Wang Yu: Producer and Publisher of Chinese Film Market
Nina Han: Film Producer and Distributor, Vice President of Fundamental Films
Solon So: Consultant of Alpha Pictures, and President of Red One Media
Wan Jun: President of YL Pictures Co. Ltd
Bright ideas for Sino-foreign cooperation
This year’s forum has invited experienced guests, who may not be “tycoons” or “opinion leaders”, but come to share their sharp insights into certain fields and discuss their abundant practical experience. Although this year’s forum shares a similar topic with last year’s, the market changes every year, and the theme of this year’s event is “New Trends for International Cooperation”. I spoke with Solon about The Revenant and its uncertainties last year, but now se see it gaining popularity after Leonardo DiCaprio’s Oscar win.
Originally, Alpha Pictures was a toy company. Two years ago, it decided to change its main business from manufacturing toys to producing children’s animations. The managers found that many overseas corporations were building business chains aimed at the entire family based on the content of the animation. For example, with Transformers， produced by Hasbro, it is possible for parents to watch it in cinema and for children to view the animated version at home. So, how can this be achieved? It relies on the extension of IP that helps to produce popular family films.
Two years ago, “Alpha Pictures” was founded under the Alpha Group with our assistance. However, people in the film industry know that it takes at least 18 to 24 months to complete a successful project, including the processes of the screenplay, pre-production, and shooting; it can take three months for American companies to start production after pre-production and post-production. So, in 2013, I advised Alpha to start with overseas companies and to adopt the projects that turned IP into films. Then, we decided to conduct basic cooperations with relatively familiar foreign companies, or overseas cooperations with previous business contacts, and to find projects that we could take part in, in 2014. In the end, we invested in The Revenant because we wanted obtain a global market position.
The aforementioned film, Transformers, was originally a Japanese manga. It was adapted into an animation and later a live-action film in the US, in a business chain created from IP. However, the film’s director told me that the revenue of film-related toys was higher than that of the box office. In 2014, the director founded a company that specialized in cartoons, but he adopted a very different approach. After using his connections to sign a cohort of screenwriters, he then decided to take up the traditional ‘story-version’ method in cartoon form, and promote it through an online company called 451 Media Group, of which Alpha is also a shareholder. The business model of the company is referred to as an ‘IP incubator’, and inspired Alpha to promote China’s original cartoon industry on the basis of its cooperation with 451. We should develop new IP projects in China using the US model, and build up a complete business chain. In the future, we aim to bring Chinese IP projects into the US and other foreign markets. The purpose of participating in The Revenant is to take advantage of its brand effect, in which subsequent projects were derived from games. It will cover a complete business chain, from adapted films or specific TV series. This is one of the reasons that Alpha cooperated with the other party.
Foreign films sit outside of the boundary we set for Chinese films, and heated discussions have been had around the topic of how Chinese films will achieve internationalization, particularly in terms of exporting not just movies but values. Fundamental Films sees itself as a China-registered international company, but seldom emphasizes its Chinese identity in terms of its methods, purposes, and even the management of film projects. Instead, it prioritizes the international criteria.
Fundamental Films is a global corporation. It is clear that the profit sharing method for international films is based on the entire global market with no subdivision but an overall ratio. First, Fundamental Films will definitely select international projects. In fact, there are two types of projects that can be internationalized: one is art house films with distinctive features, and the other is truly international projects. For example, Lucy, produced by Fundamental Films, has a globalized value and narration method. The production fees for such films can be relatively high, because the profit comes from the global market. Up to now, almost every project falls in line with this principle. However, we will also promote film projects based on the local market. The purpose is not to profit from the global market, but to achieve added functions, such as cultivating new directors and teams.
The evaluation criteria for investors are very simple. Every investor should have crystal clear aims, such as money, fame, or other derivatives. Money means the amount of money that the film can make in profit from the domestic market, which is particularly true with commercial films; the other aim – fame – is to produce award-winning art house films, such as Crosscurrents. If a film aims for the Chinese market, then its profit mainly lies in the domestic box office; the calculation method for art house films is to compete in film festivals; investors will also evaluate the film’s derivatives, such as market testing.
Most of the time when we talk about whether to invest in a film, or invest in its global or domestic market, different investment goals will result in completely different effects. For example, The Karate Kid was released several years ago. At that time, its primary market was overseas. Although it tells a Chinese story, the Chinese audience may not have accepted it; its Chinese market was so low that it could not be compared with its overseas counterpart. Nowadays, US blockbusters do a great job in the Chinese market. For example, The Revenant had global box office takings of over 500 million with 10% from China; the ratio would have been 5% in the past. At present, the profit proportion of global blockbusters is gradually increasing in the international market.
Alpha Animation is now a small business section within Alpha Entertainment. Currently, Alpha has a series of products, including animations, cartoons, films, TV dramas, online TV dramas, and theme parks, and it endeavors to form an integrated ecosystem. After the acquisition of IP products, these products will be categorized and adapted into online TV dramas, films, or animations in accordance with their types. However, this doesn’t mean that every IP product can be adapted into films, or a product from the full industry chain. In fact, the development of IP adaptation works on a very flexible model.
It is often the case that many Chinese film corporations adopt a global view when they move into the international market. In other words, they care about the profit proportion of the film’s global market instead of the traditional focus of distribution rights or box office sales in China. This suggests that the calculation of investment proportion should rely on the forecast of overseas profit, because it is much more important than profit in the Chinese market. It is necessary for filmmakers to understand European, North American, Japanese, Korean, Chinese, and other markets, which makes the increasingly globalized cooperation approach more similar to the Hollywood model. The power of the Hollywood film industry lies in its global distribution market. In fact, the main function of the six most famous Hollywood film companies is a global distribution platform that quickly sells their films around the world. For this reason, these companies recruit the top talent and conduct global market evaluation on the best projects.
In 2003, I started working at a new firm called Huaxia Film Distribution Company, which is the second company to hold distribution rights for exported films, after China Film Group Corporation. I was there for ten years, and for eight of them I worked on an important project to purchase a large number of foreign (American) films; most of them were outright purchases. A major problem was the public’s familiarity with watching American films. This meant that that very few non-American films could perform well in the Chinese market. Recently, I have been working very hard to sell Chinese films to the overseas market. However, as well as cultural disparity, many problems remain. A Russian film, On-Drakon, went viral online, but most Chinese audiences watched its pirated version. Many people think it is piracy that made this film popular, which indicates a lack of awareness of copyright protection in China. Every effort must be made to crack down on pirated films, to bring higher profits to filmmakers.
I think that Chinese films today are not in their ‘industrial age’, nor their ‘handicraft’ era, but remain in the ‘agricultural’ stage, because a fundamental awareness of copyright protection is still deficient in China. I hope that Chinese films will at least develop into the ‘handicraft’ period, with a stronger adherence to copyright protection. Why do we participate in Russian film projects? To be frank, we can not afford the American projects. However, I see a new trend whereby Hollywood, Bollywood, and other foreign film companies have started to cooperate extensively with Chinese film corporations.
Good producers grasp techniques well
I chose to step back from the lucrative film industry to teach at the Beijing Film Academy for three years, where I found a common problem in students of cinematography, broadcasting, and other departments who spent a lot of time and money on their film studies. I emphasized to my students the importance of technical skills. If a producer fails to learn techniques, he or she is not a qualified producer in spite of individual fame. The production of many film types requires the assistance of various technical resources and approaches. For instance, many visual effect films and the most popular IP films use special effects. However, China does not have particularly professional coordination in terms of special-effect procedures. The definitions and requirements of different film types become increasingly accurate, and popular film types in China need of high industrial techniques. As a pioneer, Fundamental Films cooperates with Hollywood on the basis of equity in modern society. During our cooperation, we hope that this approach will promote the development of the entire film industry and its industrial techniques, as well as advance the production level and management ability in China. The current problem for China’s film industry is not money, but the appropriate way to produce films and spend money.
Certainly, new problems arise from the existing issues. When I taught at the Beijing Film Academy, I conducted some statistical analysis and discovered that many of the film practitioners and students had a liberal art background. It is acknowledged that films with CG effects require engineering and scientific knowledge, as well as a strong management logic in the production process, which are not areas of expertise among liberal art students. Thus, we are doomed to encounter many problems when we start to build the basis of the film industry. The Chinese film industry is in urgent need of people with techniques, who can construct a real industrial system.
I believe that despite the amount of capital invested into film projects, the projects may not be excellent. However, they should at least live up to the investment. In my opinion, the essence of all the problems (including the export of Chinese films, or the promotion of the many interesting projects created by the new Chinese generation) is whether you are able to produce films with advanced approaches, as others do. The biggest hurdle is learning to use the machine to produce good films within the investment budget.
At present, many science fiction, art house, and other types of films will start shooting after completing the first stage of post-production, because this will guarantee cost control for the shooting process. Film quality matters. Thus, it is hard for producers to work if they have not mastered the right techniques. Producers should be open-minded and keep learning.
We started global collaboration a long time ago. We have found that the foreign film industry enjoys a complete industrial and systematic procedure, including production budgets, which is the easiest part of the process. When I started studying film production, personal computers were only just available on the market. I learned the categorization and calculation of budgeting through persistent study. Our overseas cooperation began with the basic standardization process, which was also a standardization project; it would move onto detailed processes later. I cooperated with director Tang Dan on the film I Phone You, and most of the crew members were German. Once, it rained during our shooting, but when everyone was going to rest, a German cameraman asked when the rain would stop. We were quite surprised, and he explained that it was possible to know when would it cease to rain in Germany or the US. Thus, a producer should be well aware of every detail when he makes his or her production plans. Hollywood is so detail-oriented in the industrial procedure that the producer knows when to have coffee and dessert, and the individual work agenda is extremely accurate.
Directions for co-produced films – real localization in China
There have been huge misunderstandings about co-produced films in the past, because most of them did not aim at the Chinese market. In a co-produced film, the original creation will not be disturbed by adding a Chinese performer, or some so-called Chinese elements. Our targeted research showed that a good co-produced film should consider both Chinese and foreign audiences and provide them with believable plots. It is neither a real co-production nor a successful film if we randomly put an actor or actress in certain scenes.
We found many IP products for the Chinese market. This is actually a long-term project – “Localization” – and is a combination of overseas IP products with original Chinese work. An integration of a foreign image and an original Chinese story will transport foreign IP products to China where the stories take place and are produced. So, they became Chinese films, and thus part of Chinese culture. The whole localization process can take as long as four to five years. Alpha Pictures’ global cooperation is based on this pattern.
In fact, many film distributors entered the Chinese market through co-produced films, because these films share the benefits of domestic films and offer higher profits than imported films. Obviously, as a matter of calculation, the easiest approach for distributors who want to profit in this way is to produce a patchwork that meets the co-production criteria. For example, one third of the performers should be Chinese, but this would be horrible to watch because the story is not based around the Chinese market. But now, we will incorporate the three parties if the story is suitable for co-production in China regardless of its origin and whether it is Chinese, American, or European centered. We will start with the story and then work towards the appropriate market.
A producer should be well aware of every detail when he makes his or her production plans. Hollywood is so detail-oriented in the industrial procedure that the producer knows when to have coffee and dessert, and the individual work agenda is extremely accurate. – Wang Yu
We found many IP products for the Chinese market. This is actually a long-term project and is a combination of overseas IP products with original Chinese work. An integration of a foreign image and an original Chinese story will transport foreign IP products to China where the stories take place and are produced. So, they became Chinese films, and thus part of Chinese culture. – Solon So
The current problem for China’s film industry is not money, but the appropriate way to produce films and spend money. The Chinese film industry is in urgent need of people with techniques, who can construct a real industrial system. – Nina Han
I see a new trend whereby Hollywood, Bollywood, and other foreign film companies have started to cooperate extensively with Chinese film corporations. – Wan Jun