Huayi Brothers '"de-filming" accelerates real-life entertainment sector's profit prospects are worried

As a well-known domestic film and television company, Huayi Brothers has made a large number of investments in cultural tourism real estate development and developed real-life entertainment in recent years. Industry experts said in an interview with reporters that it is not easy for movie theme parks to achieve profitability. Driven by Huayi Brothers '"de-filming" strategy, the expansion of the real-life entertainment sector is still accelerating.

As a well-known film and television company in China, Huayi Brothers has made a large number of investments in cultural tourism real estate development in recent years. It has deployed locations in Hainan, Suzhou, Shenzhen, Shanghai and other places. Among them, Feng Xiaogang Film Commune developed in Hainan has opened and operated.

In this regard, industry experts said in an interview with reporters that it is not easy for film theme parks to achieve profitability. Driven by Huayi Brothers '"de-filming" strategy, the expansion of the real-life entertainment sector is still accelerating. Industry experts worry that this may weaken its core advantages.

Real-life entertainment accelerates expansion and blurred profit prospects

. On December 22, 2015, Nanyang Street was officially opened to the public after the opening of 1942 Street in Huayi Feng Xiaogang Film Commune in Mission Hills Lake.

Recently, Huayi Brothers 'real-life entertainment sector has been taking frequent actions. In addition to the opening of Nanyang Street, on December 29, 2015, Huayi Brothers Cultural City officially started construction in the Pingshan River area of Maluan Mountain, Pingshan New District, Shenzhen; on December 10, 2015, Huayi Brothers (Nanjing) Film Town was officially signed; On December 1, 2015, Huayi Brothers Kunming Film Culture Town project also held a signing ceremony. In addition, Huayi Brothers Film World will be settled in Suzhou Yangcheng Lake Peninsula Tourist Resort and is currently scheduled to be completed and opened in 2017.

It is reported that the three main product forms of Huayi brand authorization and real-life entertainment include: Huayi Brothers Film Town, Huayi Brothers Film World and Huayi Brothers Cultural City. The third quarter report of 2015 shows that as of the end of the third quarter of 2015, Huayi Brothers had signed a total of 13 projects in the brand licensing and real-life entertainment sector. In the next four years, Huayi Brothers 'brand licensing and real-life entertainment sector plans to implement 20 projects, leveraging revenue of tens of billions.

Peng Kan, director of R & D and consulting of Lezheng Media, said in an interview with this reporter that real-life entertainment development is based on influential IP, but Huayi Brothers 'own IP accumulation is not enough to support 20 projects.

It is worth noting that public data shows that there are currently more than 2500 theme parks of various types in China, and about 300 have invested more than 50 million yuan. However, 70% of theme parks in China are at a loss, and only 10% of theme parks are profitable.

Experts interviewed said that in such a market environment, it is not easy for Huayi Brothers to achieve profit in the film theme park.

A research report from an institution pointed out that at present, more than half of domestic real-life entertainment projects are still at a loss, the real-life entertainment industry chain is not yet mature, and real-life entertainment with high-quality content as the core of its operation is still limited in appeal to tourists. On the one hand, it is because of the scarcity of high-quality movie content, and on the other hand, the lack of experience brought to tourists by the combination of special content and local cultural environment.

"Theme parks are a systematic project, and achieving profitability is not a simple task. They require not only professional talents, but also unique ideas. In addition, in terms of operating models, we must pay attention to the development of neighborhoods and derivatives, and improve diversified services, rather than just relying on one ticket or a single service." Wang Guohua, director of the Institute of Cultural and Creative Industries at Beijing University of Technology, said.

According to the third quarter report data of 2015, Huayi Brothers 'operating income from the real-life entertainment sector amounted to 40.717 million yuan, an increase of 105.52% compared with the same period in 2014, but only accounted for 2.04% of its overall operating income. The 2014 annual report shows that Mission Hills Huayi Feng Xiaogang Cultural Tourism Industrial Co., Ltd.'s net profit in 2014 was 1.0096 million yuan. Although it is profitable, it is far from the total investment of the film commune of 5.5 billion yuan.

"De-filming" may be hidden from

worries Huayi Brothers has attracted much attention in the industry since it used 110 million yuan in over-raised funds to increase capital in Huayi Real Estate Entertainment in 2011, kicking off brand licensing and real-life entertainment layout. In 2014, Huayi Brothers '"de-filming" strategy pushed this to a climax.

After Huayi Brothers announced "de-filming" in 2014, it divided its business segment into three major segments: film and television entertainment, real-life entertainment, and Internet entertainment. The company hopes to get rid of the fluctuations in performance caused by the unstable film business and align itself with Disney, a major entertainment media company in Hollywood. Wang Zhongjun, chairman of Huayi Brothers, previously said: "De-filming means not not making movies, but not just making movies."

Today, Huayi Brothers is moving further and further on the road of "de-filming". Experts interviewed told reporters that this risks weakening core competitiveness.

"The capital and resources that a company can use are limited. In recent years, Huayi has continued to invest resources in emerging businesses, resulting in a serious decline in its advantageous film business and the loss of stars and excellent producers. This is probably something Huayi needs to work hard to solve, otherwise it will lose the golden brand it took 20 years of hard work to establish." Peng Kan said.

Yi En's "2015 Domestic Film Distribution Market White Paper" shows that Huayi Brothers ranked seventh with 1.22 billion yuan in the total box office ranking of domestic films by private distribution companies in 2015. In Peng Kan's view, this ranking is not optimistic, showing that Huayi Brothers 'competitiveness at the core business level has declined.

Regarding Huayi Brothers 'star-driven model, the above-mentioned white paper believes that the era when stars mean box office is over, consumers' appreciation ability has improved and they are paying more and more attention to movie content. Therefore, movies supported by stars are not a natural bargaining chip to win games.

Recently, Huayi acquired 70% of the equity held by Feng Xiaogang, a shareholder of Zhejiang Dongyang Meila, and other investors for RMB 1.05 billion; acquired 70% of the equity of Zhejiang Dongyang Haohan Film and Television Entertainment for RMB 756 million; subscribed for 20% of the new shares of Hero Mutual Entertainment for RMB 1.9 billion, becoming the second largest shareholder of Hero Mutual Entertainment.

In response to Huayi Brothers 'many capital actions, Peng Kan said that Huayi Brothers' business thinking has changed, and it is changing from a traditional film and television company operation model to capital operation.

In fact, Huayi Brothers has been expanding comprehensively in terms of capital investment and other aspects. Data shows that in 2009, Huayi Brothers had 6 initial participation holding companies, but now this number has reached about 100. Huayi Brothers, which is expanding rapidly, has also been accompanied by an increase in liabilities. As of the end of the third quarter of 2015, the company's total liabilities were 4.16 billion yuan, of which liquid liabilities were 2.91 billion yuan, accounting for more than 2/3. Industry insiders told reporters that if the company continues to rely on financing to expand its business, there will be pressure at the funding level.

Talking about the future development of Huayi Brothers, institutional analysts told reporters that only high-quality film and television products can support the development of other sectors, and images and characters can be used in derivatives and other projects. Therefore, only by paying attention to high-quality content can we support our "de-filming" strategy and not damage our competitiveness.

Editor: vian