found the headline pushing him,"Changsha City, Hunan Province, rewards a house to attract overseas talents to return to China to start businesses." Through artificial intelligence searches, people like him may pay attention to similar news. Therefore, by returning to China to celebrate the Spring Festival, he realized the power of news push. In addition to content screening and intelligent push, there is also a robot writing news, which has been achieved a lot. For example, when it comes to NBA basketball games, Hagen's triple doubles, etc., many of these are written by robots. Therefore, in modern channels, artificial intelligence plays a very important role. The success of today's headlines is actually due to the use of artificial intelligence technology. When we study channels, we must push technology to a very important position to think about it.

Through this short film, you can see that VR and AR technology can be used in many fields. VR and AR are used in the design of stores. At the same time, good interactive communication can be carried out in this way. We firmly believe that VR and AR will profoundly change our work and lifestyle in the next 3-5 years.

There is also the upgrade of business models. A major phenomenon appeared in China's media industry last year. Internet video companies had 10 million paying users, and users were willing to pay the bill on the Internet. This was hard to imagine in the past. I heard that this number has reached more than 30 million users in iQiyi today. Coupled with the derivative e-commerce, the transfer and realization of a TOP works e-commerce, from our logical thinking, an IP is called Dao, which first promoted 15 friends on the APP to disseminate knowledge and content through payment. More than 80,000 users are willing to spend 199 yuan to subscribe. For example, more than 50,000 users are willing to spend 195 yuan to listen to Teacher Xiaofeng's music lessons. These phenomena make us think about it. I know it's free for so many years. Why did iQiyi have 10 million paying users last year, and why did so many knowledgeable people share it, spending 199 yuan a year? Behind this all makes us think. Entering the Internet era, this business model allows anyone who could not receive money on the Internet in the past to receive money.

Another thing, what is the most important thing today? Time. Now that the vast amount of information is given to everyone, everyone will have no time to read it. Paying for high-quality content at this time is the best way to save time. There are also comments on some articles. Trump defeated Hillary because he used social media better than Hillary. Think carefully, what mistake was this? Misunderstanding correlation as causality. To give another example, Trump's victory over Hillary is likely because Hillary's cyber security was not good. Just a week or two before the election, Hillary's computer clicked on some phishing email, causing all information to be taken away by hackers. What is the truth of what I want to say? When transmitted on the Internet, many people confuse the relevant causes and effects. In fact, there are many reasons why Trump won. But that report simply believed that Trump had good social skills, which was why he defeated Hillary. Today, the Internet is full of fast-food news. These news are likely to occupy your time and accept it before you can judge. How can you avoid this situation? In the future, more and more high-quality articles will be pushed on a paid basis. In addition to the policy impact, behind this business model, the entire society has changed and everyone has not enough time. For example, with the advent of a society with an aging population, some major social changes have brought about changes in business models. Therefore, the logic behind the Internet payment wave is actually to cherish time more and more and exchange money for time. This is the current social change. Twenty years ago, we had difficulty eating and clothing, and obviously we would not spend so much money on the Internet. Today we are willing to give up part of our benefits in exchange for better services.

This is the source of data on payment methods. Just now, I talked about the payment development represented by iQiyi. The payment market was 9.79 billion yuan in 2016 and 5.13 billion yuan in 2015. It only took seven or eight years to realize it. We saw that this business model, a service that never received money on the Internet, has undergone great changes.

The other is the Internet celebrity model. It is said that on November 11 this year, Jack Ma proposed for the first time that brands must be built and driven by Internet celebrities. It can be seen that Internet celebrities are a very important role.

Finally, there is the change in organizational thinking. Today, if you find a reliable and high-quality team, you also capture an era of human intelligence, AR, and VR, which brings some new opportunities in terms of business models and channels. At the same time, you are also sensitive to the innovation of the company's business model brought about by social changes. You have grasped all three points, but there is one last point, and this point is the most important one. Is this entrepreneurial team a change in organizational thinking under the Internet? In the Internet era or in the pan-entertainment era, the management thinking of industrial organization, industrial efficiency, and business model is very different from before. In the Internet age, if the team responds slowly, they are not partners, and the product is not fast iterative, even if you seize the first three opportunities, the content is very high-quality, and the channels are diversified, you have not adopted the Internet in terms of organizational structure. Thinking quickly iterates, it is very likely that this opportunity will be fleeting in your hands.

There are only four points I share with you today. I hope these four points will be helpful to everyone's investment in the future and help everyone see the Internet industry. In the next 3-5 years, we believe that if we seize the changes in high-quality content, channel diversification, business model upgrades, and organizational thinking, we will be able to take the lead in investing in the cultural industry. Thank you!

Editor: Nancy