Douban is leveraging off its inventory of original content with a film production unit while Alibaba has invested $15.2 million in cinema operator Hangzhou Xingji.
Douban launches film production unit
Douban, a Chinese media review website, is venturing into film production through its subsidiary Douban Read. This unit focuses on user-generated content and was started in 2012, to enable authors to self-publish and sell e-books.
According to details in an internal memo by CEO Yang Bo that was released to local media, the company disclosed that it was engaged in film production following a six-month trial.
Yang, who formerly worked for IBM in the US, launched Douban.com in 2005 as an arts-focused social network in 2005, following his return to Beijing from the US. It operates a scoring systems based of user critiques, much like the English language platform Rotten Tomatoes.
To date, Douban Read maintains community of 20,000 writers and over 8,000 exclusive works, with Yang claiming at as of the end of July, the company has sold the filming rights for 10 novels. The platforms claims that authors are able to earn 70 per cent of the sale price of their output, with most works priced at around RMB 5 (US$0.75).
Douban is now seeking to incubate film and television projects on the platform and translate them into a cinematic format, taking original stories from its platform and promoting them alongside their authors.
Reports indicate that Douban Read’s new film production venture is currently undertaking two projects; one is focused on developing stories in partnership with scriptwriters and upcoming directors while another is a fund to bankroll new films.
Alibaba invests $15.2m in Hangzhou cinema operator
Alibaba Pictures, the entertainment arm of the Chinese e-commerce major Alibaba, is investing RMB 100 million ($15.2 million) for an 80 per cent stake in a Hangzhou movie theatre operator, Hangzhou Xingji.
Hangzhou Xingji owns, operates and manages the Hangzhou Star Cinema. This latest acquisition includes 11 theatres, including one 4D cinema and one China Film Giant Screen (CFGS) theatre. It reported profit growth of 416 per cent to more than RMB 563,000 ($84,355) after taxes in 2015.
The investment is part of a bid to compete with Dalian Wanda and will see it acquire an estimated 61 per cent of Hangzhou Xingji from shareholder Hangzhou Kunwei for a consideration of RMB 39 million ($5.9 million). In addition, it will invest RMB 61 million ($9.2 million) in the company, according to a filing.
In aggregate, this translates to an 80 per cent equity interest upon deal completion and comes following the announcement of a partnership with Wuhu Gopher Asset Management on a new $300 million film and TV fund.
The investment comes amidst mounting losses for Alibaba Pictures, projected to be RMB 400-450 million for H1 2016 amid the intense competition in China’s cinema industry.
Recently, Wanda Cinema Line, China’s largest movie theater operator, has confirmed it is in discussion with South Korea’s largest movie theatre chain CJ CGV, in what could be a possible partnership, while having earlier forged a partnership with IMAX to building 150 theatres over the next six years.
Wanda Cinema Line, China’s largest cinema chain operator, is a subsidiary of property and entertainment conglomerate Wanda Group, which is controlled by China’s richest man, Wang Jianlin, who is intent on closing up to $2 billion worth of Hollywood deals.
Meanwhile, state-linked firms China Film Co. and Shanghai Film Group, are engage in initial public offers (IPOs) this month that will see them use proceeds from the IPOS to fund the construction of new cinemas.