Huayu 05, our science fiction movie universe

Chapter 652 The Breeze Meeting Before Winter

The film and television industry is experiencing a downturn!

This is a term that has been frequently mentioned in the domestic film and television culture circle since 2019.

Perhaps those working in this industry will only feel that there are fewer and fewer projects, smaller investments, more and more difficulty in starting a project, lower and lower salaries, harder and harder to find work, and harder and harder to collect final payments.

However, if we broaden our perspective and look at the bigger picture, we will find that the causes of this situation are extremely complex and multifaceted.

In fact, as a leading private enterprise in the industry, Xinghe Group has always been at the forefront of the film and television culture industry, possessing the most and most detailed first-hand data in the industry.

According to the in-depth analysis conducted by relevant departments of Xinghe Group based on industry data and policy dynamics, as well as Wang Hao's understanding of the future.

After 2019, the growth rate of the domestic film and television market will slow down, which will mainly be reflected in the weakening growth momentum of the overall box office.

It's important to understand that after several years of movie ticket subsidies, the domestic audience has been largely tapped into.

600 billion to 700 billion yuan is currently the upper limit of the total box office revenue in China.

This number may be surpassed, but with an aging population and a cyclical economic downturn, the total box office revenue nationwide will likely continue to decline slowly.

In fact, in Wang Hao's previous life, China's total box office revenue in 2019 was only 642.66 billion yuan, a year-on-year increase of only 5.4%, and the growth rate was 3.66% lower than that in 2018.

之后2020年是204.17亿元，2021年是470亿元，2022年是300.67亿元，2023年是549.15亿元，2024年是425.02亿元。

It is evident that although certain special events led to unusually low annual box office figures nationwide, excluding these low figures reveals that the total annual box office for domestic films is indeed declining.

The slowdown, or even decline, in domestic box office growth fully reflects the growing pains of the mainland film and television market shifting from "screen expansion-driven" to "content quality-driven".

Despite the addition of 9708 new screens in China, bringing the total to 69787, the output per screen decreased by about 8% year-on-year. Cinemas in third- and fourth-tier cities are also basically in a state of unsustainability as ticket subsidies end.

In this saturated market, when the industry is in a downturn, the public's willingness to watch movies decreases, from watching four or five movies a year to watching two or three movies a year, and the head effect becomes prominent.

When people are going through tough times, they tend to watch movies with better reviews and higher quality. The market becomes reliant on blockbusters, and capital tends to concentrate on top-tier productions.

Just like during the 2019 Spring Festival film season, Wang Hao's "The Martian" took in almost half of the total box office.

Last year, the top 10 films on the box office charts accounted for 45% of the total box office revenue for the year.

In this situation, the survival space for low- and medium-budget films is severely squeezed, with films with annual box office revenue of less than 1000 million yuan accounting for more than 70%.

This "Matthew effect" is also very pronounced in the online film and television industry.

According to the number of key online film and television dramas filed by the State Administration of Radio and Television, the number of such dramas decreased by 15% year-on-year, but the average investment per drama increased by 20%, and the top projects of several online video platforms almost monopolized the platform's resources.

Simply put, the film and television industry in the future will be dominated by big capital and large companies. Without capital and connections, you can forget about making a name for yourself in this industry.

Even Xinghe Group and Wang Hao could hardly reverse this, because Xinghe Group is the largest company in the film and television industry.

Although they are aware of this problem and are trying to solve it, simply increasing investment in small and medium-budget film and television projects and supporting newcomers can only be considered a temporary solution; the key problem remains unresolved.

As for what the key issue is?
It's all because of problems with the real estate economy and the high debt ratio of residents. People don't have money in their hands, so why would they watch movies? Isn't it better to just watch free short videos on TikTok?
There's nothing Wang Hao and Xinghe Group can do about this. He can't possibly give money to everyone. Shen Wansan is not someone he can easily do, and he doesn't have the power to do so.

Moreover, this situation is beneficial to Douyin, and Xinghe Group is even making moves to offer free reading and free short dramas.

As for their company specifically, all they can do is survive in this "existing market," weather the storm, and leverage Douyin for counter-cyclical development.

However, such things certainly couldn't be said at the meeting, and Wang Hao's suggestions were limited to a few points.

First, eliminate outdated production capacity and take advantage of the downturn in the film and television industry to achieve technological upgrades.

This method was used by the country in industries such as coal and steel a few years ago, and a few years later, the "anti-involution" approach is also being used in industries such as building materials, photovoltaics, and new energy.

The method is old-fashioned, but it works.

Simply put, it's about eliminating the small fry in the industry, giving up market share, and using these small fry to replenish the capital of large companies.

Of course, it sounds a bit unpleasant to say it that way, so we call it eliminating "outdated production capacity" and achieving industrial upgrading.

In response, leaders from the cultural department stated that they shared this view. Further tightening of regulatory policies by relevant departments is planned to reshape the entire industry.

In fact, the State Administration of Radio and Television had already begun implementing the "Administrative Measures for the Filing and Public Disclosure of Key Online Film and Television Dramas" in February of this year.

The regulations require online dramas and films to be submitted for review twice, once at the project initiation stage and once at the final production stage, with review standards that are similar to those for theatrical films.

In the past, the country had a laissez-faire attitude towards these two areas. The content of online dramas and movies was significantly more explicit than that of TV series and movies. There were all sorts of things like monsters and ghosts, scenes with exposed legs and breasts, plagiarism, and crime and violence themes. Just open any online video platform and you'll be bombarded with those glaring white posters.

However, there will be more restrictions in this area in the future. Online dramas and online movies will also be subject to the supervision of the State Administration of Radio and Television, rather than being subject to self-inspection by the websites.

Small film and television companies, having lost the fertile ground for survival like online movies and web series, have no choice but to either increase investment to upgrade their production level or seek refuge with large companies or platforms in the industry.

Of course, this behavior also has a drawback, namely, it will inhibit the diversity of cultural creation. Large capital and large companies investing in the production of film and television works will definitely tend to favor more mature and commercial themes.

For example, comedies and those with a patriotic theme.

However, restrictions are not prohibitions. In fact, according to Wang Hao, a veteran in the industry, there are many films currently showing in theaters in China that have no need to be shown in cinemas at all.

In the past, movies were only released through theatrical distribution. But in the era of the internet, many low-budget movies without stars, special effects, or investment can easily go online.

For example, those teen movies and cheap comedies only last a day in theaters.

Besides suggesting the elimination of outdated production capacity, Wang Hao's second suggestion was to actively expand overseas and embrace international markets. Galaxy Pictures and Tencent both have considerable experience in this regard.

Galaxy Pictures focuses on overseas film distribution, while Tencent has sold many domestic TV series to Southeast Asia, gaining a significant market share there through its established channels.

"Nowadays, the domestic film and television culture market has been almost fully explored. The film market has penetrated into third- and fourth-tier cities. Is the next step to bring home appliances and make movies available in rural areas?"

Wang Hao's last words made everyone in the conference room smile.

"That's obviously unrealistic."

"When the market enters a period of saturation, we either have to fight among ourselves or we have to fight our way out."

"Over the past few years, the country has consistently implemented a cultural openness policy, adopting an inclusive attitude towards cultural works from neighboring countries such as Japan, South Korea, and Southeast Asia. By opening up the market to let them in, we have gained the space to go global."

"Unfortunately, according to statistics, people don't seem to be very enthusiastic about cultural export in the past few years."

"Director Wang, you're just talking without understanding the situation. Of course, we know that it's good for film and television works to earn foreign exchange overseas, but the distribution channels and communication issues are difficult to resolve."

A representative from a film and television company couldn't help but say:
"Moreover, the overseas market is different from the domestic market. There are differences in aesthetics and culture between the two countries. It is easy for us to introduce foreign works and adapt them into works that we like, but it is difficult to create works that people like."

Wang Hao nodded upon hearing this, and the leader of the cultural department then smiled and said:

"Since that's the case, Director Wang, your company is familiar with the overseas distribution of film and television works. Why don't you think of a way to help everyone?"

Regarding the export of film and television works, among everyone present, this person certainly has the most authority to speak on the matter.

Their Galaxy Cinematic Universe series has many films that are released globally, such as "Taken", "John Wick", "The Mechanic", "Now You See Me", "Inception", and "Rampage", which have achieved good box office results overseas.

In addition, there are films and television series such as "Detective Chinatown," "The Witch," "Distortion Crisis," "Train to Busan," and "Unnatural," which have also sparked a wave of Chinese film and television fever in neighboring countries such as Japan, South Korea, and Southeast Asia.

That's about it. Apart from Xinghe Group, very few domestic film and television companies have taken advantage of China's cultural openness to send their works abroad.

Of course, prior to this, China's policy of cultural openness towards neighboring countries was something Wang Hao had secured from the cultural authorities, so it was only natural that Xinghe Group would enjoy this benefit first.

The cultural authorities tacitly approve of this. Rather than letting small and medium-sized film and television companies rush overseas and cause problems, it is better to support Xinghe Group first and let it form a certain brand advantage in the field of cultural export, so as to achieve better results and political achievements.

But that was during an economic upswing, a time when the domestic market was enough to make many film and television companies very profitable.

With the film and television industry facing an impending downturn, allowing Xinghe Group to reap the benefits of cultural export would only invite resentment from both businesses and government departments.

Those guys don't care whether they have the ability to export their culture overseas; they won't look for the reasons within themselves, they'll only blame the problem on the Galaxy Group's monopoly.

So it's like the future national slogan of shifting from "external circulation" to "internal circulation".

Now that the internal environment is not good, the industry's regulatory authorities are calling for "going global".

Galaxy Group naturally had to follow this trend and open up some channels for "certain" peers to go overseas.

Of course, Xinghe Group would not allow itself to suffer a loss, so Wang Hao immediately presented a preliminary plan at the meeting.

That is, Xinghe Group will build a platform for exporting works, be responsible for selecting films, help handle the overseas distribution of some film and television works, and then earn commissions from them.

In fact, Galaxy Group was already preparing to do so.

Their Starry Sky Video Network established an overseas business department in 2016 and built a corresponding overseas streaming media platform.

Previously, they mainly imported films and television dramas from overseas and then distributed their own invested films and television dramas overseas, which was a small-scale operation.

However, relying on the well-known IP of the "Galaxy Cinematic Universe", they have been doing very well in neighboring countries such as Japan, South Korea and Southeast Asia over the past year and have also occupied a certain market share.

In addition, TikTok is also a very good platform for promotion overseas. In the past year, just like in China, many video and clip bloggers have emerged overseas.

This can be considered as some form of publicity for excellent domestic films and television works.

It's not impossible to include films and television series produced by other domestic companies on board now.

With Xinghe Group's words, the senior leader of the cultural department nodded in satisfaction. Based on his understanding of Wang Hao, he knew that Wang Hao was a young man with a strong sense of the big picture and a sense of right and wrong. Since he had agreed, he would certainly not resort to any tricks or feign compliance.

However, the meeting did not end after Wang Hao finished speaking. After representatives from other companies also expressed their views, the leaders of the State Administration of Radio, Film and Television and the cultural department conveyed the relevant decisions of the higher authorities to them.

The representatives of the private film and television companies present immediately sat up straight, knowing that what was about to happen was the main event of the meeting, and what Wang Hao had just said was just an appetizer.

Sure enough, after the department leader summarized their suggestions and ideas,

In addition to reiterating that regulatory policies will be tightened across the board and strict management will remain unchanged, it was also added that actors' salaries will be subject to certain controls.

To put it simply, the things Fan and others did last year brought actors' high salaries to the forefront of public attention, causing quite a stir in public opinion.

During this period of economic downturn, ordinary people are having a hard time. At this time, actors and celebrities should keep a low profile and stop flaunting their wealth or causing scandals, thus revealing a corner of the heavenly palace.

Therefore, the "salary cap" imposed by the State Administration of Radio and Television will enter the substantive implementation stage in 2019.

According to industry regulations, the maximum remuneration for a single drama series for a first-tier actor should be reduced from 1.5 million yuan to 50 million yuan, and the remuneration for top artists should generally decrease by 5000%-70%.

The leaders of the State Administration of Radio and Television spoke casually on stage, and the bosses of major film and television companies in the audience did not raise any objections.

On the one hand, they dare not oppose it; on the other hand, this "salary cap" is beneficial to film and television production companies, so they will not oppose it.

(End of this chapter)