Editor's Note:
Recently, Lehua Entertainment passed the listing hearing of the Hong Kong Stock Exchange, which is one step closer to listing.
Behind Du Hua, the company's helmsman, ali and ByteDance appeared.
Today's three lessons recommend an article to see why big manufacturers are competing to dream of showbiz, and what market competition there are for Internet giants in the entertainment industry.
ByteDance, which has been dreaming of the entertainment industry for a long time, has finally waited for a listed company.
On August 7, Lehua Entertainment, which owns stars such as Wang Yibo and Fan Chengcheng, passed the hearing of the Hong Kong Stock Exchange (hereinafter referred to as the "Hong Kong Stock Exchange") and will be officially listed on the Main Board of Hong Kong in September.
According to the data, Lehua Entertainment, founded in 2009, has become a cultural entertainment platform covering three major business modules: artist management, music IP production and operation, and pan-entertainment business.
Du Hua, founder of Lehua Entertainment
Specifically, artist management is the core business of Lehua Entertainment. From 2019 to 2021, artist management accounted for 84%, 87.7% and 91% of total revenue, respectively.
As the "first share of talent management", Lehua Entertainment was listed on the New Third Board in September 2015, and after delisting from the New Third Board in March 2018, it began to plan to list on the main board of the Shanghai Stock Exchange, but in 2021, Lehua Entertainment terminated pre-listing counseling. This also means that the impact on the Hong Kong Stock Exchange is Lehua Entertainment's third IPO attempt.
With the listing process finalized, not only Du Hua, the founder of Lehua Entertainment, but also two Internet companies involved in the investment - Ali and ByteDance.
According to the prospectus, before the IPO, Du Hua, executive director, chairman and CEO of Lehua Entertainment, held 50.18% of the shares. Dongyang Alibaba Pictures holds 14.25% of the shares through Inform Construction, Quantum Leap holds 4.74% of the shares through Afflatus, and the controlling shareholder behind Quantum Leap is ByteDance.
ByteDance's pursuit of the entertainment industry is not only Lehua Entertainment, but also invested in its brokerage company Taiyang Chuanhe, which has Angelababy, Zhou Dongyu and Chen He, at that time, it was reported that The valuation of Taiyang Chuanhe was as high as 5 billion yuan, and there was an IPO plan to the United States.
But byte front foot investment, back foot Zhou Dongyu and Angelababy have left one after another. As of now, the financing information of Taiyang Chuanhe stays on byteDance's B round of financing two years ago.
Compared with Taiyang Chuanhe, although it holds less than 5% of the shares in Lehua Entertainment, it is a successful investment of ByteDance in the entertainment industry. Moreover, with the help of investment in Lehua Entertainment, ByteDance has further extended its tentacles to the current hot virtual idol field.
According to the investigation, in July 2021, Lehua Entertainment accepted investment from Chinese Culture, Alibaba Pictures, ByteDance, etc., and the amount of financing was not disclosed. However, according to the Daily Economic News, in 2018, ByteDance invested 125 million yuan in Lehua Entertainment.
Most of Leroy Entertainment's revenue comes from artist management business.
According to incomplete statistics, although Lehua Entertainment has signed a total of 66 artists and 71 trainees to participate in the trainee program at this stage, the artist management business is still overly dependent on Wang Yibo. In the prospectus submitted by Lehua Entertainment, it is mentioned that Wang Yibo has 36 endorsements and more than 60 commercial contracts.
Among the supplier information it provides, "Supplier B" is also speculated to be Wang Yibo. In 2021, the transaction amount of Supplier B as a percentage of total operating costs reached 43.9%. According to the prospectus, from 2020 and 2021 to April 30, 2022, Lehua Entertainment's revenue growth from "Supplier B" accounted for more than 80% of the overall revenue growth.
In addition to signing artists, virtual artists are becoming the second growth curve of Lehua Entertainment, and its virtual artist group A-SOUL, launched in late 2020, is composed of five digitally created virtual artists, namely Bella, Jiaran, Narin, Jiale and Xiangwan. A-SOUL debuted in the year of its debut and became the top of the B station, with nearly 10 million fans on the whole network. However, these virtual members still need behind-the-scenes actors to play the business.
This is also the most concerned cooperation between Lehua Entertainment and ByteDance at present.
According to the report of "Chopped Pepper TMT", the virtual idol group A-SOUL is jointly planned by ByteDance and Lehua Entertainment, with ByteDance providing underlying technical support, while Lehua provides people (avatar actors), content planning and operation, etc.
Moreover, in June 2021, Beijing Youyi Technology Co., Ltd., a wholly-owned subsidiary of ByteDance, who wholly-owned the shares, took a wholly-owned stake in Hangzhou Kanchao Information Consulting Co., Ltd., which owns the copyright of A-SOUL, and the actual controller was Zhang Yiming.
From this point of view, ByteDance is the actual helmsman behind A-SOUL.
The A-SOUL project was originally a "Project V" project that began in April 2020, but it was not directly organized at that time. "Chopped Pepper TMT" quoted an industry source as reporting that the recruitment of the middle people was initially led by Byte to find suitable voice actors, and finally reached a cooperation with Lehua, "Lehua has the experience of building traditional stars in the past, and also has a professional data, operation and maintenance team." It turned out that the choice of bytes was correct. ”
A-SOUL is the main force of Lehua Entertainment in the pan-entertainment business. According to the prospectus, from 2020 to 2021, Lehua Entertainment's pan-entertainment business achieved revenue of 37.869 million yuan, a year-on-year increase of 80.95%, and the gross profit margin was as high as 77.7%, exceeding the gross profit margin of Lehua Entertainment as a whole of 46.6%.
Lehua Entertainment said that this is mainly due to the "revenue generated by the commercial development of A-SOUL" and the relatively high gross profit margin of the Lehua virtual artist portfolio.
In May this year, after the lead singer of the virtual idol top group Jia Le left the group, A-SOUL continued its activities as a four-member group, and on June 17 this year, it entered the Pico platform and opened the first group VR live broadcast on the same night. Pico is a MANUFACTURER of VR head-mounted displays acquired by ByteDance for 9 billion yuan and merged into ByteDance's XR business line.
Lehua Entertainment's investment in virtual artists doesn't stop there.
In May, Leroy Entertainment invested in Nice's future 10 million seed round, a company focused on creating virtual artist IP. As of now, Nice Future has launched Quantum Boy, which is composed of 4 male virtual artist members, and EOE composed of 5 female virtual artist members.
In addition, Xiaoxiang Morning Post reported that in the second quarter of 2022, Lehua Entertainment and its business partners with experience in developing technology to empower virtual artists jointly established two companies to further expand the virtual artist business.
On the road to pursuing the dream entertainment industry, Lehua Entertainment is not the only entertainment brokerage company invested by ByteDance. According to enterprise investigation data, in March 2020, ByteDance exclusively invested in Taiyang Chuanhe's Series B financing with 180 million yuan.
Founded in 2015, Taiyang Chuanhe's main business is artist agency, its MCN business, with short video masters such as papi sauce, and has incubated more than 160 short video bloggers including Bigger Research Institute and Wangbu Hongmeng Uncle Joey through papitube.
In terms of artist management, Taiyang Chuanhe has signed artists such as Yang Ying, Zhou Dongyu, Chen He, etc., and has also participated in the film "The Wandering Earth", film and television dramas "Town Soul", "Spring Wind Ten Miles, Not as Good as You" and other works.
But in fact, as early as 2018, ByteDance wholly established Xi'an Byte Qiushi Information Technology Co., Ltd., whose business scope includes artist brokerage, film and television program planning, production and other businesses.
According to the "Investment Community" report, it is reported that it is also 2018 that Byte began to plan and invest in Taiyang Chuanhe, and even Zhang Yiming personally participated.
It can be said that Taiyang Chuanhe is a landmark action of ByteDance's entry into the entertainment circle, that is, it has gone to the upstream field of entertainment ecology.
For ByteDance, which is eager to make up for the shortcomings of long videos, artists are a necessary reserve resource.
However, with the successive departures of Zhou Dongyu and Yang Ying, The financing information of Taiyang Chuanhe has always stopped in March 2020.
In April 2020, Quantum Leap, a wholly-owned subsidiary of Byte, became a new shareholder of Zhongshi Mingda, with a shareholding ratio of 20%. According to the data, the main business scope of Zhongshi Mingda is artist management, variety show production and distribution, music production and copyright operation, and its artists are mostly musicians who have become popular on the Douyin platform, and the most famous artists are Yan Renzhong, a Taiwanese singer who quickly became popular on the Douyin platform in 2019.
In addition to the brokerage company, ByteDance has also invested in a number of MCN institutions in various vertical fields such as Sound and Shadow Animation, Weilong Culture, xiuwen technology, etc., and even invested in the company behind the internet celebrity Li Ziqi, Wei Nian Technology. However, with the departure of Li Ziqi, ByteDance also withdrew its investment in Weinian Technology.
In addition, Byte is also trying to participate in film and television content, and is one of the co-producers of the movie "Detective Chinatown 3" and "My Motherland and Me".
In the Spring Festival of 2020, the movie "囧Mom" was played on the whole platform of Douyin, Watermelon Video, Today's Headlines, and Douyin Volcano Version of ByteDance, which demonstrated ByteDance's determination to enter the film and television industry.
The cooperation between ByteDance and Joy Media behind "囧Mom" is not limited to the 630 million yuan movie, but also includes the two-year cooperation behind it. According to the announcement of Huanxi Media, Huanxi Media and ByteDance will cooperate in various fields related to online video, during which Huanxi Media will open up film and television project resources to ByteDance, and the two sides will also jointly build a cinema channel.
ByteDance's layout of entertainment is not limited to foreign investment, but also increases investment in self-made content.
In 2018, ByteDance's Watermelon Video announced that it would enter the field of self-made variety shows with 4 billion yuan of funds, and then launched variety shows such as "It Doesn't Matter If you don't take the test" and "Uncle Xiaoguan". On the other hand, today's headlines also announced the "Shine Plan", announcing that it will invest 20 billion yuan in traffic to support the publicity of high-quality film and television projects and the cooperation of high-quality star content.
At the end of 2020, Douyin launched the self-made talent show "Infinite Idol", but until the end of the show, the variety show did not go out of the circle and did not achieve the purpose of Douyin to create stars through variety shows.
Recently, Douyin once again launched the variety show "Baichuan Variety Season", inviting more than 40 groups of artists such as Li Jian, Deng Ziqi, Da Zhang Wei, Ouyang Nana, Xue Zhiqian, etc., to try to give birth to variety show projects with different contents through the explosive incubation mechanism.
The Internet giants that lay out the entertainment track are not only bytes.
Among the more popular agents, Lehua Entertainment, which du Hua is at the helm, stands behind Byte and Ali, Yixin Entertainment co-founded by Yang Tianzhen, and Wow Wow Wow founded by Long Dani, all of which have accepted Tencent's investment.
Tencent, which mainly enters the entertainment field in the form of investment, has successively participated in the angel round investment of Yixin Entertainment and the strategic investment of Wow in March 2018. Yixin Entertainment was the top entertainment brokerage company in China at that time, co-founded by Yang Siwei (Yang Tianzhen), Lu Yao, Chen Jie and Chen Jiaying, mainly engaged in "brokerage business", while Wow with "Idol" as the core had a popular artist Mao Buyi.
"China Times" reported that after 2018, Wow Wow Wow also won the operation rights of the Rocket Girls' Group, the R1SE Boy Group, and the Hard Candy Girls 303 Girls' Group formed by Tencent's talent show "Creation 101", "Creation Camp 2019" and "Creation Camp 2020".
In terms of foreign investment, in addition to investing with Byte in Duhua's Lehua Entertainment, Alibaba Pictures also took a 14.82% stake in Yuekai Film and Television, founded by agent Jia Shikai, becoming the third largest shareholder, and the company's artists include Yang Yang, Song Qian and Ying'er.
On the other hand, Alibaba Pictures set up its own agency. In 2017, Alibaba Pictures and Youku established an artist management company, Cool Entertainment, dedicated to cultivating and managing artists. Yang Weidong, then president of Theouku Business Group, once said, "We are not doing artist agency to compete with traditional brokerage companies for market and interests, but we hope to produce ecological synergy and cooperation to form a strong complement." ”
Baidu is deeply involved in the cultural and entertainment track through its holding company iQiyi. In 2018, an artist agency service provider called Aidou Century was established, and the largest shareholder behind it was iQIYI, with a shareholding ratio of 55%, of which Jiang Bin, chief producer of "Idol Trainee" and vice president of iQIYI, was the chairman of Aidou Century.
The company's contracted artists include nine percent, of which Cai Xukun is a member. At present, NINE PERCENT has been dissolved. In addition, iQIYI has also set up its own artist management company, Guoran Sky, and the artists who signed the contract have also participated in some online dramas and online variety shows produced by the platform.
Behind the dream showbiz, the market competition for the entertainment industry among Internet giants is prominent.
However, with the advent of Internet antitrust in the second half of 2021, Internet companies are also shrinking their investment boundaries.
For example, Huayi Brothers, which accepted the investment of Ali and Tencent, has recently suffered from Tencent's reduction. Huayi Brothers issued an announcement that the shareholding ratio of Tencent, the company's second largest shareholder, has dropped from 7.9% to less than 5%. This means that Tencent's investment front in film and television entertainment is shrinking.
Ali also liquidated its holdings in Mango Super Media last year. In September 2021, Mango Super Media announced that Ali Venture Capital intends to transfer 5.01% of the company's shares held by it by agreement, and after the completion of the agreement transfer, Ali Venture Capital will no longer hold the company's shares.
For Internet giants, continuing to expand their layout in the entertainment sector through acquisitions is ushering in potential risks in policy supervision.
*Some of the materials come from the Internet, the copyright belongs to the original author, if there is any infringement, please contact to delete.
Source | Packed Lunch Finance
The author | Xue Yaping
Editor| Zhao Jinjie
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