Rhino Entertainment Original
Text|Fat Department Editor|Park Fang
In 2022, the film and television industry has experienced an extraordinary year. Among them, in the environment of long-form video platforms fully promoting cost reduction and efficiency increase, drama companies ushered in a painful and happy year: the difficulty of the project meeting soared, the market's enthusiasm for high-quality content rose, and between the two days of ice and fire, it spent a year of "efficiency enhancement" with mixed tastes.
With the release of 2022 earnings reports by several major drama production companies in the industry, some data allows us to better observe the previous year. According to the degree of business relevance of listed companies in the drama field, Rhino Jun made a simple statistics on the performance of nine companies.
A clear sign is that with the exception of Huanrui Century and Ciwen Media, several other companies are experiencing declining revenues, which is consistent with the overall decline in the long-form video industry last year; The increase in revenue of Huanrui Century was mainly due to the 69.73% increase in film and television drama sales revenue over the same period of the previous year, and the increase in the number of dramas that recognized revenue.
This is not surprising, according to relevant data, in 2022, the production side and the broadcast side have continued the downward trend since 2018 and hit a new low. The number of TV drama reviews and filings and the total number of TV series distribution licenses obtained decreased by 1.2% and 18% year-on-year; The total number of new dramas on the whole network decreased by 9.2% year-on-year.
What is more obvious is the improvement in profitability.
In addition to Hong Kong listed companies, in order to better reflect the company's regular operation, the table adopts the indicator of deduction of non-net profit, Huace and Perfect World still have net profits in the state of declining revenue, while Huanrui Century, Ciwen Media, Tangde Film and Television have all achieved a turnaround, and Tangde Film and Television has made its first profit in three consecutive years. The decline in earnings of Straw Bear and Lemon was mainly affected by the better results of the previous year.
The "efficiency" year of industry companies can be clearly seen in these larger changes in financial reporting data. Under the general trend of content upgrading, these industry trendsetters who successfully went public before 2017 are adapting to the needs of the industry and coming up with some high-quality content to achieve survival and development.
After 2022, the industry entering Q2 2023 is still in the adaptation period to many changes, and at this stage, survival is still a mandatory course for film and television companies waiting for spring.
The film and television business is generally good
Low water level relies on cost reduction and efficiency increase
What needs to be seen is that companies with good profitability last year basically have high-volume dramas in hand.
For example, Huace's "Acquaintance with Jun Chu, Just Like the Return of the Old" and "The Little Forest of Two People" have achieved 10,000 hot times on Youku; Huanrui's "Mountains, Rivers and Moonlight" and "Agarwood Like Crumbs, Agarwood Chonghua" are also excellent data; Perfect World Pictures' revenue declined, but the Douban scores of "Basic Law of Genius" and "Rock and Roll Flower" also broke 7; Ningmeng Film and Television took out two dark horses, "Crime Hunting Guide" and "Twenty Not Confused 2".
The volume of dramas of other companies can also be used, for example, Ciwen has "City of Flowing Light" and "Two Conjectures of Marriage" with acceptable broadcast results, with a total of 5 dramas online; Tangde film and television drama financial reports show that the dramas that achieved revenue in the reporting period include "Infernal" and "Our Day", two dramas that were launched this year and achieved good results; Straw Bear's "Floating Picture Edge" and "Please Jun" also played well.
In addition, the happy blue sea ginseng investment dramas "Starfall into Sugar" and "Big Exam" also have good performances. In fact, the loss of Happy Blue Ocean is mainly due to the fact that the studio business is greatly affected by the overall downturn; In addition, the company's acquisition of Chongqing Dinu Ares Film and Television borrowed high interest and suffered a large loss; From the perspective of film and television content business alone, the revenue during the reporting period was better.
It should be considered that in 2022, when entering the industry requires content improvement, these established film and television companies have shown adaptability.
This ability is manifested in two aspects, one is the relative concentration of production resources, and the company's production system and industry partners also have a cooperation basis, on this basis to reduce operating costs; Second, it has long-term cooperative relations with TV stations and websites, and has stronger sales capabilities. These capabilities also help companies adapt to new content requirements.
Taking Tang Deying as an example, the financial report also specially sorted out the company's core competitiveness, the first two are professionals with rich experience in the film and television industry and excellent management team, as well as the establishment of a creative talent cooperation mechanism with Tangde characteristics; The distribution channel mentions more than 50 central, provincial and municipal TV stations, Hong Kong, Macao and Taiwan regional TV stations, covering online platforms such as Ai, You, Teng and Sohu, including overseas distribution agencies.
Taken from Tangde Film and Television's 2022 financial report
But on the other hand, from the perspective of these drama types, it is not difficult to see that the current traditional film and television companies are conservative in the field of dramas, and the content produced is still concentrated in urban love, fairy fantasy and family dramas, which were the mainstream common genres in the past, and relatively new are mainstream value dramas such as "Big Test" of Happy Blue Ocean, "Our Decade" and other mainstream value dramas, which are relatively conventional overall.
To some extent, this conservatism is in line with the main tone of reducing costs and increasing efficiency in 2022, and it is also because the search for certainty in times of industry turmoil requires this type of content to open up a wider circle, including more prominent efficiency on the TV side.
However, if you compare the producers who are deeply bound to the platform and undertake the production of self-made dramas, it is difficult for traditional film and television companies to reflect the unique advantages in the competition.
For example, in the summer file that hit last year, Rhino Jun once made statistics on the dramas that entered the TOP3 of the main list, and of the total 20 dramas, only 6 were produced by traditional film and television companies, and two-thirds of the platform's self-made content. A new number of production companies that bundle platforms are emerging.
Taking stellar gravity as an example, it once received financing from iQiyi, and after exporting "Canglan Tips" and "Thank You Doctor" last year, there are also projects such as "Seven O'clock Auspicious Luck", "I Want to Go Against the Wind" and "Fox Demon Little Red Lady" series in hand this year, showing the ability to produce head content; The founder Wang Yixuan's personal brand operation also shows differentiation from established companies.
On the whole, after the low water level of the industry last year to reduce costs and increase efficiency, major film and television companies have gradually adapted to environmental changes, begun to seek cost control and content refinement, and have proved their viability to the industry with their own heritage. However, facing the future, the former industry advantages and voice may encounter challenges in the next round of industry changes.
In 2023
How can industry companies survive and live well?
It can also be seen through the earnings report that the above companies have tried new revenue channels and explored greater industry imagination.
For example, Tangde Film and Television entered the live broadcast e-commerce, and on January 16, it also issued an announcement that it established Zhejiang Blue Media Culture Technology Co., Ltd. and carried out the business of providing live broadcast training for stars; Huanrui's e-commerce business also developed, with revenue of 52.77 million yuan, an increase of 296.67% over the same period of the previous year.
Since the first quarter of this year, AIGC has also become a new territory for industry companies to expand. According to iMedia consulting data, it is expected that the core market size of China's AIGC industry will be 7.93 billion yuan in 2023 and 276.74 billion yuan in 2028.
Huace, which previously announced its entry into the metaverse, first announced its strategy in the field of AIGC, and issued an announcement on the evening of April 16 that it would acquire Jingning Yuanhui and Jingning Yuanxin as wholly-owned subsidiaries with its own funds to further strengthen its equity control of Shanghai Huajuhui (reaching 82.86%). Shanghai Chinese Opera Collection, which has more than 30,000 hours of copyrighted content, will be used as a basis for exploring AIGC technology and scene applications in Huace Metavision.
In addition, Perfect World, Straw Bear, Huanrui Century, Bai Na Qiancheng, etc. have declared AIGC as a growth accelerator. These actions are indeed working, driving the market's imagination of "AIGC+IP" and realizing the self-control of many film and television stocks beyond expectations.
But conversely, it will take a long time for these actions or trends to truly translate into value. To achieve sustained growth in 2023, companies need to make more tangible achievements.
At present, in the quarterly reports released by several companies simultaneously, there have been different degrees of decline in performance. Tangde Film and Television, which turned around as a whole last year, suffered a net loss of 15.528 million yuan in the first quarter. One of the few higher performance is Huace Film and Television, which achieved operating income of 964 million yuan in the first quarter of this year, a year-on-year increase of 104.83%; The net profit attributable to shareholders of the listed company was 147 million yuan, a year-on-year increase of 28.95%.
This is thanks to the dramas launched during the reporting period of Huace, including "Go to a Windy Place" and "Spring Dreamer", etc., and the broadcast situation is relatively good.
In the first quarter of each year, such a recognized off-season of the industry, there have been several dark horses that have emerged this year, mainly before and after the Spring Festival several boutique dramas have driven the entire market, undertaking the popularity since the end of last year, including "Crazy", "Three-Body Problem", "Youth Song Line" and "Go to a Windy Place" and so on. Among these four dramas, except for Huace's "Go to a Windy Place", they are all self-made dramas controlled by the platform.
Whether it can produce high-quality content recognized by the audience within the quarter is the life and death line of the company's performance, which is a performance certainty question that the drama company still needs to solve.
At present, each family still has a lot of inventory in their hands, including Huace Film and Television's "Our Translator" and "Sanfenye", Perfect World's "Yunxiang Chuan" and "Heart Protection", Huanrui Century's "Lotus Building" and "Qianxiang Yin", "Orphans of Mars" and "Praying for the Present Dynasty", Tangde Film and Television's "Female Criminal Police Captain", Happy Blue Ocean's "Lonely Boat" and other sharp goods, the quality of content can be further observed.
Relying on the advantages of IP content, film and television companies are also deepening IP diversified derivative business, for example, Huanrui developed blind boxes, figures, original clothing replicas, fragrances and other derivatives during the broadcast of "Agarwood Crumbs", and the same clothing replicas and digital collections were sold out in a short period of time. Of course, the current market environment also determines that only explosive models can do derivatives business.
Content is the lifeblood of film and television companies, and this is an industry truth that will not change now and in the future. Walking through 2022 and entering 2023, what has improved is the industry environment, the gradually improving platform economy, what remains unchanged is that only companies that can get explosive money can eat meat, from last year to the first quarter of this year, this logic has become clearer and clearer.