(Report Producer/Analyst: Cinda Securities, Feng Cuiting, Feng Chao, Liu Wang, Li Yihan, Bai Yunhan)
1. Performance of the film and television industry: In the first three quarters of 2023, the revenue increased steadily, and the net profit attributable to the parent company increased significantly
1. Film and television sector: The demand for watching movies has gradually recovered, and high-quality film content has driven a significant improvement in industry income and net profit attributable to the parent company
Benefiting from the recovery of offline viewing demand from user groups and the drive of popular movie content, the film market will recover well in 2023.
According to the Shenwan Industry Index: Secondary Industry: Film and Television Cinema Index, in the first three quarters of 2023, the film and television cinema segment achieved operating income of 30.942 billion yuan, a year-on-year increase of +25.53%, and the revenue has accounted for 94.5% of the annual sector revenue in 22 years and 56% of the revenue of the industry peak level sector in 19 years. The overall net profit attributable to the parent company was 2.909 billion yuan, which turned losses into profits.
2. Multi-dimensional data analysis of the film and television industry
(1) TV drama industry
According to the "2023 China Drama Development Report" released by the Development Research Center of the State Administration of Radio, Film and Television, the five major development trends of the development of Chinese TV dramas, online dramas and micro-short dramas are analyzed, specifically involving dramas entering the era of high-quality content supply, the trend of diversification of creation and production, the further deepening of Taiwan-network cooperation, business model innovation, and the diversified and three-dimensional communication pattern of overseas.
According to the data of the State Administration of Radio, Film and Television, 202 plays with 7,450 episodes were produced nationwide in 2020 and obtained the "Domestic TV Drama Distribution License", 194 plays with 6,722 episodes were completed nationwide in 2021 and the "Domestic TV Drama Distribution License" was completed nationwide, and the national production was completed and the "Domestic TV Drama Distribution License" was completed in 2022 of 160 dramas with 5,283 episodes, and 109 dramas with 3,223 episodes of "Domestic TV Drama Distribution License" will be completed nationwide in the first three quarters of 2023. The creation of mainland TV dramas has crossed the stage of only pursuing quantity, and the audience's acceptance and recognition of high-quality content and popular themes is higher, which is expected to drive the healthy development of the drama industry.
The supply of high-quality content is the key to the current efforts of major platforms, and iQiyi and Tencent contribute to the top dramas. According to Yien data, iQiyi contributed nearly half of the TOP20 dramas in the 2023H1 broadcast volume index, leading the four major platforms, and the TOP20 solo dramas accounted for 35%; Among the TOP5 dramas in the broadcast volume index, iQiyi covered 3 dramas, of which "Hurricane" ranked first, and "Changfeng Crossing" entered the top three. According to data from Yien, Yunhe and other data, although the number of online dramas will decrease in 2022, the effective broadcast volume of content and online popularity will increase significantly. A total of 301 domestic dramas were launched on the long video platform throughout the year, a decrease of 18 from the total number in 2021, but the effective playback of member content increased by 24.81% compared with the previous year, and the average broadcast index of the TOP 50 domestic dramas in the whole year increased by 9.3% compared with 2021.
From the perspective of the proportion of drama themes, the number of reality-themed TV dramas will reach 129 and 4,143 episodes in 2022, accounting for 80.63% and 78.42% of the number of headquarters and episodes, respectively. In the first three quarters of 2023, this proportion reached a new high, reaching 81.65% and 79.24% respectively. Since 2022, many period dramas such as "The World", "The Glory of the Fathers", "The Road of Life", "The Days of Iron Horse Pride", and "The Sea in My Dreams" have successfully broken the circle and attracted young users to watch across circles.
Looking forward to 2024, the continuous supply of high-quality content and themes will continue to be a key factor driving the growth of the domestic TV drama market, especially sequels to proven and successful IP dramas or dramas and related themes adapted from classic novel IP are more likely to be loved by mass users. On December 7, 2023, Ningmeng Film and Television, which focuses on producing high-quality dramas, officially released the 2024 drama list, and 16 works made a blockbuster appearance. Focusing on the content strategy of "super content connecting the new public", the film list takes the core of the story as the standard to realize the layout of the whole track of reality, suspense, urban romance, ancient costumes, and innovation.
Among them, sequels to popular dramas such as "Thirty Only 2", "Ask Heart 2", and "Crime Hunting Guide 2" are listed, which are expected to contribute to the increase of 24 years. The rest, such as "Police Honor 2", "Celebrating More Than Years 2", "Son-in-law 2", "Trident 2", "Chasing the Murderer in the White Night 2", "Douluo Continent 2", "Tang Dynasty Strange Tales: Westward Journey", "Langya Bang 3", "Dajiang Dahe 3", "Ode to Joy 5", etc., are all expected to become popular dramas to be broadcast.
(2) The film industry
According to the data of Maoyan Professional Edition, as of December 8, 2023, the total box office (including service fees) of films in China has reached 51.5 billion yuan, which is close to the peak of 64.14 billion yuan in 2019, and the recovery trend of the film market is relatively obvious. The total box office of films in the first 11 months of 2023 will reach a total of 50.95 billion yuan, compared with the recovery degree of the total box office in the first 11 months of the film market in 19/20/21/22 was 85%/308%/115%/180% respectively, and the overall film market has a good recovery trend. With the release of many popular movies such as "Man Jianghong", "She Who Disappeared", "Fengshen Part 1" and other popular films, judging from the data available in 2023, the box office is rising gratifyingly. From 2019 to 2022, the total box office of films in China will be 641.4, 203.1, 470.3, and 29.93 billion yuan, respectively.
As of December 8, 2023, the total box office of films in the country is 51.5 billion yuan, which has become the second highest in the past five years, although it is not as large as in 2019 but is close to 2017, As of December 8, 2023, the total number of film screenings in the country reached 120 million, close to the level of 2019 and 2021, and is expected to surpass it to a new high in the past seven years; as of December 8, 2023, the total number of moviegoers in the country reached 1.217 billion, which has become a new high in the past four years, and there is still a distance from the relatively high water mark in 2017-2019; as of December 8, 2023, the average ticket price of films in China is 42.3 yuan, and the average ticket price of films in China has grown steadily since 2017, from 34.4 yuan in 2017 to 42 yuan in 2022. The growth trend of the box office, total number of screenings, total number of people and average ticket price has been good, which has led to a significant recovery in the business of film and television theater companies, with an increase in revenue and a significant turnaround in profits.
From the perspective of the film supply side, the number of theaters and the number of screens have not fluctuated much in the past three years.
From the perspective of the supply of films, the number of mainland films from 2017 to 2022 will be 518, 559, 611, 365, 677, and 378 respectively, and from the beginning of 2023 to December 7, the number of films will reach 569, which has recovered to the high level of 19 and 21, compared with the number of 378 films in 2022, which has been greatly improved, and the quality of the film has also been recognized by consumer groups, and high-quality and high-reputation blockbuster films will be released frequently in 2023.
According to the data of Maoyan Professional Edition, from the beginning of 2023 to December 9, 2023, the total box office of mainland films will reach 51.7 billion yuan, of which the cumulative box office of "Man Jianghong" is 4.544 billion yuan, the cumulative box office of "The Wandering Earth 2" is 4.029 billion yuan, the cumulative box office of "All or Nothing" is 3.848 billion yuan, the cumulative box office of "Disappearing Him" is 3.523 billion yuan, the cumulative box office of "Fengshen Part 1" is 2.634 billion yuan, the cumulative box office of "In the Octagon Cage" is 2.207 billion yuan, and "Thirty Thousand Miles of Chang'an" The cumulative box office is 1.824 billion yuan, the cumulative box office of "Bear Infested, Stay with Me "Bear Core" is 1.495 billion yuan, the cumulative box office of "Solid as a Rock" is 1.349 billion yuan, and the cumulative box office of "Unfamiliar with Life" is 1.184 billion yuan. In 2023, cinema occupancy will also achieve a significant recovery to 8.3%, compared with 8.1%, 7.9% and 5.9% in 2020-2022.
As of December 9, the top 10 films at the box office accounted for 51.5% of the total, so the top hit movies are the key factor driving the total box office growth of mainland films, and the supply of high-quality content is the guarantee for increasing the film and television consumption of user groups.
Comparison of domestic and imported films: In recent years, the Chinese film market has shown an increasing proportion of the supply of domestic films and a decreasing proportion of the number of imported overseas films, and at the same time, due to the improvement of the content quality and reputation of domestic films and the decrease in the number of imported overseas films, the number of domestic film viewers has increased from 53% in 2017 to 81.2% on December 7, 2023, which is conducive to the long-term and steady development of companies in all links of the domestic film and television industry chain.
Comparison by city: According to the data of Lighthouse Professional Edition, as of 2023.12.08, the box office of mainland movies is divided by city, with first-tier cities accounting for 16.5%, second-tier cities accounting for 44.4%, third-tier cities accounting for 18.4%, and fourth-tier cities accounting for 20.7%. In recent years, the proportion of the box office in first- and second-tier cities has decreased slightly, and the proportion of box office in third- and fourth-tier cities has increased. In terms of attendance, the first-tier cities have the highest theater attendance rate, and the fourth-tier cities have the lowest attendance rate.
Comparison by schedule: The box office performance of the Spring Festival and summer stalls in 2023 will be better, of which the box office of the Spring Festival stalls will reach 6.77 billion yuan, surpassing the 6.04 billion yuan in 2022. According to the data of Maoyan Professional Edition, "Man Jianghong" and "The Wandering Earth 2" achieved a box office of 2.61 billion yuan and 2.17 billion yuan respectively, and the total contribution of the two films was 71% of the box office of the 23rd Spring Festival. "Bear Infested: Stay with Me "Bear Core"" accounted for 11% of the box office, becoming the highest-grossing work in the series. The box office of "No Name" was 490 million yuan, accounting for 7.3%, and the box office of "Deep Sea" was 360 million yuan, accounting for 5.3%.
The box office of movies in the summer of 2023 will be 20.62 billion yuan, a year-on-year increase of 125.7%. A total of 504 million tickets were issued, a year-on-year increase of 115.7%, and the total number of shows was 34.626 million, with an average ticket price of 40.8 yuan. According to the data of Maoyan Professional Edition, the box office of "All or Nothing" was 3.53 billion yuan, accounting for 17.1% of the total box office of the schedule, the box office of "Disappearing Her" was 3.52 billion yuan, accounting for 17% of the total box office of the schedule, the box office of "Fengshen Part 1" was 2.48 billion yuan, accounting for 12% of the total box office of the schedule, the box office of "In the Octagon Cage" was 2.2 billion yuan, accounting for 10.6% of the total box office of the schedule, and the box office of "Thirty Thousand Miles of Chang'an" was 1.8 billion yuan, accounting for 8.7% of the total box office of the schedule. The increase in supply, the recovery of consumer demand, and high-quality content blockbuster films will drive the trend growth of the film market in 2023.
In 2023, there are still potential blockbuster movies to be screened, such as "Twinkle Twinkle Twinkle Star", "Aquaman 2: The Lost Kingdom", "If You Are Honest Do Not Disturb 3", "Goldfinger", "Annual Meeting Can't Stop" and many other films are expected to continue to contribute to the total box office in 23. Looking forward to 2024, the supply of blockbuster films is also relatively large, which is expected to continue to drive the growth of the mainland film box office market.
For example, Yang Mi, Yu Qian, and Tian Yu starred in "There is No Thing That Can't Be Solved by a Hot Pot"; Aaron Kwok, Lin Jiadong, and Ren Xianqi starred in "Temporary Robbery"; classic animated IP film "Bear Infested: Reversing Time and Space"; The high-hit film "Mr. Red Carpet" starring Andy Lau and directed by Ning Hao is expected to become a hit film of the year; other "There's a Commissary by the Clouds", "Genius Game", "Nezha's Demon Boy in the Sea", "Wild Times", "Crisis Route", "Wild Child", "Legend", etc., are all expected to contribute new increments to the Chinese film market in 2024.
3. Generative AI empowers multiple aspects of the film and television industry
1. The increase in the proportion of Internet book sales (2C direct sales) revenue led to an increase in the overall gross profit margin
The traditional way of writing film scripts often has to go through a series of links, such as creative conception, story outline, character building, plot refinement, correction and polishing, etc., which requires a lot of creative time and energy. As a new technology that can generate text, images, audio and video, and other content, generative AI has brought revolutionary changes to the film and television industry. Through this technology, film and television creators are expected to reduce costs and increase efficiency in film and television production, such as script creation, picture and video content generation, visual effects generation, post-editing production, market optimization and operation and other industrial chain links can use AI to assist production.
AI is a great tool in the concept design phase of film and television, which can help to broaden the horizons and ideas of creators. In the art design stage, the created art design drawings can be further refined by AI, which is expected to provide richer choices and improvements in details such as materials and props. In particular, it is expected that the production efficiency of animation, film, television, comics, and other content will be greatly improved.
1) Film and television script creation & evaluation
The traditional script writing process requires a lot of manpower, material resources and time, but AI technology can automatically generate scripts that meet the requirements by learning and Xi a large amount of script data. For example, in 2016, the American Hollywood production company Wanda Group cooperated with IBM to develop an AI script creation tool called "Oscar", which can automatically generate movie scripts according to the needs and requirements of users. In 2023, Huace Film and Television will establish the AIGC Application Research Institute, which consists of 4 departments, including more than 20 outstanding full-time talents such as artificial intelligence experts, AI human-machine co-creation compound talents, and film and television data experts.
Focusing on the pain points of film and television drama production, Great Aim has promoted key projects such as "Novel and Script Efficient Evaluation System Project", "Top Screenwriter Assistant System Project", "Digital Asset Intelligent Generation Project" and "Video Intelligent Upgrade Project" to improve the production efficiency and product quality of its main business. The company is actively promoting the research and development of vertical models suitable for script-assisted creation.
In December 2022, DeepMind launched an AI screenwriting product "Dramatron", which is based on the self-developed large language model Chinchilla, which can generate a complete movie or drama script including title, character list, plot, scene description and dialogue with a single sentence outline, and is coherent.
Specifically, Dramatron uses logical hint chains to hierarchically apply large language models to generate well-structured contexts, making the title, characters, story rhythm, place descriptions, and dialogues in the script read more cohesively. At the same time, it will generate story details including title, characters, plot, scene & dialogue based on the semantic understanding of a one-sentence outline.
Haima Qingfan: A technology-driven, content-centric, high-quality film and television work-related creation company, covering novel IP, film and television scripts, short video scripts, etc., one-stop content creation services from intelligent writing to evaluation, with more than 1 million users on the whole platform. The artificial intelligence script evaluation system independently developed by the team is committed to promoting the industrialization of film and television. The team used machine science Xi to predict the quality of novels and scripts, and screened out IPs and scripts with popular attributes with higher text quality and greater possibility of adaptation in online novels and scripts.
With the support of efficient and accurate AI algorithms, Haima Qingfan's own screenwriting team uses AI data combined with senior content experience in the film and television industry to carry out IP development and script creation. Since the opening of cooperation in 2019, it has reviewed more than 50,000 episodes of dramas, more than 20,000 movies/online movies, and more than 8 million online novels, helping to improve the efficiency of content creation in the industry.
The main customers include: Taopiaopiao, Beijing Culture, Ciwen Media, Alibaba Literature, China Film Production, Qishu Youyu, Aimei Film and Television, etc.
2) Film and television special effects production and video editing
Traditional special effects production requires professional special effects artists to perform complex operations and rendering, while AI technology can achieve automatic special effects production through deep learning Xi algorithms and computer graphics technology.
Google's DeepDream project uses neural network technology to transform ordinary photos into artistic-style special effects. The traditional video editing process requires editors to spend a lot of time and energy on editing and post-processing, while AI technology can automatically identify keyframes and scenes in the video through image recognition and depth Xi algorithms to achieve fast editing.
For example, Adobe's Premiere Pro software has introduced AI technology that can automate video editing and post-processing based on user selection and editing Xi. For example, when a user selects a video and marks out keyframes, the tool can automatically identify transitions between keyframes and edit and post-process them according to the user's editing Xi. The advent of such a tool reduces the workload of editors and reduces the cost of editing.
Based on accurate automatic tagging and recognition technology, AI can not only help filmmakers manage and edit audio materials, remove noise and improve sound quality, but also analyze video materials to identify characters and emotions and other information, and complete complex operations such as automatic editing, trailer generation, and short videos.
In addition to professional film editing, with the rise of platforms such as Tiktok, Youtube, and Instgram, the demand for video editing corresponding to video content creation under the creator economy is also worth paying attention to.
Although the professional market is dominated by established professional video editing software, ByteDance's CapCut shows another possibility that the second force brings to video editing, which is to democratize video creativity and production, according to the overseas unicorn official account.
After its release to overseas markets in 2020, CapCut has surpassed 100 million users in less than four years, while Adobe Creative Cloud, where Premiere Pro is located, currently has only about 30 million subscribers, and Final Cut Pro X has only 2 million users in the same time after its release.
Captions: Video editing software with many AI features, founded by Gaurav, the former head of Snap's Design Engineering team, with 3 million creators, 100,000+ daily active users, and 1 million+ videos created per month.
The rise of Captions has benefited from short-form videos, and its first popular feature, which is also the most admired by creators, is automatic subtitling, which is much more accurate than its counterparts in Premiere Pro.
Compared with CapCut, the overall functions and UI of Captions are more concise, and the subtitles and stickers capabilities are at the industry's high-quality level, and it is still iterating AI capabilities, launching AI Eye Contact, AI Dubbing, AI Music and other capabilities. At the same time, Captions also launched Lipdub, a product that focuses on multilingual dubbing and lip-syncing, in October, which overlaps some use cases with products such as 11Labs and HeyGen.
3) Innovate the film and television content generation link - Wensheng video direction
The progress in the field of Wensheng video has been much faster than expected: Runway has released Gen1 and Gen2, launched Motion Brush to take a step forward in reliability, and Stability AI has recently released its first Text-to-Video model, Stable Video Diffusion. In July 2023, Pika Labs launched a server on Discord and gained 500,000 users in a few months, gradually becoming a dark horse company that can compete with Runway.
At the end of November, Pika Labs officially launched the latest generation of video generation model, Pika 1.0. Pika 1.0 not only improves the quality of video generation, but also supports a variety of video styles such as 3D animation, anime, or movies. Pika Labs has completed three rounds of funding for a total of $55 million, with the latest valuation at $250 million. Nat Friedman, Daniel Gross and Lightspeed led Pika's Pre-Seed, Seed, and Series A funding rounds, respectively, as well as a number of Silicon Valley star investors, CEOs or core members of key companies in the AI field.
The highlights of Pika 1.0 include: 1) Text-to-video/image-to-video; 2) Convert the style of the uploaded video;3) Expand the video canvas;4) Change the original video content through AI, such as changing the color of the costume, adding characters, adding props, etc.;5) Extend the video: Use AI to extend the length of the existing video clip by a few seconds, but there are problems with the consistency of the extended video that needs to be improved, and with the increase of the extension time, the overall video effect is currently reduced.
4) AI tools empower film and television producers with classic animation IP and broaden the space for IP adaptation
On December 5, 2023, China's first AI-produced animation film "Yugong Yishan" was grandly launched in Beijing, the project was initiated by the Propaganda Department of Jiyuan City, Henan Province (the birthplace of Yugong Yishan Story), the Engineering Research Center of the Ministry of Education of Beijing Film Academy as the guiding unit, and Interactive Pictures Co., Ltd. as the producer.
At present, it is combined with AI in some aspects of the production process, but it has not yet truly realized the "upgrading of the whole film industry chain" of AI, so this film project will take this as one of the important goals to create a film project with "full process participation" in the AI era.
In short, "AIGC" is implanted into every traditional process such as plays, art, music, 2D/3D animation, live performances, special effects, editing and synthesis, etc., so that AI technology can deeply transform the original model, so as to achieve the main purpose of improving the quality of works, improving work efficiency, and reducing production costs.
The mature traditional process of film and television animation is combined with AIGC, rather than blindly relying on AI technology to complete independently, and the stability has been significantly improved after many tests, which basically solves the problem of jitter and flickering of AI-generated images, and at the same time, the stylized generation of images replaces a large number of 2D\3D animation work.
Fourth, the rise of micro-short dramas and the development of high-quality products
(1) Overview of the micro-short drama industry
On December 6, 2022, the State Administration of Radio and Television issued a notice on the "Opinions on Promoting the Prosperity and Development of Short Drama Creation", which discussed in detail various guiding opinions on supporting the healthy and steady development of the short drama industry, and defined short dramas as "usually a series with a single episode of 15-30 minutes, a series of unit dramas with a single episode of less than 6 episodes, a series of dramas with less than 20 episodes, weekly dramas and other forms, with the characteristics of short length, concise content, compact plot, etc., and complement the advantages of medium and long dramas, micro short dramas, short videos, etc." According to this, a micro-short drama is defined by the length of a single episode and is a series of less than 15 minutes.
According to QuestMobile data, in the proportion of total user time spent in China's mobile Internet sub-industry, the proportion of short video user time has reached 28% after a period of rapid growth from 2019 to 2021, and the occupancy of user time by video works tends to be stable and upward.
We believe that micro-short dramas, as one of the main forms of expression in the field of film and television works, are closer to the current "short, flat, and fast" mobile Internet transmission mode, that is, the characteristics of "short duration of a single episode, flat production cost, and short production cycle".
After two years of high-growth development, the micro-short drama industry has ushered in the current key development node, and there are actually many hidden problems under the high growth of the industry, such as serious homogenization of content, illegal rubbing of edges, and frequent themes that do not conform to mainstream values.
Therefore, from the perspective of economic development, the rise of new industries is expected to effectively drive the development of the industrial chain economy, employment data and household consumption data. However, the long-term development of the industry is inseparable from effective supervision, and from the current regulatory attitude of the State Administration of Radio, Film and Television towards the micro-short drama industry, we prefer to call it "supportive supervision".
On November 20, 2023, the Byte Giant Advertising Rules Center issued an announcement that, in order to promote the compliant development of the short drama advertising business, the qualification requirements for new customer entities that place short drama advertisements have been updated, and the effective date will be November 23, 2023. At present, advertisers need to provide the following corresponding qualifications to promote short dramas on the Douyin platform:
1) The advertiser's "Value-added Telecommunications Business License" and "Information Network Dissemination Audio-Visual Program License"
2) The advertiser's "Radio and Television Program Production and Business License"
3) "Short Drama Copyright Statement and Commercial Promotion Commitment"
4) Screenshots of the main body information of the Mini Program, Quick App, and APP to be launched, and the subject of the corresponding application must be the same as the advertiser
Note: Proxy investment (including one-to-one proxy investment, one-to-many proxy investment) is not supported; if there is no "Information Network Transmission Audiovisual License", the "Network Culture Business License" can be provided; if the short drama promoted by the advertiser has a certain influence or popularity and other key short dramas, the copyright certificate of the corresponding short drama must be provided.
Business model: The main participants of micro-short dramas include: micro-short drama content copyright owners, production and filming parties, micro-short drama copyright owners, micro-short drama distributors and downstream users. After the filming is completed by purchasing content IP or creating its own script, the producer of the micro-short drama will provide the micro-short drama to the copyright owner of the micro-short drama, and then realize the traffic distribution of the micro-short drama through platforms such as traffic distribution platforms/content communities to reach C-end users.
Specifically, 1) users watch advertisements to unlock follow-up content, 2) recharge and consume platform points to pay for a single episode, 3) micro-short drama advertising implantation, 4) micro-short drama platform membership subscription, 5) popular micro-short drama IP monetization, including starring live broadcasts, etc.
According to the huge amount of creative platform data, the profit distribution of the entire micro-short drama industry chain also has a certain mechanism.
By purchasing and customizing scripts from the upstream, and then putting the micro-short dramas into advertising and streaming, the better the content, the more attractive consumers will be, and the better the cash flow quality of the platform. The script creation time of IP & screenwriter is short, the cost is low, and the guaranteed income plus 1-2% of the share can ensure the continuous output of the script creator.
For the filming party, because it is a micro-short drama production and a realistic theme, it does not require the investment of high technology and high equipment costs, and the slightly higher guaranteed income and commission ratio can ensure the sustainability of the production team.
For copyright owners, the main cost lies in the delivery of traffic and the purchase of scripts. Under the condition that they have a large number of active users, distributors can accurately reach the user groups of micro-short dramas with corresponding labels to achieve accurate delivery.
In the cost of micro-short dramas, the cost of buying volume accounts for a high proportion. According to the recent statistics of the Byte Giant Engine-Content Consumption Business Center, the micro-short drama industry will continue to maintain rapid development in 2023, with a daily consumption of 3000w+ during the Spring Festival at the beginning of 23, a breakthrough of 4000w+ during the May Day holiday, a Dragon Boat Festival impulse of 6000w+, and an average daily scale of more than 5000w in September.
According to the WeChat public account of the Dou Short Drama Ranking, the ROI of the mini program micro-short drama is higher than 1.1 and will continue to be streamed, we assume that the average daily stream is 5000w, according to the calculation, the annual turnover is expected to reach at least nearly 20 billion yuan, plus the launch of other streaming platforms, the market space is estimated to be between 200-30 billion yuan, which also means that it is equal to nearly half of the market space size of the 64.1 billion movie box office in 2019.
On the content supply side, micro-short dramas have a large number of online literary material sources. According to the statistics of the giant engine, in 2022, the cumulative number of online literary works on various platforms will reach 35 million, and the number of online adaptations will only account for 0.02%, providing a steady stream of adaptation space for the creation of micro-short dramas. And from the perspective of the distribution of IP sources of micro-short dramas, in addition to online literature, there are also a large number of high-quality comics, film and television dramas, games, animation IPs, etc., which also have potential.
(2) The marginal changes brought by micro-short dramas to the film and television industry
We believe that in addition to being a new track increment, micro-short dramas and live-action film and television games will effectively make up for the problems of long production cycles, limited production capacity and insufficient ways to monetize film and television IP copyrights in the film and television industry, and are expected to open up new space for advertising traffic models and IP copyright monetization in the film and television industry. Micro-short dramas are expected to bring marginal changes to the film and television industry, mainly reflected in the following points:
1) New direction of IP licensing (micro-short dramas, live-action film and television games, etc.)
As an emerging content track, micro-short dramas inject increments into the industry, and the upstream IP licensors of the industry are expected to be the first to benefit. With the high-quality and healthy development of the industry, the classic IP image and classic IP script are expected to be better derived, and the development of the upstream IP side will be promoted through the model of guarantee + account sharing.
At the same time, we believe that in the future, the field of micro-short dramas will not only be purely fast-paced "cool dramas", but also the micro-short drama industry is expected to present the form of platform micro-short dramas with high-quality content and classic IP, such as micro-short dramas adapted from well-known and popular movies and TV drama IP, such as the production of the micro-short drama "Assassination of the Novelist" that has been started by Huace Film and Television.
At the same time, film and television companies have a large number of IPs in their hands, and some first-mover companies have explored mini games as one of the ways to monetize IP, opening up the path of IP monetization in the form of royalty + turnover sharing, and opening up the imagination space of IP monetization. The emergence of live-action interactive micro-short drama games is also expected to become one of the ways for film and television companies to monetize their IP, whether it is animation IP, live-action IP or TV drama IP, etc., it is likely to become a source of production content for live-action film and television games.
2) The traditional business model of film and television companies is pure ToB, and micro-short dramas make film and television companies closer to C-end users
After the film and television production companies in the industry have developed and completed the script creation through self-development or external acquisition, the film and television works produced will be disseminated to the C-end user group through multi-level channels such as distributors, third-party marketers, distributors or online video platforms after production and shooting.
With the emergence of new media forms of micro-short dramas, film and television production companies can use the advantages of their own industrial chain to produce micro-short dramas, and then invest in the purchase volume by contacting third-party platforms, such as Douyin platform, WeChat applet, etc., to reach consumer groups, and more directly and quickly understand the portrait preferences of C-end users, so as to achieve rapid transformation of style update iteration, which is also conducive to the production of medium and long film and television drama works, and promotes the long-term healthy development of announcements.
3) Increase production capacity and reduce production costs, and micro-short dramas are expected to show a trend of high-quality content in the future
Traditional film companies often face many uncertainties such as long production cycles, high investment, and fixed share ratios, while the production cycle of micro-short dramas is short, and the script creation and shooting cycle can be completed within one or two months, so we believe that the production cost is low. Film and television companies often have a large number of high-quality film and television shooting bases, editing, shooting props, group performances, fast shooting speed, sufficient number of scripts and other multi-faceted advantages, which can quickly cut into the production of micro-short dramas. Even if you don't personally participate in the production process, you can benefit from connecting all participants in the industrial chain as a resource integrator, and at the same time, you can also have industrial chain advantages in many aspects such as investment promotion and recruitment of technical management personnel.
At the same time, we believe that the content of micro-short dramas is expected to become high-quality. In the early stage of the development of the industry, there may be shoddy micro-short dramas that rely on buying volume to reach users and become popular models, but when more homogeneous content frequently appears, consumers are less willing to pay, and the ROI of micro-short dramas will also decrease. High-quality micro-short dramas can continue to ensure the reputation of the work for a long time, gradually accumulate more user groups to stay in the producer of high-quality micro-short dramas, and more user payment and advertising placement can make the business model achieve a positive cycle, whether it is relying on classic IP or self-created scripts, the future of high-quality content is likely to be a long-term development trend.
4) It is expected to bring more business monetization models to film and television production companies and traffic platforms
As a form of media content, micro-short dramas are essentially similar to long videos, high-quality content attracts more users to watch and becomes a hit, and there are more monetization channels after the traffic increases, such as the brand placement of plot advertisements in the production process, the insertion of opening and ending advertisements, and the insertion of shopping links in the plot for monetization. The starring actor uses private domain traffic to conduct live broadcast activities, etc., and the Kuaishou side currently has anchors who have completed the process from the earliest shooting videos to live streaming and then to micro-short dramas interspersed with advertising placement and bringing goods, and the improvement of GMV has also brought benefits to related platforms.
As a brand owner, in today's situation of high traffic costs, choosing to transfer part of the budget from the live broadcast room to business micro-short dramas is also a way to reduce traffic costs.
5) Enhance the value of film and television copyright protection services
According to the data of Kuaishou Xingmang Micro Short Drama, as of January 2, 2023, a total of 921 accounts have been found to maliciously pirate "Kuaishou Xingmang Micro Short Drama" on a short video platform, of which 197 new pirated accounts will be added from December 14, 2022 to January 2, 2023. We believe that the emergence of the incremental market for micro-short dramas is expected to increase the scope of customers of copyright protection service providers on the one hand, and on the other hand, it is also expected to arouse the attention of traditional content providers to the value of copyright protection services, and boost the value of copyright protection services on both sides.
6) Reduce the policy risks brought by long dramas and movies, and have a low dependence on celebrities
Due to the short production cycle of micro-short dramas, the large number of creations, and the fact that most of the actors are non-star artists, in recent years, there have been many cases of celebrities' personal behavior violations that have led to the removal of their related film and television works, bringing economic and other losses to relevant companies. Investing in the field of micro-short dramas can appropriately reduce the occurrence of similar risks, which is expected to promote the sustainable development of film and television companies and investors, and the stability of the capital side will also provide stable cash flow support for micro-short drama production companies and script creators, and promote the normal cycle operation of the industrial chain.
5. Summary of the report
Benefiting from the recovery of offline viewing demand from consumer groups and the drive of popular movie content, the film market will recover well in 2023, especially in the Spring Festival and summer holidays, and the frequent release of popular films will drive the high growth of the mainland box office market in 23 years, so the supply of high-quality content is the guarantee for the long-term steady growth of the film and television industry.
Looking forward to 2024, Yang Mi starring in "There is No Thing That Can't Be Solved by a Hot Pot", Aaron Kwok starring in "Temporary Robbery", the classic animated IP film "Bear Infested: Reversing Time and Space", and the high-hit film "Mr. Red Carpet" starring Andy Lau and directed by Ning Hao is expected to become a hit film of the year, and other "There is a Commissary by the Clouds", "Genius Game", "Nezha's Demon Boy in the Sea", "Wild Times", "Crisis Route", "Wild Child", "Legend", etc. are all expected to contribute new increments to the Chinese film market in 2024.
With the application of AI tools in the film and television industry, it is expected to benefit the entire film industry chain, including film and television script production, scene construction, post-editing, publicity, etc., to achieve real cost reduction and efficiency increase in the industry. At the same time, with the steady development of new media formats such as micro-short dramas, we believe that micro-short dramas are expected to become the second growth curve for the revenue growth of film and television companies.
Under the trend of "supportive supervision", film and television companies are expected to successfully enter the micro-short drama track and open up a new space for film and television companies' IP monetization.
At present, the corresponding valuation of the film and television sector in 24 years is 28x, superimposed with the blessing of head themes such as micro-short dramas and AI film and television, and we are optimistic about the opportunities in the film and television sector in 24 years: Shanghai Film, a leading film and television content producer (group support + IP advantages), Huace Film and Television (rich reserves of film and television dramas + micro-short drama track), Guangguang Media (24 years of "Nezha 2" can be expected) and other A-shares [Alpha Entertainment, Jebsen Shares, Baina Qiancheng, China Film, Bona Films], etc., as well as Hong Kong stocks [Vobile Group (Film and Television Copyright Services), Ningmeng Film and Television (short dramas go overseas + 24 years of film list reserves), TV broadcasting (scarcity of Hong Kong dramas, handheld IP to develop e-commerce)] and so on.
6. Risk factors
Macroeconomic risks: the decline in domestic economic growth and the decline in disposable income of residents have led to a decrease in consumption of the film and television industry;
The risk of declining growth rate of the micro-short drama industry: the trend of content homogenization is serious, the regulatory risk of the industry is intensifying, and the growth rate of the industry scale is declining;
New technologies are not progressing as expected: Generative AI has not had a significant effect on reducing costs and increasing efficiency in the film and television industry.
——————————————————
The report belongs to the original author, only for Xi! If there is any infringement, please delete it privately, thank you!
The report comes from [Foresight Think Tank]