China is always on my radar.
For the Factual sector, it’s been boom and bust, glimpses of editorial freedom followed by heavy state control, old business models and new ones.
Despite many false dawns, I have kept my eyes open for hopeful trends for documentarians who are determined to do business in China.
This post captures my recent impressions.
A MIDDLE CLASS EXPLOSION
- China’s current economic growth is the fastest and most expansive in human history:
Source: OECD and Brookings
- China is forecast to add 850 million consumers to its middle class between 2009 and 2030.
- Europe will add 16 million.
- And the U.S. and Canada will lose 16 million.
- (Middle Class is defined as earning between US$16,000 and $160,000).
- At the macro level, China’s middle class scale advantage will fundamentally re-balance the global economy, strategic power relations, and much more.
- Even a tiny video niche can be highly profitable in such a vast, consumer-driven market.
- Branded content opportunities will proliferate:
- It’s a field where the West enjoys a creative advantage, at least for now.
- And where creatives enjoy access to decision-makers for Western brands that will be focusing on growth in China.
- And Chinese financial investment will accelerate in Western media, in both established businesses and startups.
CO-PRODUCING DURING THE ANTI-CORRUPTION DRIVE
- At Sunny Side of the Doc in June, I met with Chinese producers as well as with Westerners who work on coproductions there.
- Here are my key notes from several conversations:
Broadcasters
- China’s copro market had virtually closed down to outsiders during the Party’s anti-corruption campaign.
- Broadcast executives and regulators had lost their jobs, and some were jailed.
- Broadcast decision-makers asked “Why put ourselves under scrutiny by doing business with the West?”
- The channels are now opening up, slowly.
- CCTV9 Documentary Channel is cautiously returning to copro’s, and with more savvy than earlier in the decade.
- Terms and practices still lack standardization.
CICC
- CICC is “the most reliable copro partner” for Western players.
- It funds 20+/- hours / year of copro’s with Chinese broadcasters and international partners.
- Contributes up to 50% of budgets for specials of around $1.2 million.
- Main topics: Chinese History, Engineering, Science, Blue Chip Wildlife and China’s Culture.
SVOD / Online SNAPSHOT
- SVOD and online video is a Wild West, booming largely outside the heavy hand of the regulators.
- JPMorgan Chase estimates that China’s SVOD base will grow from 144 Mn to 234 Mn in 2020.
- That’s close to the projected cable subscriber base of 248 Mn in 2020.
- The leading SVOD players in 2017 are iQyi (99 Mn subs) and Tencent (81 Mn).
- The acquisitions process is quite impenetrable to outsiders:
- Buyers are not attending industry events.
- But they are “nimble” and can pay “real money”.
- I heard of a Blue Chip wildlife commission for around $500k for China SVOD rights only.
- The solution for Western producers and distributors is to “move slowly, go to China and listen, and build relationships.”
- Westeners “need a broker or local partner.”
- “Library buys” are preferred to individual documentaries or limited series.
- Most deals are revshares, and MGs (minimum guarantees) are rare.
- Chinese buyers usually localize the content, but require delivery with English CC or subtitles.
SVOD, SVOD and SVOD!
At MIPDoc, I asked Natural History New Zealand’s CEO Kyle Murdoch about the key trends in China.
- Kyle has deep experience in China, including coproducing with CCTV9 the PBS summer hit Big Pacific
- Here are Kyle’s Takeaways:
- Increasing demand for content by SVOD players, and increasing competition between them.
- The viewing trend of China’s Free To Air and satellite channel audiences is “older and fewer.” It’s the same as in the rest of the world.
- But in China with such strong state support for national, provincial and municipal channels there is not the same commercial pressures, so this means that every broadcast model is still viable.
- With such a large and diverse population, China has space for multiple new SVODs for factual content.
- Demand for high quality docs here is strong, lots more options with Internet channels working and co-funding with FTA’s more closely to maximize audience.
- It’s an incredible market, always evolving.
WHAT’S FILLING THE IP VOID? INTERNET NOVELS!
I recently caught up with experienced “China insider” Michael Yan. I asked him to share the key trend in developing IP in China.
- His answer – Chinese Internet Novels – captures the always surprising business pathways that are being forged in this vast and highly-regulated market.
- Chinese Internet Novels are increasingly the main source of IP for Chinese films, television shows, and games.
- Example: 76% of source material for Chinese drama series originate from novels.
- Gold rush: breakout Internet novels now fetch US$1mil; the hottest ones: $7.5mil.
- Nearly all bestselling titles are bought out by investors.
- Now, there’s an acute shortage of blue-chip novels available to adapt.
- Studios like Tencent and Alibaba are building out their own digital publishing arms to incubate content.
Takeaways for Western Media Companies
- Chinese publishing has been ignored by foreign media players.
- But it now offers a strategic beachhead into China’s entertainment space.
- Michael predicts that digital publishing will also become a route for developing documentary and popular unscripted content.