On March 18, China Literature Group (0772. HK) announced its 2023 annual results. According to the report, in 2023, China Literature Group will achieve revenue of 7.01 billion yuan, net profit attributable to shareholders of the company will be 800 million yuan, a year-on-year increase of 32.3%, and the corresponding net profit margin attributable to the parent company will reach 11.5%, an increase of 3.5 percentage points year-on-year. At the same time, China Literature's operating profit reached 710 million yuan, a year-on-year increase of 12.8%, achieving a double improvement in operating efficiency and profit performance.
Hou Xiaonan, CEO and President of China Literature, said: "In 2023, China Literature will continue to build an IP development system that spans all forms of content, and at the same time empower creators with the latest AI technology to continuously consolidate the content ecosystem. In terms of online business, we have continuously improved the competitiveness of the high-quality content ecosystem through a series of measures such as optimizing product operations and channel structure, and the growth of Qidian Reading has reached a record high. In addition, in the field of IP visualization and commercialization, we present a series of high-quality works to users, and actively explore emerging content forms such as high-quality short dramas. We believe that in the wave of industry upgrading, China Literature is well prepared in terms of high-quality content reserves, ecological collaboration, and technological innovation. We will continue to adhere to the core values of 'content, platform, and IP', and achieve our mission to make good stories endless." ”
High-quality content continued to set new records, and the starting point reading revenue increased by 40% year-on-year
According to the performance report, in 2023, China Literature continued to improve its platform capabilities to serve the content creation ecosystem, focusing on the production of high-quality content, implementing strong anti-piracy measures, and optimizing the operation of core products, and achieved revenue of RMB3.95 billion from its online business, of which the revenue from its core self-owned products, Starting Reading, increased by 40% year-on-year.
Driven by the high-quality content strategy, the quality and vitality of China Literature's content creation ecosystem have been continuously improved. According to the data, the number of new writers on the platform has reached 380,000, the number of new works has exceeded 670,000, and the number of new words has reached 39 billion. Among them, the continuous increase in the number of new creators and the outstanding performance are particularly eye-catching. It is reported that in 2023, 60% of the new writers on the China Literature platform will be post-00s, and the number of new writers with a total income of more than 100,000 yuan will increase by 60% year-on-year, and the number of new books with an income of more than 1 million yuan will account for nearly one-third, and the number of works of post-00s writers with more than 10,000 works will increase by 230% year-on-year.
In terms of users, with the IP community as the link, China Literature has continuously enhanced the close connection between readers and works through a series of operational activities. For example, in 2023, the cumulative number of words of "This Chapter Says" read at the starting point of "The Circle of Fate" will exceed 70 million, and a single user will dub the work more than 2,800 times. At the same time, the official theme station "Curly Baboon Research Association" created by the platform for "The Master of Mystery" gathered more than 600,000 fans in the first month of its launch relying on a new interactive method, and the daily activity of users increased by more than 200% month-on-month, which not only effectively enhanced user stickiness, but also provided a new path and new increment for the creation of "mysterious" audiobooks, blind boxes, adapted animations and other categories.
Thanks to the active creative ecosystem, continuous improvement of product operations, and effective copyright protection mechanisms, China Literature's "Starting Point Reading" has shown continuous growth in recent years, with revenue increasing by 40% year-on-year in 2023. At the same time, the number of new works with an average subscription of more than 100,000 increased by 125% year-on-year, the number of new books with millions of reviews on the platform increased by 67% year-on-year, and the number of works that received 100,000 monthly tickets increased by 66% year-on-year. In 2023, the average MAU of China Literature will reach 210 million, and the average number of monthly paying users will reach 8.7 million, an increase of 10.1% year-on-year.
"Breaking the Sky", "Douluo Continent" and other comic games continue to be popular, and the ecology of the whole IP industry has been improved
Hou Xiaonan said: "In order to realize the social and commercial value of the head IP in the whole life cycle, systematic and integrated development is required. Therefore, China Literature has always prioritized the construction of an IP development system that spans the entire life cycle of various content forms. ”
During the reporting period, China Literature continued to consolidate the construction of a full-life cycle development ecosystem for high-quality IP, and increased the popularity rate of different content forms. According to the data, in 2023, China Literature's copyright operation and other revenue will be 3.06 billion yuan, with a quarter-on-quarter growth rate of 46.2% in the second half of the year.
In terms of film and television, following the past popular works such as "Celebrating More Than Years", "Son-in-law", "The World" and "Hello, Li Huanying", China Literature will successively launch high-quality hit works such as "The Wind Rises", "Ordinary Road", "Sun with Me" and "Stalker" in 2023. Among them, "Ordinary Road" remained popular during the broadcast, ranking first in the Tencent Video TV drama hit list for 16 consecutive days, ranking first in the prime-time TV drama ratings of China's audio-visual big data (CVB) for 15 consecutive days, and ranking first in the popularity list of multiple third-party professional film and television data platforms; "Sun with Me" ranked first in the daily list of Kuyun's full-end broadcast volume for 16 consecutive days, and "Stalker" ranked first in the prime-time TV drama ratings of China's audio-visual big data during the broadcast.
In the field of animation, China Literature continues to launch sequels and new episodes of classic IP adaptations, which makes the top IP content continue to maintain high popularity. During the period, popular animation sequels such as "Breaking the Sky", "Star Change", "Full-time Mage" and "Martial Arts" performed well, especially "Breaking the Sky" topped the list of the most popular Chinese comics on Weibo for 3 consecutive months, and currently continues to maintain the popularity of the first animation popularity on the whole network. According to Yunhe data, among the top 10 works on the animation broadcast list on the whole network in 2023, 6 are adapted from the IP of China Literature.
In the field of comics, among the comic works adapted by China Literature IP to be launched in 2023, 13 comics have exceeded 100 million in popularity. At the same time, China Literature Group announced that it plans to acquire the assets of Tencent Animation, and include well-known Chinese comic IPs such as "Under One Man" and "Fox Demon Little Red Lady" into the copyright library, enriching the reserve of China Literature's head IP, and further consolidating the cooperative production line of novel comics and supplementing animation production capacity.
In the field of games, the successful launch of China Literature's authorized adaptations of "The Legend of Mortal Immortals" and "Devouring the Starry Sky", as well as the smooth progress of IP game projects such as "Breaking the Sky" and "Daily Life of Chat Groups", demonstrate the competitiveness of China Literature's IP in the game market. At the same time, China Literature's self-management capabilities are also constantly improving, and the continuous iteration and optimization of New Douluo Continent has brought players a more immersive gaming experience. In the future, China Literature's self-operated game projects such as "Breaking the Sky: A Three-Year Covenant" and "Dafeng Beat the Guard" will also meet you one after another.
"Hot and Hot" and "Celebrating More Than Years 2" have opened a year of blockbusters, with AI, going overseas, and accelerating IP visualization driving medium and long-term growth
In the 2024 Spring Festival, the film "Hot and Hot", co-produced by Xinli Film and China Literature Film and Television, both under China Literature Group, won the box office championship, with a total box office of over 3.4 billion yuan, opening the "year of explosions" of China Literature. Subsequently, China Literature will also usher in a large product cycle of IP business. In addition to "Hot and Hot", the film "Under the Stranger" cooperated by China Literature and director Wu Ershan and the film "Customs Front" cooperated with Emperor are progressing smoothly. In terms of dramas, in the major lists of dramas to be broadcast in 2024, the content of "produced by China Literature" is very high. In Tencent Video's most anticipated list, the second season of "Celebrating More Than Years", "Walking with the Phoenix", "Da Feng Beat the Guard", "Rose Story" and other works are all in the forefront. Among them, the number of Tencent Video reservations for the second season of "Celebrating More Than Years" has exceeded 12 million, making it the first drama on the whole network to exceed 10 million reservations.
On the basis of continuously consolidating the basic skills of the IP ecosystem and improving the development efficiency of the entire IP life cycle, China Literature also actively explores emerging content forms such as short dramas, and accelerates the comprehensive application of AI in the IP ecosystem and the process of going overseas, thereby driving the diversified growth of the company's business in the medium and long term.
In terms of short dramas, in 2023, China Literature Group released the "Short Drama Galaxy Incubation Plan", launching three major initiatives: the 100 IP cultivation plan, the 100 million yuan creation fund support, and the exploration of interactive short dramas. At present, China Literature has several short dramas with a turnover of more than 10 million yuan, and the expansion of animation production capacity after the acquisition of Tencent Comics is expected to further accelerate the visualization of China Literature's IP.
In terms of AI technology empowerment, in 2023, China Literature will release the first large-scale model in the online literature industry, "China Literature Wonderful Pen", and the Writer's Assistant Wonderful Pen Edition, which is now open to all writers who have signed contracts with China Literature, and the weekly utilization rate of AI functions has reached 30%. In addition, as an important application scenario of AI applications, AI machine translation is expected to help WebNovel, China Literature's overseas reading platform, gradually establish a strategic competitive advantage in some core regions. In December 2023, 21 of the top 100 works on WebNovel's best-selling list were AI-translated works.
The overseas business process of Reading Literature is also accelerating, and the overseas reading platform WebNovel provides about 3,800 Chinese translations and about 620,000 local original works. At the same time, high-quality works such as "Hot and Hot" and "Celebrating More Than Years" Season 2 have also been released globally, or contribute new performance growth points to China Literature.