BAT is accelerating the profitability of film and television IP value-added video websites, but it remains to be seen

As competition among video websites becomes increasingly fierce, major platforms have been trying to break through the two major bottlenecks of membership fees and upstream development and self-production over the past year.

On November 6, Tencent announced its copyright content layout for 2016. Han Zhijie, general manager of Tencent Video Copyright Cooperation Department, said that Tencent Video will achieve "large-scale coverage" in terms of copyright content and "seize more top IP resources".

Specifically, Tencent will cooperate with the giant American film companies Paramount and MGM to exclusively broadcast the popular movies released by the two companies next year on its platform, such as "Star Trek Beyond", "Mission: Impossible 5: Rogue Nation" and the "007" movie series. Tencent revealed to the 21st Century Business Herald reporter that its overall copyright investment budget for 2016 reached a ten-digit figure.

In the already brutal battle for the right to move, Alibaba's entry will accelerate the competition. On the same day as Tencent's press conference, Alibaba officially announced that it would acquire Youku Tudou for approximately $4.5 billion in cash. With the addition of Baidu's iQiyi website, video platforms have also entered the "Three Kingdoms" trend of BAT.

Tencent Vice President Sun Zhonghuai said that this situation of three-way division of the market is "mixed". "There is no doubt that Tencent will face greater competition, and the copyright department has recently felt the pressure from other companies. (After Alibaba acquired Youku), the relationship between Youku, iQiyi and Tencent has changed subtly compared to the past."

Just as IP becomes the most important weight in competition, its value is also rising under the pursuit of capital.

Hu Mingyi, executive producer of The Return of the Great Sage, believes that IP (intellectual property) is not omnipotent, and the overheated context of IP can easily disrupt the market, and "originality is the solid driving force for the development of film and television content." In Sun Zhonghuai's view, whether the prices of some IPs are overpriced depends on whether they meet the real needs of users. As long as the diversified income has a scale effect, the return on investment is still significantly high.

The false fire of film and television IP

The growth rate of IP copyright prices in the past two years has been staggering.

Sun Zhonghuai revealed that the price paid for IP 5-8 years ago could yield a return of thousands of times today. For example, the copyright of Liu Cixin's "The Three-Body Problem" was sold for only tens of thousands of RMB, but the price of adapting the copyright of such a theme into a movie or TV series is now astronomical. "The IP accumulated over the past 20 years will be fully developed in the next 2-4 years, and then new works accumulated over the past two years will be developed."

According to previous media reports, the film copyright fees of many popular IPs, such as the famous online novel "Why Sheng Xiaomo" and Guo Jingming's "Tiny Times" series, have increased by about 10 times in three years. "The so-called IP fever is because every video website pays great attention to it and invests a large proportion of it." Sun Zhonghuai said bluntly.

On the one hand, there is a hot market environment for IP, while on the other hand, people in the industry are beginning to be annoyed by the commercial value of IP.

Han Zhijie introduced that when considering the value of a copyright, in addition to observing its popularity from channels such as Baidu Index, Weibo Hot Search, and WeChat Moments, its cast and whether it is a first-tier satellite TV platform have also become basic considerations. Chang Bin, director of the film business department of Penguin Pictures, also said that IP is only a reference dimension when investing, and the project director, main creators, team, and script must also be considered. "IP is not omnipotent."

In the eyes of some film investors, there are few true "super IPs" of the above works. Popular IPs released this year, such as the "Tiny Times" series and "Fall in Love with You", had box office revenues of 488 million yuan and 354 million yuan respectively, both of which failed to break the 500 million yuan mark.

In today's era of "Internet + content", even a product with an IP background and an excellent script still needs strong online and offline marketing behind it.

Liu Qingqing, deputy general manager of Wanda Film and Television Media Co., Ltd., believes that the Internet era is characterized by the fact that word-of-mouth cannot be hidden, and the forwarding effect will penetrate into various channels at a very fast speed. "Internet marketing is a very important part, and we must make good use of this tool, but the core is still content. We only produce a product suitable for the Internet context (such as short videos, viral videos), but in the end, we must win with content."

The long road to IP profitability

Faced with investment risks of IP, investors including video platforms are trying to develop profit channels other than single income, such as making a movie into a web series, developing it into a game or animation, and selling a series of by-products.

"To develop and build a brand through multiple channels, multiple means, and in a three-dimensional way, on the one hand, you can make more money, and on the other hand, you don't waste resources." Chang Bin cited the current situation of Chinese film investment as an example. More than 90% of the cost of domestic films comes from the box office, and it is easy to lose all the money. With copyright costs of tens of millions, video websites are under the greatest pressure. "It is more expensive to buy a drama than to make one yourself."

"But for investors, it provides an additional channel for cost recovery. The box office of many Hollywood films and TV shows probably only accounts for a small part of their total revenue, so the 'pan-entertainment' approach is still very necessary," Chang Bin pointed out.

Sun Zhonghuai also pointed out that creating economies of scale for diversified income is the way out. Equipping the IP with sufficient funds, production teams and strong enough distribution channels will bring good commercial value and returns. "Whether it is a variety show, TV series or movie, compared to buying a product produced by a third party and only having the right to broadcast it, owning the right to develop and produce a work can achieve a high return on investment."

At present, many upstream production companies of content output consider the platform's channel advantage as another criterion for partners in addition to price advantage. The confidence of major platforms can be reflected in the American online video website Netflix. At the end of last year, Netflix's global paid video users had reached 54.5 million.

In China, iQIYI announced in June that its monthly paid VIP membership had reached 5.017 million. Last month, it announced that it had achieved 150 million unique users per day, 1.1 billion daily views, and 190 million hours of viewing time.

After the Alibaba acquisition, Youku's head, Victor Koo, announced that Youku has achieved a multi-screen monthly coverage of 580 million users, with an average monthly usage of 69.5 times per person on mobile devices. Tencent has also announced that its mobile app has achieved 130 million monthly active users and 66 million daily active users since 2015. Under this coordinate scale, it has been ranked first in the industry.

Although the companies have not disclosed specific paid revenue data, they all said that the growth rate of this part has continued and been considerable this year.

According to the data of the "Online Video Personal Payment Industry White Paper", from the beginning of 2014 to the beginning of 2015, the scale of China's video personal payment market grew from 210 million to 590 million, with an annual growth rate of 178.1%. At the same time, the proportion of user payment in the main structure of the online video industry's revenue has increased year by year, and as of the first quarter of 2015, it has reached 11%. However, none of the three companies have made a profit yet, and are still in a loss-making state with insufficient income to cover expenses.

In this regard, Sun Zhonghuai predicts that the annual turnover of the three video websites will be in the tens of billions next year, which includes advertising fees, membership fees, game point cards and online live broadcasts.

(Editor: Chen Shijun, if you have any comments or suggestions, please contact: [email protected])

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.