"Tencent's acquisition of Shanda Literature" is a smokescreen released by Shanda itself

You must have heard such voices in the community, "Recycle old mobile phones, old computers..." These old electronic products have long been damaged to the point that they are truly objects that no one picks up on the street, but there are still people who come to recycle these things every now and then. Do they still have value?

In fact, these discarded electronic products are full of treasures after being disassembled. The intact components can be reused, and the metals are very scarce precious metals that can be refined again.

Shanda, which was once a big name in the Internet industry, is now like a used mobile phone. After its dream of becoming an online entertainment empire was shattered, Shanda is accelerating its "dismantling" and selling off each "component" in pieces.

The two best quality components inside Shanda's "mobile phone" are Shanda Literature and Shanda Games. During the privatization process of Shanda Games, Shanda is no longer the largest shareholder and has indirectly completed the backdoor listing and divestiture of its business. Now it seems that it is Shanda Literature's turn.

On November 6, there were rumors that Shanda Literature was about to be sold to Tencent for 4-5 billion yuan. Friends then sought confirmation from Tencent and Shanda Literature. Tencent responded directly, calling it a rumor and declining to comment. Shanda Literature's response was quite intriguing. Shanda Literature told Friends that "the new investor introduced by the company is not a listed company, and Liang Xiaodong, the former CFO of Shanda Literature, will serve as CEO."

Shanda Literature has clarified Tencent's acquisition to some extent, but what we need to know is that Shanda Literature has not denied to some extent that this new investment has any close relationship with Tencent.

Tencent’s good plan

Tencent is not the first protagonist in Shanda Literature’s scandal. Long before Tencent, Alibaba and Baidu had connections with Shanda Literature to some extent.

The fact that BAT has set its sights on the same company already proves Shanda Literature’s success. Its position in online literature will not be shaken for at least the next 2-3 years.

The reason why BAT needs Shanda Literature is actually very simple, because Shanda Literature will, to a certain extent, improve their own entertainment ecosystem and develop a full range of films, games, TV series, etc. based on the copyright of online literature.

This was Shanda's original intention when it acquired Qidian and many other literary websites and packaged them into Shanda Literature. However, although Shanda Literature is now successful, it seems to be making wedding dresses for others.

In this process, we need to note that, unlike Alibaba, Tencent and Baidu both have their own online literature businesses. Baidu spent nearly 200 million yuan to purchase Zongheng Chinese Network, the second-ranked online literature network, from Perfect World, while Tencent created Founding Chinese Network after poaching the Qidian team.

However, after being acquired by Baidu, Zongheng Chinese began to drift away from Qidian, while its pursuers such as 17K began to close in. Founding Chinese Network poached many editors and top authors from Qidian, but the results were not ideal.

An author from Qidian told Friends that "it will take time for Tencent Literature to build a readership, and the development of Tencent Literature is still too short."

"The biggest feature of literature is that its content is unique. He wrote a novel and people like to read his content. So after he poached it, these contents were lost," 9158 founder Fu Zhengjun told Friends.

Therefore, we see that Tencent has poached many great writers from Qidian with a fee three times higher than Qidian’s per thousand words, but in fact the overall income of these great writers has not increased much. “I went to Tencent because the price offered by Tencent is like a fixed high salary, and I want stability. But in fact, if I work a little harder at Qidian, I can earn more than Tencent, because the readers here have already developed habits, and we know what they like to read, so we can do a better job in fan economy,” the author said.

At the same time, he also said, "For those old gods who rely entirely on the original starting point, without sufficient market testing, it is impossible to judge whether their works can maintain the original level."

As the high-paid recruits did not achieve good results, Tencent's shortcomings in its ability to create idols began to be magnified. In a previous interview with Shanda President Qiu Wenyou by Friends, Qiu Wenyou said frankly, "One of Shanda Literature's major advantages is the experience accumulated over the years. It doesn't matter if you poach a few great writers. We have a mature mechanism for creating stars, and perhaps someone will soon take their place."

Whether it was because it was very easy to poach people with high salaries in the beginning but it became increasingly difficult later on, or because of its own insufficient ability to generate revenue, Tencent Literature still has a long way to go if it wants to give back to Tencent's entire entertainment chain, at least in the next two years.

Therefore, acquiring Shanda Literature, the leader in this industry, became the first choice. On the one hand, it could quickly meet its own needs, and on the other hand, it could cut off the shortcomings of Alibaba and Baidu in this area. Tencent did not lose money in this deal no matter how you look at it.

Shanda is changing tracks: making it easy to start and end

Shanda Literature once again denied the rumored boyfriend Tencent and used the excuse of an investment from a non-listed company as an excuse. However, according to information received by an old friend, this incident was most likely a smokescreen released by Shanda Literature itself, a hype, and a cover-up.

Because for Shanda Group, after the complete transformation into investment business, Shanda Literature is not as significant to the group as before. "It used to form a linkage effect with other industries, just like what BAT needs Shanda Literature now, but now Shanda only has Shanda Games, and it is not even the largest shareholder."

After Shanda Group was privatized, we did see Shanda begin to dismantle the embryonic form of the empire it had built, including Bianfeng, Jisheng, Ku6, and Shanda Games, which has just completed a privatization change. No matter what the asset is like, once it reaches the highest point of its existing track or the declining point of the track, Shanda will act without hesitation. This is a common trait of capitalists. Once they see no hope of growth, it is the last chance to act.

In contrast to its continuous investments in mature or declining companies, Shanda has invested in nearly 100 companies in the mobile Internet sector. Moji Weather, Gudong Bracelet, Baozou Comics, Weiboyi, etc. have all received huge initial investments from Shanda and achieved good results. This is just the tip of the iceberg of Shanda's investment.

After Liang Xiaodong took the position of CEO of Shanda Literature, we can clearly see that: Qiu Wenyou, the group president, has a background in investment banking and has participated in many capital operations including the listing of Sina, Giant, Shanda and Lenovo's acquisition of IBM, and has many years of experience in capital; Liang Xiaodong, the CEO of Literature, has served as the CFO of Shanda Literature since March 2009, and previously served as the director of financing and investor relations of Shanda Group, the deputy director of the investment center and other positions; Zhang Yingfeng, the CEO of Games, has served as the group's legal director, the group's vice president and a partner of Shanda Capital. All of them have participated in capital operation projects including the listing of Shanda Group, the spin-off listing of Shanda Games, the privatization of Shanda Group, and the sale of Bianfeng and Haofang to A-share listed companies.

Shanda has completely put capital first. Behind this is Chen Tianqiao's own understanding of Shanda.

In an interview with the media in May this year, Chen Tianqiao said, "Because I have proved that I can be a king, I should continue to help people do things and become a kingmaker. We can make a very good product and a very good company, but the characteristic of the cultural industry is creativity, and creativity can never exist in the same person. It is constantly discovered among all the people. So I have begun to change my mindset in 2008 and hope to become a helper, supporter and creator of heroes."

An obvious fact is that Shanda acquired many excellent projects back then, including Ku6, which were leaders in their respective industries at the time. However, after being controlled by Shanda and obtaining huge capital, they began to be gradually eliminated by the market.

"Shanda has a good vision. Chen Tianqiao graduated from Fudan University's Department of Economics. He has a clear business vision and logic. TalkBox was a voice chat product before WeChat came out. It was acquired by Shanda, but it didn't do well," a person close to Shanda told Friends. "Shanda needs to see immediate results for all its products, otherwise it will be cancelled."

Chen Tianqiao's strategic vision can be seen from the creation of Shanda Box and the entertainment industry chain back then, because what Alibaba and Tencent have been doing so far is nothing more than imitation in a different dimension.

Now, Shanda has begun to apply this strategic vision to investment and no longer demands a controlling stake. This is undoubtedly the most correct choice. Perhaps it is the result of Shanda having paid enough tuition over the years, or perhaps it is because it has tasted the sweetness in the sale of Bianfeng and other companies.

In short, Chen Tianqiao has not changed, Shanda has not changed, only the way of doing things has changed.

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.