Entertainment: I am the peak

Chapter 738 Is the Industry Really in a Downturn?

The company's daily operations are fully managed by CEO Zhang Zhao. Apart from major strategic deployments and decisions, Li Qiutang rarely interferes with the company's management. Sometimes he won't even come to the company once a month.

However, the conflict between the chairman and the CEO is an inherent part of corporate management, and no company can escape this problem unless Li Qiutang is willing to take on both roles. But if he does that, he can forget about making movies.

While Zhang Zhao was indeed in charge of the company's daily management, Li Qiutang, through the "Sky Tree Project" and by arranging for Chen Zhixi to serve as the vice president of production early on, firmly controlled the lifeline of a film and television company—production.

The delicate and amicable balance between the chairman and CEO of Autumn Pictures had been maintained for many years. Now, Li Qiutang's sudden announcement of internal restructuring has disrupted this long-standing balance.

Zhang Zhao initially thought it was due to the arrest of Feng Xiaogang, and he also felt it was necessary to take the opportunity to reorganize the company. However, he later discovered that this was not the most important reason for Li Qiutang's actions.

Li Qiutang and Zhang Zhao talked behind closed doors for an entire afternoon. Li Qiutang told Zhang Zhao about the problems she had discovered one by one and persuaded Zhang Zhao to cooperate with her in reorganizing the company, especially the company's blind large-scale investment and blind expansion.

Autumn Pictures has made too much money; it wouldn't be an exaggeration to say they have too much to spend.

Upon hearing the news, Chen Zhixi returned from the United States overnight. She had always been in charge of production, so if there was to be a restructuring of production investment, she would be the first to be affected.

Li Qiutang's first target was indeed the production department's blind investment, but he also paid attention to the methods and would not reprimand senior executives in front of the grassroots employees, as this would not be conducive to their future work.

Li Qiutang and Zhang Zhao convened a closed-door meeting with core executives in production management, including Chen Zhixi.

Li Qiutang, armed with the materials she had compiled over the past few days, launched an inquiry into the production management.

Many of the films the company has recently invested in are from Shanghai. According to Chen Zhixi, this is because the company has reached a cooperation agreement with CMC, and Li Ruigang acted as a go-between, facilitating many collaborations with the Shanghai film industry.

"Is Guo Jingming also from the Shanghai film circle?" Li Qiutang discovered Guo Jingming's "Yin Yang Master" two-part series in the new film that the company invested in and will start filming next year. The film is expected to start filming in the middle of next year, with two parts to be shot back-to-back, with a total investment of 6 million yuan. Qiutian Pictures is the third largest producer.

Guo Jingming is certainly not part of the Shanghai circle, but he does operate in Shanghai and has a large business, so it's not surprising that he has some connections within the Shanghai circle.

"How did you evaluate him internally?" Guo Jingming doesn't have a good reputation among audiences, but from a production perspective, he is indeed a director who can make money. Li Qiutang wouldn't be an outsider and talk about the director's reputation.

The evaluation of "Onmyoji" by the relevant person in charge was entirely within Li Qiutang's expectations.

However, Li Qiutang still rejected the investment in "Onmyoji".

"Who gave Guo Jingming the IP of Onmyoji? It's not that you can't adapt Japanese IPs, but you need to think carefully about how risky it is to adapt Japanese IPs in China, especially IPs like Onmyoji and Shikigami that are rooted in traditional Japanese culture. Whether Chinese audiences can accept them is a question."

"The Legend of the Demon Cat is fine in itself, but does Guo Jingming have Chen Kaige's aesthetic sense? You only see that Guo Jingming can make money, but think about what kind of results a Japanese film can achieve in China. He has a lot of fans, but how much box office revenue can his fans bring in? Ordinary audiences won't be interested in a film like this."

Li Qiutang demanded to withdraw from the "Onmyoji" project: "There should be quite a few people willing to take over Guo Jingming's project, so I can get my money back."

After that, Li Qiutang also rejected another resource from the Shanghai entertainment circle, "Operation Fox Hunt".

Li Qiutang's decision to reject the play was met with much opposition.

This film has a very high chance of winning. It is based on the real Operation Fox Hunt, and the scriptwriting has received support from various government departments and the original Fox Hunt team members.

Shanghai Film Group and Qiu Tian both believe that "Operation Fox Hunt" can create the box office miracles of "Operation Mekong" and "Operation Red Sea".

Shanghai Film Studio sought out autumn, hoping to draw upon relevant experiences related to autumn.

"Filming will start next May or June, and Tony Leung has already confirmed to join the cast, so why not invest?" Indeed, on the surface, "Operation Fox Hunt" has a very high chance of winning, and even Zhang Zhao felt that there was no reason to reject the film.

Li Qiutang explained, "If Shanghai Film Studio wants to follow our example and make mainstream commercial films, they should choose an action movie, a thrilling case, instead of an economic crime film. Economic crimes presented on the big screen don't provide the audience with any excitement. Look at 'Overheard,' how much did it make? Can Zhang Lijia even surpass 'Overheard'?"

"A budget of 200 million, a break-even point of 600 million. Even the three 'Overheard' films didn't reach 600 million. I'd invest if the director could keep the budget under 100 million." Li Qiutang didn't remember the exact box office figure for the film, but if the director was willing to lower the budget, Li Qiutang wouldn't mind spending some money to play along with the Shanghai film circle. Losing money was fine; it was just a way to build relationships.

After discussing "Operation Fox Hunt," there was another film she wanted to talk about, but Li Qiutang paused and instead started talking about the industry situation.

If you don't thoroughly explain the industry situation, you won't be able to get much of your work done.

Many people raised concerns about the industry downturn at this year's Shanghai International Film Festival, but many at Autumn Film Studio did not feel the chill of the downturn.

"We have received more investment in the past six months than in previous years."

"Because the more the industry declines, the more concentrated resources become," Li Qiutang pointed out.

As the top company in the industry, there are many people who want to invest in Qiutian Pictures. Investors who withdraw from other companies will think about giving their money to Qiutian.

"This year's National Day holiday box office totaled 19 billion yuan in 7 days, a 3% drop from last year. This is a signal." Li Qiutang also revealed a secret: "I recently wrote an internal report for the ministry."

"You're still writing this?"

"I was invited to write this, and it's my first time writing something like this. Don't interrupt," Li Qiutang shared what she had written with her colleagues. "I'm not kidding. The hot money in the industry is receding, and as the leaders, we are temporarily unaffected, but we absolutely cannot go against the trend and remain unaffected."

"Since the beginning of this year, the regulation of the film and television industry has become increasingly strict. The number of film and television companies raising funds in the secondary market has decreased by more than 50% year-on-year, and the IPOs in the film and television sector have remained at zero."

"Now they're launching a tax crackdown on the film and television industry. You must know how many companies have been deregistered in Horgos recently, right?"

"The salary cap will definitely kill off a number of companies that rely on celebrity endorsements for project financing."

“The industry also has prominent structural problems. Last year, 3800 films were approved for production, but 80% of them failed to get into theaters, and of those that did, 80% failed to break even. Most people in this industry are losing money.”

Autumn may not lose money standing on the top of the pyramid, but when most people in an industry can't make money, the foundation is unstable, and the pyramid will inevitably collapse.

“The cinemas have expanded blindly, and the total number of screens has increased rapidly, but our core operating data, such as occupancy rate and output per screen, have declined very sharply.”

"Why did I want to acquire LeEco? It's not just to expand our company's reach, but also because online viewing of TV shows and movies will become a trend in the future, and theatrical films will fall into a long-term slump."

"Let me emphasize again, I am not exaggerating. The film and television industry is about to face an unprecedented darkest moment. We must let the chill blow to every corner of the company, and everyone must be on high alert."

Then, he also rejected a movie called "Twenty Years of Northeast Past". This was not a web movie at all. The movie starred Xia Yu, Zhang Jingchu, Hu Jun and Wu Yue. It was a real theatrical film.

"You dare to touch gangster movies? You really don't know your own limitations."

"These films, we'll sell them to whoever's willing to take them over and get our money back. Good steel should be used where it's needed most, not wasted on trivial matters."

Although Li Qiutang didn't say it explicitly, everyone understood that he was going to scale back his strategy.

(End of this chapter)