Entertainment: I am the peak

Should I sell Chapter 658, "Operation Red Sea"?

As CEO and Vice President of Production of Autumn Pictures, Zhang Zhao and Chen Zhixi have been showing off everywhere for the past month, talking about the company's successful experience with "Wolf Warrior 2".

Wolf Warrior 2 has grossed 56 billion yuan at the box office. If Qiutian were not a listed company, there wouldn't be much of a story to tell. But since Qiutian is a listed company, the 56 billion yuan figure can be used to create all sorts of interesting stories.

In the past month or so, the box office figures have been discussed to death, and the wealth-creating myth brought about by the stock price increase has been talked about. Now Chen Zhixi wants to talk about something else.

"The revenue structure of domestic film and television companies is too singular, with box office revenue accounting for as much as 80%, and in some cases even as much as 90%, which is a very unhealthy proportion. This is also one of the reasons why domestic film and television investment is too risky, as revenue relies entirely on box office revenue that can break even three times the cost, and the development of film and television-related products is still relatively backward."

"Things have been a little better in the last two years. Copyright prices have gone up a bit, which has allowed us to sell our films to video websites and recoup some of the losses. But this amount is just a drop in the bucket and doesn't quench our thirst. For Hollywood films, box office revenue usually only accounts for one-third of the total revenue. They have a very mature system for managing peripheral products and services, and I think we should learn from that."

The excessively high proportion of domestic film box office revenue is a long-standing issue, which has been raised at least 5 years ago. However, the domestic market is too unique, making it difficult to establish other revenue channels.

Making movies is really hard to make money!

With the market's hot money now receding, Chen Zhixi's renewed call for diversifying film revenue channels is timely and appropriate.

"Our company started developing movie merchandise relatively early and has some successful experience, but we still wouldn't dare say we're very mature in this area," Chen Zhixi began to complain. "We started preparing for 'Wolf Warrior 2' merchandise a month in advance. According to incomplete statistics, the sales of officially licensed products we've authorized have already reached 40 to 50 billion yuan. However, piracy is extremely serious. After 'Wolf Warrior 2' grossed 1 billion yuan in its opening weekend, a lot of pirated T-shirts and bullet-shaped pendants appeared online. We worked with online platforms to monitor them, but we really couldn't keep up."

"We lost even more!"

Sales of 40 to 50 billion do not mean that the company will earn that much in the fall. Specific revenue figures will not be released in the fall.

After venting her frustrations, Chen Zhixi continued, "Wolf Warrior 2 is too special, so its merchandise can generate some revenue. But there are many films with average box office performance that may not have the resources to produce merchandise and will still rely heavily on box office revenue. So I think it is necessary and urgent to explore revenue channels other than box office revenue."

Those in the industry know that Chen Zhixi is right. It's not just Qiutian that makes movie merchandise, but piracy is rampant in China. Moreover, the cost of breaking the law is low, while the cost of protecting rights is high. Even Qiutian can't do anything about piracy.

Chen Zhixi then went on to advertise that Autumn Pictures' film and television merchandise development plans could be offered to industry professionals.

"Welcome everyone to cooperate," Chen Zhixi said with a smile.

However, after Chen Zhixi's words were reported, netizens focused on how much Qiu Tian earned from merchandise related to "Wolf Warrior 2".

With sales of 40-50 billion, making 5 billion in profit isn't unreasonable, is it?
That's outrageous! Who makes such high profit margins on merchandise?!
A month before the release of "Wolf Warrior 2", Li Qiutang told the copyright director that he was guaranteed to earn 100 million yuan from the merchandise. After the movie was released, the copyright director said that he would quit if he could earn less than 200 million yuan.

However, in retrospect, both of them underestimated the profitability of "Wolf Warrior 2".

Through licensing and sales revenue sharing, Wolf Warrior 2 has brought in no less than 5 million yuan in profits for the autumn season in just over a month.

The copyright department has become the most profitable department for the company so far this year, and it's unlikely that any other department will earn more in the future.

To reward the outstanding contributions of the copyright operations department, the company arranged an overseas trip for them afterwards.

When it's time to reward, autumn is absolutely generous. The copyright director was preparing for the department's winter trip abroad, but a bolt from the blue woke him from his dream.

The deputy manager in charge of derivative product development suddenly resigned!
He was a major contributor to the development of the "Wolf Warrior 2" merchandise, and he will definitely receive bonuses and promotions in the future. Why did he resign at this time?
But he said he didn't want to work in Yanjing anymore after finishing this big order for the company, and wanted to go back to his hometown to be with his wife and children. The company couldn't refuse such a reason, so they had to let him go.

However, a week later, the day before the premiere of "City of Rock," the copyright director told Li Qiutang that the manager had joined Huayi Brothers.

"Because of the non-compete agreement, he wasn't in the film and entertainment sector, but instead worked as an advisor at an investment company under Huayi Brothers. This is clearly poaching, it's outrageous! He even went back to his hometown to be with his wife and kids, we've all been played by him."

It's obvious, but what can be done about it in the fall?

There's no way around it, because on the surface, this job change seems perfectly legitimate. Besides, they've poached people from other companies in the past few months.

Moreover, the deputy manager of the derivative product development team in the copyright operation department is a low-level leader who would not cause the company to have any thoughts of "retaliation".

But it does feel a bit off.

However, Li Qiutang no longer cares about Huayi. Huayi's film and entertainment revenue has been declining continuously. In Li Qiutang's eyes, Huayi is a dying person who will stop breathing on its own without any intervention.

This can be considered as achieving their goal of diversifying their film offerings.

So far this year, all the films produced by Huayi Brothers have flopped, with the only profitable film being "Dangal".

Huayi Brothers' 51% owned subsidiary, Huaying Tianxia, ​​participated in the domestic distribution of "Dangal," and yet they still have the nerve to call "Dangal" their own film.

How much of that distribution revenue will actually end up in Huayi's hands?
Huayi Brothers suffered such a loss with "Valerian and the City of a Thousand Planets" that they couldn't even find anyone to take the blame, and the industry ridiculed them as "picking up something unwanted in autumn and treating it as a treasure."

After the summer movie season, Huayi Brothers will only release one film, "Youth," in December, and according to current information, Huayi Brothers will be absent from next year's Spring Festival movie season.

To put it bluntly, Huayi is only hanging on by its real-world entertainment and internet entertainment (mainly game companies) sectors; otherwise, it would have been finished long ago.

Huayi's latest market value is 190 billion yuan, ranking at the bottom of the top five in China, and it is the only film and television company with a market value of less than 200 billion yuan. Even Huace has a market value of 270 billion yuan!
Li Qiutang really looked down on companies like that.

"Don't worry about him, he'll never amount to anything." Making a mountain out of a molehill by bringing up the departure of a deputy manager.

Li Qiutang left the company in the afternoon to go and check on the post-production work of two films.

At the same time, Ye Ning entered the headquarters building of Berna Pictures and met Yu Dong, who had returned from a business trip. After exchanging pleasantries, Ye Ning asked him the purpose of her visit: "Mr. Yu, are you selling your film 'Operation Red Sea'?"

(End of this chapter)