Film and China have a long history together. A French tourist brought the art to China as early as 1886, according to the day’s newspaper of record, the Shun Pao. By 1905, China had shot Dingjun Mountain, its first film.
For most of its history, the world of Chinese film has been a lone fighter up against the dominant foreign market. But that may be changing.
China’s Internet giants have taken an interest in film and have become aggressive promoters of domestic productions.
The trend began with LeTV’s formation of Le Vision Picture in 2011. Last June, Alibaba Group spent HK $6.24 billion turning China Vision Media Group into its own Alibaba Pictures Group. A month later, the Baidu subsidiary iQiyi formed iQiyi Pictures.
This month, Tencent entered the game by setting up Tencent Penguin Pictures and Tencent Pictures on September 11 and 19. At present, the companies are mainly focused on online seat reservation and ticket sales, but film investment is almost certainly on the horizon.
In the last two years, Baidu invested in The Golden Era, Gone With the Bullets and Miss Granny. Alibaba invested in Mission Impossible: Rogue Nation. Tencent invested Dragon Blade, Black and White: The Dawn of Justice and Meet Miss Anxiety.
Last year, CEO of Bona Film Group Yu Dong said at the 18th Shanghai International Film Festival, “In the future, film and TV series makers will probably work for Internet companies such as Baidu, Alibaba and Tencent.”
Yu’s prediction may be an exaggeration, but with Internet money flooding the film business, the industry will have a hard time staying isolated.
For companies who specialize in video search, such as LeTV, Youku and Tudou, film is an important channel for profits. Many netizens pay a membership fee to streaming media sites to watch films that are still playing in the cinema.
At the most basic level, film industry investments give these companies more resources to attract new members. Higher membership counts will win more advertisers who will buy more expensive ads.
But many of these video companies have dreams of original content. By producing and broadcasting their own creations, the companies get an advantage on both sides.
The situation is more complicated for Baidu, Alibaba and Tencent. For these Internet giants, video is not a primary service. The three have strong existing businesses and don’t need a hand in the film industry. Their investments might be a sign of how to force diversification in a tight market.
Jack Ma, CEO of Alibaba Group, once said his Alibaba would be a business empire, not an e-business empire.
It’s almost impossible to live a modern life in China without feeling the touch of Baidu, Alibaba and Tencent. For the three companies, each of which has interests in shopping, food and transportation, media offers a hopeful thread to unite their businesses.
And more importantly, there is much money to be made.
China is already the second big film market in the world. In the last decade, China’s box office value has expanded 30 percent every year, and the 2015 total box office value is predicted to reach 45 billion yuan.
The Baidu Film Business Department initially targeted cinemas with online seat selection and ticket sales. Then it expanded into producing domestic films and leveraging its Baidu Tieba, Baidu Map and Nuomi.com products to publicize its works.
A business pattern that expands interests, earns profit and increases the number of users is exactly what most Internet companies want.
Integrating the Internet with traditional industries and using it to drive their development has become known as “Internet Plus” in Chinese business circles. The concept was first put forward by Yu Yang, CEO of Analysys International in 2012. It appeared on the Chinese Government Work Report at the third Session of the 12th National People’s Congress on March 5.
It is unknown whether the film gamble will pay off for China’s Internet companies. But with support for the move codified in national policy, many business planners see Yu’s prediction as the way of the future.