
At present, the strong attraction of China movies to outside funds is unstoppable.
Special feature of 1905 film network At present, the movie market is the most "not bad money" in China: the box office output has increased by more than 30% for six consecutive years, and the total amount is expected to exceed 30 billion this year, achieving a 200% increase in the number of people watching movies. Under such an industrial background, funds from all walks of life are scrambling to enter the film and television industry, and film companies are constantly expanding their business maps. As of the first three quarters, the total capital operation value of the film and television industry has already reached tens of billions, far behind the "seemingly amazing" box office estimate. It can be said that capital is constantly changing the pattern of China films.
Now the question is, what kind of influence does such frequent and huge capital operation have on the future development of China films?
Multi-layout of "Internet-based" M&A and expansion of film industry
In the first three quarters of 2014, Huayi Brothers made frequent moves in the Internet field: in June, it acquired the selling network; In July, the online game strategic plan was announced at China Joy (China International Digital Interactive Entertainment Exhibition); In August, the new media platform Star Shadow Alliance was launched to develop fan economy … … In response to these attempts, Wang Zhonglei, president of Huayi Brothers, responded in an industry forum: "With the advent of the Internet era, Huayi’s corporate structure and business layout are bound to change. We need to constantly strengthen inter-industry cooperation to adapt to the development trend of the network economy. "
At present, Huayi Brothers is deploying its interactive entertainment business group. In fact, as early as four years ago, they began to target the Internet industry for multi-party layout. In June 2010, Huayi acquired a 22% stake in Palm Technology for 145 million yuan. In 2011, Tencent was introduced as a strategic investment partner. In 2012, Huayi International, a wholly-owned subsidiary, invested in Domi Music. In 2014, Huayi once again spent 672 million yuan to control Guangzhou Yinhan Technology. For the purpose of acquisition, the company explained: "Improve the layout of the industrial chain and bring new revenue growth points to both parties."
This model has been widely recognized in the process of the integration of traditional film and television companies and the Internet. In addition to Huayi Brothers, Enlight Media also successively invested RMB 160 million and RMB 230 million in two online game companies, Fun Life and Xianhai Technology, and then spent RMB 176 million and RMB 208 million to win the hot air network and animation company Guangzhou Blue Fox. Li Li, chairman of Heli Guang Chen International Culture Media, said that for traditional film companies, the space of the online market is huge: "In 2013, the box office revenue of several major film companies was 4 billion yuan, while the Internet industry only brought related benefits from the game industry chain, which exceeded 80 billion yuan."
The pace of industry integration of film and television companies to "de-film" has accelerated.
On October 23rd, Huayi Brothers officially announced its third quarter 2014 financial report. It shows that the company’s film business income dropped by 74.76% compared with the same period of last year, but the overall operating profit maintained a growth of 13.07%. These data are enough to show that Huayi Brothers is fully implementing the development strategy of "de-filming". Wang Zhonglei said that Huayi Brothers expects to rely on the expansion of downstream industries to bring about the brand’s liquidity, and on the basis of maintaining the two core advantages of film content and star-making ability, accelerate the pace of business integration of the company.
China’s film industry needs to own and improve its industrial chain if it really wants to compete with Hollywood. And a complete industrial chain means that online and offline must develop simultaneously. On the occasion of its 20th anniversary, Huayi Brothers announced the opening of "Huayi Xiaogang Feng Film Commune" and officially launched the cultural tourism project. Light Media, which urgently needs to explore business transformation, has also planned to spend 10 billion yuan to build "China Film World" in Shanghai. However, compared with the "Oriental Film Capital" built by Wanda Group, a subsidiary of Wanda Pictures, which cost 50 billion yuan, it was immediately "dwarfed". If Leonardo DiCaprio, Nicole Kidman and other Hollywood superstars were invited to help open the red carpet a year ago, it still belongs to the local tyrants’ school, then the film and television base under construction, which integrates the comprehensive functions of film and television location, film and television production, film and television exhibition and film and television tourism, has begun to take on the momentum of "Oriental Hollywood". As a pioneer in the combination of film and real estate, Wanda has identified film production base and cultural real estate as new areas of core functional industries, attracting domestic and foreign film and television companies to settle down, which indicates that China film industry has taken a key step towards Hollywood’s mature development layout model.
In the third quarter of 2014, the performance of LeTV and its LeTV film industry was quite eye-catching. Its own network DNA allows LeTV to save the link of "internetization" and focus more on downstream industries. While relying on movies such as TV and TV to seize the market share of the big screen, we have completed the construction of the whole product line of super tv. The performance report shows that the sales volume of its super tv products has increased rapidly, and the ecological effect has been highlighted, which has helped the company to establish a diversified business model of "diversified content+diversified channel layout+diversified users+diversified income" and promoted the company’s profit to increase steadily.
Outside the film industry, financial capital and traditional enterprises have entered the market one after another.
Not only do film and television companies choose to diversify their industry layout and obtain capital support through different channels, but a large number of financial capital and enterprises in traditional industries also prefer this industry. On the one hand, the booming film and television industry in recent years makes investors expect to get high returns in a short time; On the other hand, it also shows the urgent transformation needs of some traditional enterprises. Therefore, compared with the situation in the same period in 2013, most of the industry mergers and acquisitions were led by tycoons such as Huayi Brothers and Light Media, the trend of film and television resources integration spreading to the outside world in 2014 was quite obvious.
In the past, PE(Private Equity Private Equity Fund) has been simply seeking cooperation with initial public offerings. Huayi Brothers, Huace Film and Television and other companies have successfully listed through this cooperation model. Nowadays, with the expansion of the film and television industry capital market, PE has gradually withdrawn from IPO business, and the concept of "M&A fund" has begun to rise, and it is not difficult to find the figure of cultural and entertainment industry. Relevant people in the industry pointed out that under the premise that the expected profit is optimistic and the industrial income is growing, film and television are very competitive in attracting investment in the financial industry. Compared with the long capital freeze period and fluctuating yield of IPO, the return on investing in movies is obviously faster and much higher than the former.
According to statistics, as of press time, the total value of capital operation involving the film and television industry in 2014 has exceeded 10 billion. In addition to the financial industry mentioned above, many traditional enterprises have begun to choose "cross-border" under the influence of factors such as the investment profit rate and the decline of main business profits. In August, Zhongji Holdings, which transformed from the traditional manufacturing industry, spent 1.5 billion yuan to bring Confucianism Xinxin Film into the door; In September, Royal Dairy officially issued an announcement to purchase 100% equity of Yujia Film and Television for 205 million yuan; During the Golden Week of November, Beijing tourism was in the limelight for a while because of investment. In the end, the box office of this film broke through the 1.1 billion mark, and another work that was previously released also achieved good results. The industry estimated that Beijing tourism could gain 100 million yuan by relying on the transformation of film and television this year, which more than tripled the net profit of 32 million in the same period last year. Judging from the company’s fixed-income plan, they will also plan to raise 3.3 billion yuan, of which 2.52 billion yuan will be used to acquire three cultural media and brokerage companies, completely shifting their business from a single tourism service to paying equal attention to tourism and film and television culture.
High return leads to capital aggregation, cross-border financing enhances professionalism and avoids risks.
On the one hand, the traditional industry is caught in the predicament of slow development, and on the other hand, the film and television industry is facing the opportunity of market expansion. At present, the strong attraction of China films to foreign funds is unstoppable. For those investors who have fought many battles, what is there in the film circle that is worth throwing money into?
Gao Jun, general manager of Guosheng Film, pointed out in an interview with 1905 Film Network: "What do these outside investors see? It is a return of 10 million yuan and 300 million yuan. It is a myth that investing 30 million yuan to earn 1.2 billion yuan. In contrast, the investment prospects of other industries are much dimmer, which also makes China’s film and television industry form a capital aggregation effect. " However, Gao Jun also admitted that most irrational investments that lack the guidance of professional teams will become bubbles: "The annual output of movies can reach 700-800, while only 200-300 are in the cinema. Even if you enter the cinema, it is not 100% profitable, basically following the 2: 8 law, and only 20% make money. " About three years ago, all kinds of hot money poured into the film circle, and all kinds of small movies came one after another. Gao Jun once revealed that a boss invested in a movie and lost all his money. He almost jumped out of the window in front of him. In these three years, after the survival of the fittest, those who blindly invest are not without, but the cakes left to them are getting smaller and smaller, and the industry is developing and maturing. Those who can stay must have their own advantages.
Abandoning the blindness of "no return" to enter the film industry, now hot money outside the industry begins to operate in a standardized way through formal capital channels and professional venture capital teams, which not only reduces investment risks, but also ensures investment returns. For example, in September 2014, LeTV Pictures, which ranked TOP3 in the mainland film company, completed the B round of financing with the participation of Hengtai Capital and other companies, with a quota of 340 million; In the same month, Huanya Media Group, a well-known entertainment company, jointly established Longhu Capital with SM Entertainment and Fubon Group to raise funds for international investors, with the first-stage target of 100 million US dollars (about 600 million yuan). The combination of film and television companies and capital is more standardized and systematic.
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Both foreign investors holding hot money and film and television companies in the ups and downs industry have seen the unstoppable trend of cultural industry upgrading behind the box office output of China films. For investors, this is an opportunity that the capacity and consumption power are still growing and the prospects are bright. In the eyes of film and television companies, the current rapid development of the industry provides them with an excellent platform to extend the industrial chain and broaden business channels. In a word, the box office revenue of 30 billion yuan can’t meet the rapidly developing market demand and space. Industry capital will realize the change from quantity to quality through the integrated operation of seizing every minute, and jointly help China film industry to mature.