Close Cooperation between iQiyi and Hong Kong Pictures Guarantees a Bright Future for Major Online Movies

In 2015, cooperation between iQiyi and Asia’s Hong Kong Film Financing Forum (HAF) officially commenced. The iQiyi Special Award was set up by HAF, and a themed forum was established by the two sides. By making use of HAF as a platform, iQiyi can display its brand image while reserving promising film projects. During the 14th HAF, iQiyi will organize a forum entitled ‘Movie – Internet: Pondering Double Release Terminals’ to discuss how Internet-based release can be used to its optimum advantage.

In recent years, cooperation between Hong Kong Pictures and iQiyi has grown ever closer. In 2015, iQiyi Pictures and China 3D expanded their cooperation into areas such as the development of high-quality IP, film investment, copyright cooperation, publicity and release, and game derivatives, and planned to co-produce between eight and 12 films. In addition, iQiyi Pictures was the investor, producer, marketer, and distributor of Hong Kong film Return of the Cuckoo, which earned 43,000,000 HKD of returns from distribution shortly after its release, becoming something of a sensation.

As China’s leading platform for launching and broadcasting major online movies, iQiyi continues   to increase its investment and improve its business model. The first online movie in a series of co-productions between iQiyi and renowned Hong Kong director Wong Jing is IGirl, which will be released in March 2016. With an investment cost and publicity and distribution scale comparable to those of theatrical films, as well as a producing team of famous directors and actors, IGirl will be a new benchmark in the online movie industry. We spoke to Yang Xianghua, Senior Vice President of iQiyi, about iQiyi’s development of major online movies.


Q: How did major online movies find their way into iQiyi’s business model?

Yang Xianghua: We proposed that movies should be for paying users a long time ago, when we were discovering that the commercial model made it hard for filmmakers to make a profit. The reason is that a movie lasts longer and pays higher bandwidth costs than a television show. In 2011, several video streaming websites including iQiyi and Youku launched a user-paying model for films. Based on market analysis, iQiyi officially proposed the concept of the ‘online movie’ in March 2014. Broadcasting channels for Chinese movies were originally limited to two kinds: through cinema, which occupied most of the market share; and through TV (only the CCTV movie channel was available back then). At that time, more than 600 Chinese movies were filmed each year. Nearly half of them were shot in DV and were able to be released through DVD. Since China does not have a sound multi-channel distribution market, the Internet is sure to become an important channel for releasing films and TV dramas in future. That’s why we proposed the concept of the ‘major online movie’. Why did we add the adjective ‘major’? Because the hottest model in 2013 was the micro-film, which depended on commercials to earn a profit. To cover the costs of marketing, micro-films need to expand the effect of Internet-based spread. However, brand companies are only interested in hot topics. When the popularity of micro- films reaches its peak, its development momentum will slow down. We believe that the popularity of major online movies will last much longer.


Q: What are the advantages of the ‘major online movie’ business model?

Yang Xianghua: In recent years, the overall cost of major online movies has been relatively low. In fact, we have drawn lessons from other business models, particularly the network novel. In the early days of the Internet, reading novels was the most popular activity online. Most were free, and had   pirate versions on many websites. Subsequently, the online literature boom gave birth to lots of high-quality work and writers. Using the network novel model for reference, major online movies are expected to bring the work of young film makers to a wider audience and offer them an opportunity to make money and become famous. This is the value we expect from this platform. In China, film and TV drama creators and A-list actors and actress are badly needed, which makes it hard for young directors to attract investors. I hope that iQiyi’s major online movies will help to fix this problem.


Q: What trends do you predict for iQiyi in 2016?

Yang Xianghua: This year, we will open our online movie program to cooperation partners as usual. We are also looking to work with well-known directors, and film and television companies to produce films with relatively higher cost and quality. The main purpose is to deepen users’ understanding of major online movies, especially the distribution process. Based on high quality and popular stories, major online movies deserve a more powerful promotion method.

Film projects adopt an open business model for Internet-based distribution. That is to say, cooperation partners are encouraged to do the marketing for the films. If there is marketing program or budget input, cooperation partners will be able to enjoy more subsidies when dividing up the revenue. Like theatrical films, films using the Internet for circulation need to be top quality. The likelihood of these films being a success is even higher with effective marketing strategies.

Q: Does iQiyi have any requirements for cooperative projects since adopting the model of dividing up revenue among partners?

Yang Xianghua: Our basic requirements for cooperative projects are as follows: the film should last more than 60 minutes; it must have a superior level of production, an intact storyline, and film capacity; content and production processes should conform to national laws and regulations. Compared to feature films, major online movies have a lower barrier to entry and less strict censorship. Currently, films are mainly censored by iQiyi itself, but this will probably change in future. There are exclusive and non-exclusive cooperative models available. In actual practice, the former model is more popular because iQiyi takes the lead in this industry in terms of its number of members. Cooperation with iQiyi will guarantee more money and hits.


Q: In your view, where are major online movies going in the future?

Yang Xianghua: First of all, a large group of paying viewers online will give major online movies a larger market than feature films. With a market scale that’s nearly as large as the DVD market in America, major online movies will have a bigger development scale than feature films. Secondly, the young directors trained by our platform could probably rise to be heavyweights in the film industry, on a par with Spielberg. Thirdly, one day in the future, the Internet will probably become the only channel for releasing feature films. This has already happened in the television industry. Finally, many Internet- based entertainment companies will be listed.

Yang Xianghua, Senior Vice President of IQiyi. Joining IQiyi in 2010, he was initially in charge of the development of new business and then the mobile Internet. Currently he is responsible for the affairs of VIP members and IQiyi Pictures. He holds the Master of Engineering degree from Tsinghua University.

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