China’s Entertainment Giants Create Digital Platforms Encompassing Production, Distrubution and Ticketing

The recent merger of China’s online ticketing systems and their ventures into other parts of the showbiz’s value chain will contribute to the growth of what many call “pan entertainment,” or an all-encompassing entertainment experience, leading to the domination of few big players and potentially fewer consumer choices.

China’s online movie ticketing accounted for nearly 85% of the total movie ticketing sales in the second quarter of 2017 — a staggering growth compared to 30% in 2013, according to the Beijing-based Big Data Research. Leading the race is Alibaba’s Tao Piao Piao (22.9%), followed by Tencent’s Maoyan (22.5%) and Weying (18.8%).

But the online ticketing business in China isn’t just about selling tickets. September’s announcement of the merger of Maoyan and Weying means that the online ticketing market is dominated by e-commerce giant Alibaba and Tencent, which also operates WeChat, China’s biggest social media platform.

Tencent president Martin Lau told the media that the merger of Maoyan and Weying will further the development of pan-entertainment, boosting the entire value chain of film and entertainment business and offering on and offline support for film production companies and cinemas. He said Maoyan Weying will become an important strategic partner for Tencent’s pan-entertainment development.

The concept of pan-entertainment has been hailed in China, Cecilia Yau of PwC Hong Kong Entertainment & Media told Variety. “A lot of companies are investing in the IP development stage … to cultivate the production of dramas, games, movies — and then cinemas,” Yau says. “Companies will have more control over distribution and release windows. They look into acquiring businesses that complement their existing ones.”

Tencent was not alone. Despite a loss of 976 million yuan ($147 million) in 2016 caused by the heavy subsidy for Tao Piao Piao’s operation, Alibaba Pictures increased its stake in the online ticketing platform in July from 87.6% to 96.7%. Tao Piao Piao has also begun investing in film production and distribution this year.

One of Tao Piao Piao’s wildest success was patriotic action drama “Wolf Warrior 2,” which became China’s highest-grossing film ever. The online ticketing platform not only contributed to more than 40% of the film’s ticketing sales, it also acted as one of the distributors.

Tao Piao Piao was also involved in the distribution of crime thriller “Shock Wave” and romantic drama “This Is Not What I Expected.” Tao Piao Piao’s chief Li Jie told the media that the online ticketing platform has transformed into a key online sales platform as part of the value chain of the film industry.

With dominating platforms involving in the distribution process, it will be much easier to control which films are more available.

Shanghai-based critic Bono Lee says the market is developing to feed just two or three big companies “so that it is easy to keep everything under control.” And although more audiences are after non-Hollywood content, as demonstrated by the recent popularity of “Dangal” and “Bad Genius,” the market has yet to be ready to offer more diversified movie choice for consumers, he said.

Zhou Jianwei, a consultant for the Shanghai Film Distribution and Exhibition Assn., says the domination of online ticketing platforms was unlikely to influence audience’s tastes, despite some industry players’ hopes to cultivate an arthouse audience.

“Mass audience still prefer Hollywood blockbusters. There aren’t that many great non-Hollywood films available in the country yet. It takes time to get people interested in arthouse and non-Hollywood films,” she says.

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