Innovation is a way to survive
-Interview to Zhang Zhao, CEO of LeTV Pictures

Time Raiders, which was propagated in 2016 Cannes International Film Festival, finally presented to the audience on the summer schedule in August. Five days before the release, LeTV held the “Value Reconstruction Day” conference, proposing to enhance the interaction between IP of film entertainment and to achieve “IP ecology”. Subsequently, the video of Zhang Zhao’s speech, who is the CEO of Le Vision Pictures, spread quickly on the Internet, triggering a reflection on the current upsurge of IP industry.

During the interview, the main topic Zhang Zhao talked was about “innovation”. Le Vision Pictures’s strategy of IP operations is different from most companies in the market. Their practice of demassification and separate-screen also come out unusual way. Established in 2011, Le Vision Pictures has gone through five years of rapid development, but in Zhang Zhao’s opinion, Le Vision Pictures is still “on the way”.


Innovation should become the normal behavior in the film and television industry

CFM: We had an interview to you in 2013. You said that the core value of company was Internet and globalization. It has been 3 years until now. Is there any change to the core value?

Zhang Zhao: The core value is still on the way and there is no change with it. I think it will remain the same until I retire. For the whole industry, the idea of Chinese film industry’s Internet and globalization is just at the stage of very beginning. Our company just started to do it a little bit earlier, and has little bit more experience about that. In fact, once the industry goes into the Internet era, it changes very fast. The way to go is completely different from that of Europe and America over the past decades and it will also accelerate this iterative process quickly. Therefore, in order not to be eliminated by the rapid development of the industry, the only way is to lead industry, to reform initiatively, rather than being pushed by the industry, which is passive.

So, from 2011, I have already determined the target when the company was established. It has been five years until now and we are still in the stage of beginning. Although we all see that the current development of company is quite good, and even it is called a “Legend Enterprises”, the measure of development is still by the traditional, static way. So we all think that company has not gone fast enough and it is still on the way. We can often see that in the Internet industry, many companies that were the leaders of the industry five years ago now are all in bad situation.

In fact, we still don’t have a deep understanding of how fast of the pace of development and the turnover rate that the film industry has been with the impact of Internet. Chinese film and television industry has not been as large as Hollywood, which is too big to even turn around. So, the industry of China can change and turn around quickly. If companies do not learn how to turn around it will be eliminated.

I think we should adhere to innovation. Innovation is a way to survive. It is very important. On the one hand, we may ignore the fact that the film industry has been accumulated for 120 years, especially from a global perspective, so it is difficult to manage the industry. We cannot underestimate the accumulation of the history and tradition of film industry. On the other hand, if we obsess with the film industry itself too much, it is likely to ignore the change that Internet industry has brought to it. So we need to manage the measurement, and it is necessary to respect the history of the nature of the industry, but also understand that its business model has undergone a fundamental change. Therefore, enterprises should take the initiative to “self-change” before such changes. Although this process is very painful and very difficult, innovation should become the industry normal behavior.

For us, Internet has further deepened the integration process from film industry into a whole ecological industry. It used to be “Internet video age”. Now it has become ecological, and has begun to enter the “Internet ecosystem television era” .The ecology and globalization has combined together, but this eco-model is a new concept. We now are in Studio + Netflix + Apple + Amazon model. In the future there may be +Tesla. In this ecological model, any plus is an extension of the industry. It can be said that Le Vision Pictures is now entering a multi-text, multi-terminal stage of development.

CFM: You just mentioned Le Vision Pictures is integrated into a whole ecology. What are the strategic goals and plan to the upgrade in the future?

Zhang Zhao: During these years, Le Vision Pictures has done lots of on demassification, then we will continue to do separate-screen: a variety of different types of screens, and the film become a screen of all of them. The film is actually a screen. The pictures of film are finally to be presented on a variety of different screens. Each screen has different characteristics, such as cell phones, computers, television, Google glass, Apple watch, car screen, even bicycles and so on. Each screen’s requirements of the content are not the same. The next step is the construction of ecological content, and then to get the users’ data through various screens. To build a closed loop between the users, content and marketing assessment. To manage the users’ so-called “video physiological cycle”. We need to figure out how to divide screen by different entertainment content and what are the different contents that users watch in different time. It will contribute to form a much more refined service processes. Otherwise, when the content has been produce, we still don’t know who are their target users. By separate-screen and content ecology, we will transform the film industry and this transformation will bring fusion effect to film industry as well. The Internet is a multi-screen era, in which people has massive demand to video contents. Whereby the entire film industry will flourish, showing explosive state.


Separate screens and demassification 

CFM: What is the status of the strategic development separate-screen? What will be the future trend of separate-screen?

Zhang Zhao: The company is currently the second largest shareholder of TCL. LeTV’s smart screen’s production has reached tens of millions, and become the No.1in Chinese market. Last year LeTV began to enter the field of mobile phones. By the plan the mobile phones’ production also will reach tens of millions. In addition, LeTV is also the second largest shareholder of Coolpad. All of these are our strategic partners. All of these touch screens will play LeTV’s products and those of all partners. Now we have started to make a lot of content by ourselves. The first thing is to do well in closed-loop. For the content we should try to provide better and long lasting quality IP services to the terminal users. Usually we will consider making IP series, and then try to achieve multi-screen and multi-textual. After the closed-loop done, then to consider opening platform to all content providers in the industry. All of us cooperate together. It is such a process. Now, we are still in the closed-loop process, so I said we are still on the way.

For the future development trend of separate-screen, I think the free hardware is a trend. In accordance with the economic sharing model, the screen is to watch the content, so free hardware is an inevitable trend, which is likely to bring a great impact on the hardware industry. Free screen is likely to be gradually realized in the future, and then users may need to pay for the content. Further, the content may be free too, and ultimately the user just pays for the service. This is a transforming process that the manufacturing industry gradually changes into the service industry. And now a lot of services that we are thinking of are still brewing. For instance, if the user notices an IP, the data of the consumption will be saved, and then the user has opportunity to expand the IP together with content providers. So the IP will be further developed during the interaction. This is the so-called “co-create” concept. There are many application models of the Internet and there is a lot of room for innovation in the future.

CFM: LeTV has done a very good job in demassification area. Could you share some of the experience and ideas?

Zhang Zhao: I think the most important thing for a business model is that it should be a home of the ability. At present, there may be no other company can compare with LeTV who serve so many demassification users. This is our ability. To provide different people with demassification service, it is a basic principle. I often say that LeTV’s model likes “lotus pond”. Lotus seed is a small ecological in lotus pond. Under the lotus are deep-rooted lotus root, and nutrient is mutual delivered. So, even when we are not aware of it, the lotus has occupied half of the pond, and then it will occupy the entire pond. The ability of demassification is the most important. In the future we also need to have the ability to cross the public to achieve the geometric growth. In practice, whether or not to cross the public should be carefully considered. Don’t cross the public without thinking. For something that cannot cross the public, we won’t do it. For something that suitable to cross the public, we need to do it definitely. You must find out the common things of two different groups, such as cultural appeal, aesthetic habits, stars and other elements that can be combined together.


To maintain a strong vitality of IP 

CFM: Nowadays, IP is a hot topic in film and television industry. In this regard, what is LeTV’s strategy for IP development?

Zhang Zhao: After the successfully release of “Tiny Time” series, LeTV is making Guo Jingming’s second series “L.O.R.D”. We found that a number of the audience of “Tiny Time” has grown up, so we need to do the appropriate adjustments. Relatively speaking, demand will grow when people grow up. So for “Tiny Time” ‘s audience’ age — for example 15 to 25 years old before, now we need to expand to 25 to 35 years old. IP content and creation are corresponding to expand, which is a growth process of IP. Take “L.O.R.D” as an example, the effect of the original consumer groups and Guo Jingming will be the basis to extend. When the original actors grow up, population attracted by them is also expanding. At the same time, our entire product is also upgraded, adding Fan Bingbing, William Chan, Aarif Lee, Wang Yuan and other new stars. For business, what we want is audience, not age. When these audiences grow up, we need to grasp the data of them and the information of their consumption upgrade. Therefore, the entire business model of LeTV is based on the users’ IP. Which groups do the users belong to? How to increase the number of users? In fact, when IP elements and the scope are expended, the population of users will expand too.

In practice, we like to use the experience model. Because when we made “Tiny Time“, the most important experience was the carnival. Experience is real. When everyone participates in this matter, it will become the user’s own experience. We can interact with audience by this type of marketing experience. The most successful thing we did in “Tiny Time” is a theme, called “Tiny time is our time”, or said “my age”. We made the audience, high school students and high school female students, become the owner of the IP. Eventually, they occupied the cinema.

IP means property intellectual, in which we need to inject a lot of input. I always call it IP operations and it should concentrated on audience. For the corresponding content of IP, the demand will become large. In addition, we need to achieve cross text, from single text to cross text. With the users’ growth, the IP also should have the corresponding variety show, games, reading literature, drama etc. About IP development, we need to consider consumption, but also to consider the value added. LeTV’s operation on IP is to allow users to participate more. We call it CP2C, customer – plan to customer. We hope more users to create with us. The purpose of the operation is to allow the IP to achieve value-added. LeTV is basically using Internet to achieve the development and value-added of IP, so the data is more accurate, and the interaction with users is richer. This is an important step to turn the manufacturing industry into a service industry. If IP was taken away from the users, it only becomes a well-known theme. In this case, there is only consumption left, without lasting vitality. I firmly believe that the future of the vitality of the IP will remain in the users.

Talking about IP, people in the industry generally concern about how to improve the efficiency of making money, such as buying a famous IP to improve the efficiency. So everyone concerns the model of efficiency, not value creation mode. When the film is completed, the rest is only marketing, promotion, trying to spend money to let everyone knows about it. In fact, this model has low efficiency. If you want the IP to survive for a very long time, it requires a series of capabilities, so that other text can continue to extend. The Chinese film industry has just started to make the ability to convert IP.


Chinese and foreign partners work together to develop the “the Great Wall” 

CFM: In November 2015, LetV proposed to work with Hollywood on 13 film projects, including director Zhang Yimou’s “The Great Wall“. What is the progress?

Zhang Zhao: “The Great Wall” has decided the release schedule, and caused widespread concern. I think LeTV has taken a key step for making “The Great Wall” and other Hollywood cooperation projects. The cooperation is not only at the business level. Much more is in terms of IP creation. I think “The Great Wall” is a big IP. People all over the world are familiar with and love the Great Wall of China. “The Great Wall” is a project for the global market, with the investment amount up to $150 million. Although it is only a moderate scale of investment project in Hollywood, for Chinese market, it is already the largest co-project in the history. I believe that the film will be competitive in the global market. Our partners also make such judgments. In addition, “The Great Wall” is also a “cross” project. First it crosses the region. From a global perspective to look at the market, probably in Europe it will get better reaction. Because relatively speaking, European audiences are much more familiar with Zhang Yimou.


CFM: In the process of project operation, what are the opportunities and challenges that LeTV is facing?

Zhang Zhao: In the process of cooperation, we must first solve the problem of original IP. At present, LeTV does not stay in stage to buy IP or buy the company. Of course, it is also very important, but it is not LeTV’s future. The R&D is the future direction. We hope that in the future we can cooperate with foreign countries to create IP. When we have IP we have users.

In this project, the biggest challenge we face is how to tell a good story and how to operate as our overseas partners. While our overseas partners also learn from us for how to do a good job in China. Mutual learning is cooperation. I think co-project is to solve the problem stand in the global market. The most important is the global market, and China is a part of the global market.

In the future, LeTV will gradually expand a lot of cooperation with Hollywood. Hollywood’s six largest studios have very strong production capacities, and worldwide distribution capabilities. And we have such IP that can root in the Chinese market, which also very popular in the Hollywood. We come together to share resources. With the support of the Chinese market, taking the Hollywood production capacity as a standard, using their global distribution system, and the contribution of our operation ability in the Chinese market, all of these show opportunity that China and American Film industry cooperate to go to the world market.

IP is made by research and development, and at the same time it can create value and contribute value. Value is not measured by money. In fact, Hollywood is also looking for outstanding IP in the Chinese market. However, people who have best understanding of Chinese market are still Chinese. Why the Chinese cannot lead the research and development? So this direction is the Chinese film industry bound to take. At present, during the process of cooperation, who is the leader is not important. As long as we make contribution, they will naturally follow us. It is not to say that value is measured by money. Money cannot buy real value. We must strive to create value for making the Chinese film going to the world.