The core output value of pan-entertainment reached 458.44 billion yuan, and live broadcast, film and television, etc. were favored by investment.

The output value of China's pan-entertainment core industry reached 458.44 billion yuan. This media entertainment market, which consists of games, drama variety shows, movies and live entertainment, attracts capital parties to participate. What are the big shots in the investment circle thinking when investing in the pan-entertainment industry?

Original title: What do investors with a core output value of 458.4 billion yuan think when investing in "pan-entertainment"?

Since 2017, as of the end of April, there have been 148 investment incidents in the pan-entertainment market, with a financing scale of nearly 25 billion yuan. If we learn from investors 'perspective, China has entered the era of "paying for entertainment." This media entertainment market, which consists of games, drama series variety shows, movies and live entertainment, has attracted various capital parties to compete to participate.

At the Online Games and Pan-Entertainment Industry Forum of the China Online Culture Industry Annual Conference held on December 28, 2016, the China Entertainment Think Tank released the "2016 China Pan-Entertainment IP Development Report." According to the report, in 2016, the output value of China's pan-entertainment core industry reached 458.44 billion yuan, the upstream incubation level market size was approximately 122.72 billion yuan, the midstream operation level market size was approximately 128.29 billion yuan, and the downstream monetization level market size was approximately 207.43 billion yuan. With the advent of the pan-entertainment era, while the IP content market is booming, the surrounding derivatives market is also promising. Conservative estimates suggest that the size of China's derivatives market has exceeded 100 billion yuan.

Such a huge market size allowed the 2017 China Private Equity Investment Summit held in May to open a separate discussion session for the "media and entertainment industry." So, what are industry leaders from companies such as Morgan Stanley and Yao Wei Capital thinking when investing in the pan-entertainment industry?

Live broadcast! Live broadcast! Live broadcast!

The live broadcast industry is the first topic for investors to communicate in the "media and entertainment industry" segment. In the eyes of Wang Guoxing, managing partner of Songyu Capital, which started investing in the live broadcast business two years ago, the increasingly low price of mobile devices and mobile phone traffic is an important factor in the rapid popularity of live broadcast.

Indeed, consumers can spend 108 yuan on Jingdong to buy a Lenovo 3G smartphone that supports Wi-Fi. According to the "China Mobile Internet Development Status and Security Report (2017)" released by the Internet Society of China, in 2016, the number of active smartphones in China reached 2.33 billion, an increase of 106% compared with 2015. The more than double growth is related to the increasingly accessible smart devices and hotspot services.

People's love for battle games is also reflected in capital. Douyu and ImbaTV, which are mainly engaged in game live broadcast business, have received Series C investment. MarsTV was listed on the New Third Board in September last year with its game event operation and live broadcast business. The "2016 China Game Industry Report" shows that the annual revenue of China's game industry in 2016 was 165.57 billion yuan, accounting for the largest share of China's pan-entertainment industry market.

Capital's favor for the live broadcast industry also benefits from China's unique market environment. You know, last year, international Internet giants such as Twitter and YouTube all began to increase the development of their live broadcast business, and Facebook even spent US$50 million on the development of Facebook Live. However, these fierce battles, in Wang Guoxing's words,"have been blocked." "For example, Netflix was unable to enter China due to its license." Gordon Milner, a partner at Meifu Law Firm nearby, added.

Live broadcasts have become popular in the eyes of investors, such as Zhou Hongyi's watch live broadcast, Wang Sicong's panda live broadcast, and Migu live broadcast invested by China Mobile, not to mention that BAT covers multiple dimensions such as pan-entertainment, games, sports, stars, e-commerce, and secondary yuan. Live broadcast layout.

But this does not mean that the live broadcast industry can develop without worry. In late 2016, the investment intensity and amount in the live broadcast field have shown a downward trend, and relevant China departments have also strengthened supervision of live broadcast platforms in accordance with the law. Investors present made it clear that they are not so optimistic about the current live broadcast business model.

"Today's live broadcasts are based on website traffic, but now there is a monopoly on traffic in China." Qu Guoyu from Taiping Pine Capital said,"You should pay for content first. We sell ads at the end. Today's model is still based on clicks, and I hope it can develop into a form of registration in the future."

"As investors, we prefer to invest in live broadcast platforms. Only platforms with many users can we easily obtain user data." Wang Guoxing said, but for new companies, obtaining investment will also become difficult because "the cost of obtaining new users will become very expensive."

Investing in films is a "dangerous" thing

. In discussions in the film and television industry, content quality has been repeatedly mentioned by investors. Although today's China films still have quotas for imported films, they do not have to directly compete in the world's film arena.

There is still much room for discussion about the distance between the quality of China films and the world level. For example, in terms of remuneration, Tang Weizhong, managing director of China Development Capital International, once invested in a Hong Kong film and contacted both Aaron Kwok and Tom on the lead role selection. Cruise, the same role in the same movie, earned $500,000 for Tom Cruise, while Tom Cruise needed $20 million. "This is not to say that pay reflects the scale of competition. What I want to say is investment in quality." Tang Weizhong said that in 2016, only one China film ranked in the top three in China box office rankings, which may also explain some problems.

"China's history and culture provide great content materials," Tang Weizhong said in an interview with Interface News. If the quality is improved and South Korea is as happy as exporting this content in the form of entertainment industry,"I don't see any reason why it cannot be exported to the world like South Korea."

As for the pursuit of IP and small fresh meat, the investor said that social media can make things in a small circle quickly known to the public without relying entirely on stars and hot IP."I have invested in Hong Kong without big stars. Movies have achieved huge returns just because it is a good story."

But that was an experience in Hong Kong after all. China still has a long way to go to maintain film indicators, improve quality, and gain industry status.

What is also believed to require a long-term process is the addition of new investment targets. Gordon Milner said,"China consumers have become richer in recent years, and their consumption habits have become more global. Like an American consumer, I think companies like Facebook or Google will enter China not an assumption, but a matter of time."

But Tang Weizhong also mentioned that investing in movies is a "dangerous thing." After all, movies are not like science, which can accurately calculate the results of every step."Even if more money is invested in the early stage, we will still not be able to predict the audience's preference for it." Controlling costs and adding technology to the viewing experience is much easier for an investor than worrying about audience preferences all the time.

For Wang Guoxing, investing in big online movies will be more in line with the current trend. He cited iQiyi as an example: "iQiyi supports unknown small directors, small production companies do big online movies, such as those small production companies can get half of iQiyi's financial support, dividends and bonuses." Because Aiqiyi has sufficient funds and the content of the movie is not bad, even a small movie can easily get a lot of clicks."

This is a controllable investment path and is not afraid of external shocks, such as Apple's restrictions on App rewards."It may be a shock to those who use the reward function," Wang Guoxing said proudly,"But in China, we have many ways to pay creators, including Alipay, Weixin Pay, etc. Young people like this payment method very much and are willing to pay producers."

The inevitable VR

In 2016, the market size of China's VR industry jumped from 1.54 billion yuan in the previous year to 5.66 billion yuan. 2016 is also known as the first year of the VR explosion in China. But behind the hustle and bustle is the less hot market. Judging from data from many domestic and foreign survey institutions, the actual sales data of VR equipment generally fell short of expectations. How to go about VR is still a mystery.

The conversation inevitably also talked about VR. Coincidentally, these investors have all proposed that the future of VR lies in gaming. This is also inseparable from the vitality of the current game industry. Tencent's online games have contributed US$2 billion in revenue to the company. The immersive interactive experience brought by VR and China's huge game market have convinced investors that the combination of the two will be very promising.

In addition to games, they are also optimistic about the use of this technology in live broadcasts of events and movies. The combination of VR and sports is indeed in full swing. The NBA and the NFL have joined forces with NextVR to test VR broadcasts; the application of VR technology in the Rio Olympics; in the "13th Five-Year Plan for the Sports Industry" issued last year, the State Sports General Administration also clearly stated that it will "encourage new sports equipment and equipment, wearable sports equipment, virtual reality sports equipment, etc." research and development "as a key task. "VR+ Sports" is gradually becoming the fastest growing segment of VR live broadcasting.

But integration with other projects is not so easy."The development of VR systems is still very difficult." Wang Guoxing said.

In addition to technical difficulties, the popularity of VR equipment, the development of suitable content, and presentation forms are all difficulties in the current development of VR. Including how to balance the single-person immersive experience with its social attributes. As one investor shared at the scene,"I enjoy watching the game live, but people around me always bother me. VR can solve this problem." But how this private experience will cause spread and talk in the social era remains to be resolved.

Regarding the future of VR, these investors are also uncertain."VR is a technology, and technology will always face the question of whether it will be short-lived." Tang Weizhong explained,"For example, VCD technology in the 1990s could seriously impact Hong Kong's film industry, but since then, movie theaters have also continued to develop, ranging from 2D, 3D to 4D. Technology is constantly changing."

"So the key is that the industry needs to know how to achieve self-improvement." This investor with 20 years of experience commented.

Editor: jessica