How can you become a star without money?

Chapter 242 The Vanished Thirty Years
China's animation industry experienced a decline that lasted for about thirty years, from the 1990s to the early 2000s.

This is known as the 'Thirty Years of Anime Disappearance'.

从画风引领影响全球的华夏学派时期，82年连环画出版量近9亿册一直衰退到05年的4000万册，终于在2009年恢复到1亿册发行量，开始回暖。

However, behind these nearly 30 years lies a talent gap and an aesthetic discontinuity in Chinese animation. The market recovery is only due to the fact that the "Cultural Revitalization Plan" in 2009 listed the animation industry as one of the eight key cultural industries for development and introduced various related support measures.

Compared to the booming animation industry in Europe, America, and Japan in recent years, the number of influential works in Chinese animation has been very limited. The lack of IP influence in these works has directly resulted in the inability of comics to collaborate with games and animations. In addition, with the penetration of mature industrialization strategies in Japan, Chinese animation can be described as 'quiet and unnoticed'.

Even a leading comic magazine like "Comic Fans" hasn't produced any particularly influential IPs, and without influence, it naturally lacks market consumption potential.

Among the few animation IPs available in recent years, "Qin's Moon" and "Rainbow Cat" can be considered to have a certain audience with consumption potential, while "Pleasant Goat and Big Big Wolf", "GG Bond", and "Blue Cat" are basically aimed at children.

Therefore, taking advantage of the 'Magic Comic Con', Wang Yao specially invited Xuanji Company to participate in the cooperation. As one of the most pioneering companies in 3D technology in China, Xuanji is not only a potential force in the upcoming 3D film market, but also a significant potential force in addition to its copyright potential.

Xuanji can be considered one of the first companies in China to heavily invest in the development of the 3D technology industry. Its parent company, Tomorrow, was one of the earliest companies in China to explore 3D technology and holds multiple related technology engines. Xuanji was founded entirely because it needed to monetize through 'content + technology'. At the same time, in 07, its first work, "Qin's Moon," which cost tens of millions of yuan with the help of subsidies, appeared, and it began to catch up with the foreign animation industry in terms of content quality.

However, technology companies have a problem: they are too "honest." Mingyue Xuanji has the most advanced technology in China, but it has always adhered to the "work-study" model in running the company. While providing technical services to major film and game companies, it reinvests the money it earns into content creation.

While this model is reliable, it does limit development. The output and quality of "Qin's Moon" should have been improved, but due to the "honest man" model, the production cycle became very long.

In order to quickly accumulate funds, Shen Ping, the founder of "Qin's Time", began to try various commercialization paths, such as animation and game adaptation. Seeing the success of the "Pleasant Goat and Big Big Wolf" movie, he also wanted to try to get involved, but funds were indeed tight. After receiving Wang Yao's invitation, he immediately expressed his enthusiasm for cooperation.

"Mr. Shen, I'm sorry to have kept you waiting." Wang Yao arrived at the conference room to meet Shen Ping, intending to discuss IP licensing cooperation.

"Mr. Wang, this event was a great success! Congratulations!" Shen Ping stood up and said with a smile.

"Congratulations! The Qin's Moon booth is very popular." Wang Yao had someone turn on the projector and broadcast the live stream from Bilibili.

Looking at the discussions about "Qin's Moon" on the live stream, Shen Ping smiled broadly. He was also amazed by Wang Yao's wealth and resources. The number of online viewers was approaching 20,000, and tens of thousands of yuan were spent on the live stream every hour. That would be enough to produce one episode of "Qin's Moon" in a day.

"According to the backend data, discussions related to 'Qin's Moon' account for about 5% of the total, which is already quite an influence," Wang Yao said with a smile.

"It's probably because the recent remake has attracted a lot of both new and old viewers," Shen Ping said with a smile.

The first season of "Qin's Moon" was just re-released in May, and its ratings were off the charts. This is also why Shen Ping is trying to commercialize the series and make movies.

"I heard that Mr. Shen has a background in game design?" Wang Yao asked with a smile.

"I guess so. I liked art when I was young. After graduation, I worked on several joint venture projects at my company, mainly as an art director. Mr. Wang is young, I don't know if he has played the first version of 'Virtual Life'. I did the art."

Later, I worked on several game projects and found that to make money in games, you have to follow a formula, which was my weakness. Eventually, I switched to magazines until 04 when I got the "Jing Ke's Tale" project and came across "Qin's Time." I felt that this work was very meaningful, so I've been working on it ever since. "Shen Ping said with a smile.

"President Shen has brought a very important opportunity to Chinese animation." Wang Yao smiled. "The 3D film industry has a good outlook this year, and President Shen must have received quite a few orders."

"Thanks to Avatar, Xuanji has now taken on enough work to film Qin's Moon 3," Shen Ping said.

"The pace of releasing one film every two years is making us viewers very impatient," Wang Yao laughed.

"There's no way around it. The production cost of 'Qin's Moon' is too high, nearly 100 million per episode. But because it airs on Cartoon Network, although the viewership is high, the advertising rate is too low. We worked hard for a year on 'Qin 2,' and the net profit was less than a million."
"But if we take on 3D movie projects, we can basically earn two or three million a year. However, we only have thirty or forty people, and we have neither people nor money." Shen Ping sighed softly.

"It's also because the domestic animation industry is not doing well, and it's impossible to support ourselves." Wang Yao nodded.

"3D animation has been doing alright these past two years. At least we have subsidies to ensure we don't lose money. Without the national subsidies, we probably would have to release one every four or five years. However, we recently wanted to turn 'Qin's Moon' into a web game to see if we could generate revenue," Shen Ping said with a wry smile.

“It’s difficult. The main audience of Qin’s Moon is teenagers, who generally don’t have much spending power. I’m afraid it will be hard to support the revenue of web games.” Wang Yao shook his head.

“The awkward part is that the majority of the audience for ‘Qin’s Moon’ is junior and senior high school students, who are at the most stressful stage of their studies. Unlike ‘Pleasant Goat and Big Big Wolf,’ which has a younger audience, parents are unlikely to take their children to see the movie. It’s difficult,” Shen Ping sighed.

The success of the two consecutive "Pleasant Goat and Big Big Wolf" movies, and the record of breaking 100 million yuan this year, has given the entire animation industry a boost. Naturally, Shen Ping would not be uninterested.

But then I thought, the "Pleasant Goat and Big Big Wolf" movies are all watched by parents, while the audience of "Qin's Moon" would be criticized by their parents for watching TV series even if they just watch a movie, let alone watch a movie. It's even more impossible for them to spend money to watch a movie with their parents.

Lacking a consumer base is truly painful.

“Indeed, President Shen is very wise. If we release a movie now, it might end up like ‘Rainbow Cat,’ losing all our money and going into debt.” Wang Yao nodded.

Rainbow Cat and Qin's Moon share the same audience, so it was inevitable that Rainbow Cat would flop at the box office this year. In addition, the previous malicious reporting had influenced public opinion, and parents had a negative impression of this type of 'martial arts' genre.

It's not enough for the audience to like it; they also need to have money to support it.

"So we can only save money to finish 'Qin's Moon' first, and then wait a few years until these kids go to college or graduate, and maybe they'll have a chance." Shen Ping smiled.

The reason why the "Qin's Moon" IP will achieve a valuation increase of tens of thousands of times in the next few years, reaching a valuation of nearly 50 billion, is that the audience has grown up and has the purchasing power to buy.

“It is indeed good to proceed steadily, but has President Shen ever heard the saying, ‘A hundred years is too long, seize the day’?” Wang Yao asked rhetorically.

Shen Ping raised an eyebrow slightly.

"Iron Man 2 grossed nearly $7 million worldwide, and its influence in China covers an entire demographic. Moreover, Marvel will continue to release new works, which already have a huge comic book base."

Meanwhile, Japanese manga is gaining more and more influence in China. The three major shonen manga account for almost 70% of the discussion volume in the anime topic on Tieba. Not to mention anything else, I just signed a license for their merchandise cards last month, and they've been on the online store for less than half a month. Mr. Shen, guess how much revenue we've generated?" Wang Yao asked.

"One hundred thousand?" Shen Ping pondered for a moment before saying the largest amount he could imagine.

Shen Ping was naturally familiar with the merchandise industry, but based on his understanding of this category, selling two million a month was already the limit, and the annual revenue would be nearly twenty million, which was more profitable than selling merchandise toys in China.

“Over 1 million, and that’s just the initial stage. The cumulative number of consumers is as high as 100,000. But even based on the size of the Tieba user base, there is still a potential market of at least 1 million to be developed.” Wang Yao shook his head.

"Japanese Yen?" Shen Ping's eyes widened upon hearing this.

What do you mean?
A million in half a month? That would be tens of millions in revenue a year? And all those cheap cards???

“Of course it’s Chinese currency.” Wang Yao chuckled. “However, it’s also because our cards have some original art style, and the quality is among the best in the world. Mr. Shen, you can go to the card-drawing area later. I estimate that the offline revenue today will be tens of thousands of yuan.” Wang Yao holds the copyrights to dozens of popular IPs, plus the private domain marketing channels in the card circle that he has already operated in the early stages. The scale of anime cards far exceeds that of celebrity cards.

Shen Ping swallowed hard: "Our 'Qin's Time'?"

"We can't sell at that scale; the volume is still too small." Wang Yao shook his head. "Currently, anime merchandise is mainly dominated by toys/stationery from leading domestic companies like Aofei, but their biggest problem is that they rely entirely on copying Japanese IPs."

For example, racing games like "Thunder Speed," mecha games like "Mecha Beast God," transformation games like "Balala the Fairies" and "Armor Hero," and yo-yo games like "Fireball Teens" represent a development direction specifically designed for toys and related products for teenagers and children.

Instead of focusing on content and quality, they relied entirely on high production volume to seize the market. However, the box office success of the two consecutive "Pleasant Goat and Big Big Wolf" movies made Aofei start to pay more attention to content.

The low update frequency of "Qin's Moon," coupled with its audience's lack of purchasing power, limited promotional materials, and the adult-oriented IP, puts it at a disadvantage in commercializing related products such as toys and stationery.

Wang Yao's words hit Shen Ping's weak spot: the characters of "Qin's Moon" can't be printed on school bags and notebooks like "Pleasant Goat and Big Big Wolf". At most, stickers sell well, but the profit is too low, so it is difficult to make a profit on merchandise.

This is why Xuanji (the animation studio) couldn't commercially develop "Qin's Moon" and instead had to take on side jobs to support it.

Everyone thinks "Qin's Moon" is valuable and optimistic, but they just don't know how to monetize it. Web games are the fastest and most effective method they can think of at the moment, but after listening to Wang Yao's analysis, it seems that the audience can't support it.

"However, the 3D industry will indeed see new development this year. Does Xuanji have any plans in this regard?" Wang Yao changed the subject.

"Let's recruit some new people and take on more peripheral jobs. Our technology is quite mature, but our basic hardware is lacking. Many big productions have directly outsourced to overseas teams, so we can only take on some smaller, smaller jobs," Shen Ping said.

"Mr. Shen should know about the Star Travel in 'Water Thorn', right?" Wang Yao said with a smile.

"Of course, it's a household name, considered one of the top mobile games right now," Shen Ping said instinctively.

“I have some shares in Xingyou. This year, they will not only continue to invest in mobile games, but also develop 3D technology. They have also invested in several subsidiaries in Korea, Australia, India and other places, mastering some midstream technologies in the industry. They can already be considered to have an industrial foundation.”

However, there are indeed some shortcomings in the content sector. I admire Mr. Shen's control over content, and I wonder if there will be an opportunity to cooperate." Wang Yao said with a smile.

Upon hearing this, Shen Ping's mind raced: "Mr. Wang wants to invest in our Xuanji?"

"I do have this idea. I've been a comic book/game enthusiast since I was a child, but I always feel a bit awkward watching foreign works. Fortunately, the animation industry can be included in the industrial chain that Skyfire is involved in."

"It can be seen as a response to the national cultural revitalization strategy, but it mainly depends on President Shen's ideas. If Xuanji joins, then the 'Qin's Moon' IP will have a full-chain commercialization path including movies, animation, comics, games, and offline merchandise," Wang Yao said with a smile.

"Mr. Wang wants to acquire us?" Shen Ping gasped.

It is obvious that the value of each of the directions proposed by Wang Yao is greater than the current value of Xuanji Company itself.

"I'm optimistic about the future value of President Shen and Xuanji, but I'm also a businessman and naturally want to maximize my profits. However, regardless of the circumstances, I will cooperate with President Shen; it's just a matter of degree." Wang Yao smiled amicably.
“A shallow collaboration would be an IP licensing or project investment. I would provide the money, and Mr. Shen would provide the technology and the works. Settlement would be based on the project. However, in the initial stage, we could only cooperate on profitable businesses, such as animation and comic book publishing. I could buy the copyrights for games and movies first, but production would not begin for at least a few years.”

If we cooperate deeply, I might acquire more than 70% of the market share, and then through full-chain capitalization, go public within 3-5 years.

Shen Ping's mind sank. Although Wang Yao was young, he was far more ruthless.

The superficial cooperation undoubtedly leverages the established influence of "Qin's Moon" to increase output and then directly generate profits, but the possibility of using "Qin's Moon" as a guinea pig to test the market cannot be ruled out.

After all, with Wang Yao's capital, he could acquire or create a team that is even better than Xuanji at any time.

Deep cooperation means that Xuanji has directly caught the wave of capital and is able to flourish in all aspects, but at the same time, it is very likely to lose control over the company's development direction.

There's no choice here.

"May I ask, Mr. Wang, is there no animation content-related segment in your industry chain?" Shen Ping chuckled.

"Yes, I have invested in an online comic platform in Japan and acquired a lot of copyrights. Currently, we have a team of about 300 artists in Japan. If 'Qin's Moon' is added, the production cost and efficiency will be very high with the support of these experienced artists."

Furthermore, it allows for the simultaneous release of multiple "Qin's Moon" comic series, accumulating users through comics, converting them into anime viewers, and ultimately developing industries such as games, movies, and merchandise.

"The advantage of this is that we can predict in advance which series will be popular, reducing the cost of investment losses," Wang Yao said with a smile.

"Is there a chance for overseas distribution?" Shen Ping squinted.

"Of course, regardless of whether it can be profitable, we should increase production first. I also have a literary website under my control, and there are several good online novels that are ready to be adapted into comics. President Shen should know about the complaints against 'Rainbow Cat' two years ago. If it is only distributed domestically, it will face many similar embarrassing situations."

However, if it is released simultaneously overseas, we can use public opinion campaigns to address such malicious complaints in the future, emphasizing that "foreign children can watch it, but Chinese children cannot," employing an export-to-domestic sales strategy to mitigate the negative impact.

Therefore, I have already been in talks with Omnicom Animation, the parent company of "Rainbow Cat," regarding a potential acquisition. Their company is facing a cash flow crisis due to the founder's retirement and the failure of the "Rainbow Cat" movie this year, resulting in losses of tens of millions of yuan. They are also facing debts of tens of millions of yuan and are seeking new funding.

I value their company because they have already established a certain system and industrial foundation, and they also have a content team led by masters like Yu Hua and Han Meilin. Their "Little Fu Gui" and "Rainbow Cat" series have already gained considerable influence. As long as they are managed properly, they can achieve timely monetization.

Most importantly, their company still has thousands of employees, making it one of the largest animation companies in China, capable of providing a large output.” Wang Yao dropped another bombshell.

Hongmeng Cartoon holds a dominant position in China's animation industry. If Wang Yao's acquisition is successful, it would be equivalent to controlling one-third of the animation industry.

"Would you mind disclosing the acquisition amount?" Shen Ping swallowed hard.

“Omnicom currently has a debt of over 40 million yuan, and its net assets are only a few million yuan from a few IPs. Moreover, a lot of its assets have been seized. On the premise of assuming all the debts and promising not to lay off employees, I will invest 10 million yuan to acquire 90% of the shares,” Wang Yao said with a smile.

"How could we have lost so much money?" Shen Ping exclaimed in surprise.

In 06, Omnicom received a $750 million investment from Sequoia Capital, valuing the company at nearly $1 million, which enabled it to expand rapidly. However, despite operating difficulties in recent years, it has unexpectedly suffered such a large loss.

In contrast, another leading company, Aofei, is said to have a valuation of over 30 billion.

It's true that creating original content is a dead end, while copying and imitating others makes a fortune.

(End of this chapter)