Huayu: Starting from joining the mainstream entertainment industry in 96

Chapter 165, Section 163: The Inevitable Trend (Revised)
Monday, January 5, 1998.

The festive atmosphere of the New Year had not yet completely dissipated, but an invisible tension had already filled a solemn and respectful conference room in the Beijing Radio, Film and Television Department.

The warmth of the heating couldn't dispel the somber expressions on the attendees' faces. Around the oval conference table, key figures who would determine the next direction of the Chinese film market sat in stark contrast to each other.

On one side was the "attacking side" led by Han Sanping, the director of Beijing Film Studio, with Wang Sheng, the young but composed general manager of Shengying Media, and Zhang Heping, the chairman of Forbidden City Film Industry, sitting beside him.

They represent the driving force behind the success of "30 Days" and the innovative model of the film studio alliance.

On the other side was the "defenders," led by Zhu Yongde, general manager of Shanghai Film and Television Company, and Wu Mengchen, general manager of Shanghai Film Distribution Company, surrounded by executives from film companies from various provinces.

Their expressions varied; some were indignant, some were worried, and some had shifty eyes, calculating their own interests.

They represent the vested interests of the traditional distribution and screening system.

At the head of the conference table sat a vice minister from the Ministry of Radio, Film and Television. His face was calm and his gaze was deep as he chaired this coordination meeting concerning the future direction of the film distribution system.

Officials from relevant departments and bureaus within the ministry, along with representatives from the publicity department, sat on either side, observing silently.

The meeting room was filled with smoke, the aroma of tea mixed with the smell of cigarettes, creating an oppressive atmosphere.

The deputy minister coughed lightly, breaking the silence. His voice was not loud, but it clearly reached everyone's ears: "The purpose of inviting everyone here today is very clear: to coordinate the subsequent nationwide distribution of the film '30 Days'."

The film has been showing in Beijing, Tianjin, and seven cities in Jiangsu Province for a full month now. Its success is undeniable.

He paused, his gaze sweeping over Han Sanping's group. "Comrade Sanping, what is the final box office figure you reported?"

Han Sanping was prepared and replied in a deep voice: "Minister, leaders, '30 Days' was screened in nine regions for a full month, and the final total box office was 50.96 million yuan."

He emphasized: "This box office performance was achieved in only nine cities, and under a strict revenue-sharing system."

"Fifty million, nine hundred and sixty thousand..."

This number caused a slight commotion in the conference room. Although many people knew about it beforehand, they were still shocked to hear it again.

In late 1997 and early 1998, it was nothing short of a miracle for a domestically produced film to achieve such success, given that it was only shown in select cities.

This undoubtedly provides strong evidence of the enormous potential of market-oriented reforms and the revenue-sharing system.

The deputy minister nodded, his expression unreadable: "Yes, this result truly demonstrates the film's quality and market acceptance. An excellent domestic commercial film shouldn't be limited to audiences in only a few regions."

Comrades Sanping, Zhang Heping, and Wang Sheng, the film has been airing for a month now. Shouldn't you loosen your grip and let more audiences in other regions see it?

Upon hearing this, Han Sanping leaned forward slightly, his attitude respectful but his tone firm: "Minister, we fully support the ministry's work and are willing to expedite the nationwide release of '30 Days' to meet the needs of the general public. However,"

He then changed the subject: "The prerequisite for the release is still the condition we insisted on before—film companies in all provinces and cities must implement the revenue-sharing model."

"30 Days" generated over 50 million yuan in box office revenue in nine cities within a month, which fully demonstrates its huge market potential and audience base.

We believe that adopting a revenue-sharing system nationwide will allow the film's value to be more fully realized, and will also help to better recover funds to support the film studio's reproduction and the development of new projects.

This concerns the future financial operations and survival of our Beijing Film Studio, and even dozens of film studios within the alliance.

He emphasized the words "survival and development," and looked directly at the vice minister, while also glancing at Wu Mengchen and the others opposite him.

The deputy minister remained noncommittal, turning his gaze to the other side: "Comrade Meng Chen, and the general managers of the provincial companies, what are your opinions? Do you think Director Han and the others' requests are feasible?"

Wu Mengchen cleared his throat, forcing a troubled smile. He glanced at Han Sanping before saying to the deputy minister, "Minister, we congratulate Beijing Film Studio and '30 Days' on their achievements. As for the revenue-sharing system, as an exploration of film market reform, we are not entirely opposed to it."

He then changed the subject: "However, the conditions proposed by Director Han, especially the requirement that the box office revenue be settled within one month of the film's release, are... really difficult and not very realistic."

He spread his hands, looking helpless: "Our country is vast, and the economic level, management level, cinema facilities, and settlement process are different in various provinces and cities. In some places, transportation is inconvenient, information is slow to be transmitted, and it takes time to verify accounts."

The rapid settlements they achieved in nine locations, maintained through special relationships and high-pressure tactics, are difficult to replicate nationwide. In my opinion, a more realistic approach would be to gradually settle revenue sharing payments six months after the film's theatrical run ends. This would be more prudent and give local governments time to adjust.

"Mr. Wu is right!"

"Six months is considered fast; in some remote areas, it's good if they can settle the debt within a year!"

"A month? That's simply impossible!"

Wu Mengchen's words immediately drew the echoes of a group of provincial company executives behind him, who all chimed in, saying that settling accounts within a month was "asking for nothing" and "unrealistic."

The meeting room suddenly became noisy.

The deputy minister frowned slightly, raised his hand and pressed down lightly. After the sound subsided, he looked at Han Sanping and said, "Comrade Sanping, what do you think? What General Manager Zhu and the others have mentioned are objectively existing difficulties."

Han Sanping's expression remained unchanged, but he sneered inwardly. He knew that the other party was using the inertia of the administrative system to delay and try to maintain the old rhythm of interest distribution.

He glanced at Wang Sheng beside him, and Wang Sheng nodded almost imperceptibly.

“Minister,” Han Sanping raised his voice slightly, with an undeniable firmness, “we understand that there are differences in different regions, and we are willing to give them some flexibility.”

However, the speed of capital recovery is directly related to the life and death of the film studio! We invest huge sums of money in making films, not to have our funds tied up in long settlement cycles. Three months! He held up three fingers and said decisively, "This is the bottom line we can accept! After the film's release, the monthly box office revenue sharing must be settled within three months after the end of that month! This is the minimum requirement to ensure a virtuous cycle of film production."

If we can't even do this, then we'd rather not expand the screening scope for the time being than let our precious funds be tied up indefinitely, affecting the progress of a series of subsequent projects.

The nearly 10,000 employees of the Beijing Film Studio, and tens of thousands of colleagues from dozens of film studios within the alliance, all depend on these funds for their livelihood and creative work!

One trick can be eaten all over the world.

The room fell silent once again.

The Beijing Film Studio Alliance is now financially powerful and certainly has the confidence to say this.

The success of "30 Days" has given them a great deal of influence.

The deputy minister pondered, his gaze sweeping across the faces of both representatives.

Just then, to some people's surprise, Zhu Yongde, who was sitting next to Wu Mengchen, suddenly spoke up. Instead of continuing to strongly oppose the settlement cycle, he steered the topic in another direction.

Zhu Yongde sighed, as if making a huge concession, and said, "We understand Director Han's difficulties. Film production does require a quick return of funds."

If... if the ministry deems settling accounts within three months a feasible approach, then we in Shanghai can take the lead in trying it, do our best to promote it, and set a good example.

His words surprised not only Han Sanping and Wang Sheng, but also some provincial company executives around him.

Is Mr. Zhu... about to give in?

Wu Mengchen continued, "However, since we are going to implement a profit-sharing system, the profit-sharing ratio must be clearly defined and a relatively fixed standard that everyone can accept."

We can no longer operate like before, with each film having its own interpretation, leading to chaos.

I think the proposed 40% cut for the producers and 60% cut for the exhibitors in "30 Days" is debatable in the current market environment.

The exhibitors bear a significant portion of the costs associated with cinema operations, advertising, and personnel. Is 60% sufficient to cover these costs and generate a reasonable profit? I believe a more careful assessment is needed.

He cleverly passed the buck back, attempting to secure more benefits for the projectionist in terms of revenue sharing.

Upon hearing this, Wang Sheng understood.

Shanghai Film & Television Company and Shanghai Film Distribution & Exhibition Company have integrated the production, distribution, and exhibition chain. They also yearn for a more standardized and efficient revenue-sharing model to improve their profits and operational efficiency.

Wu Mengchen did not genuinely intend to oppose the revenue-sharing system. He was merely using the "momentum" created by the Beijing Film Studio alliance to force more conservative and less efficient provincial companies to accept change. At the same time, he aimed to secure more favorable terms for his own company and standardize the revenue-sharing model to facilitate his future management of his vast cinema chain system.

He was "using someone else to do his dirty work" while simultaneously "setting the rules."

As expected, Wu Mengchen's words sparked murmurs among some provincial company executives, with some showing dissatisfaction and feeling that Wu Mengchen seemed to be "betraying" his camp.

The vice minister clearly saw the key to this success. He looked around the room and slowly said, "The success of '30 Days' proves the audience's enthusiasm for excellent domestic films and also proves that the direction of market-oriented reform is correct."

Revenue sharing is an internationally accepted practice and an inevitable trend in our reforms. Details can be discussed, but principles must be upheld.

He set the tone, then went on to say, "Regarding the settlement period, Director Han's proposal to settle accounts within three months of the film's release presents a challenge, but it is not insurmountable. Local authorities need to improve management efficiency and adapt to market demands. In principle, I support this."

He glanced at Wu Mengchen: "Regarding the revenue sharing ratio, 40% for the production company and 60% for the exhibition company can serve as an important reference standard and negotiation basis at this stage."

There can be some variation depending on the specific film and region, but the goal should be to move towards standardization. It's a good thing that Shanghai is willing to take the lead and try; hopefully, you can gain valuable experience from this experience.

The deputy minister's summary basically adopted the core demands of the Beijing Film Studio alliance, while also giving Wu Mengchen and others a way out. More importantly, it clarified the direction of reform.

Wu Mengchen's expression shifted several times before he finally nodded: "Since the minister has said so, we in Shanghai will definitely overcome the difficulties and earnestly implement it."

His words were tantamount to tearing a large hole in the defense line of the provincial company alliance.

Seeing that the situation was not good and that the leaders had all changed their minds, the other provincial company executives could only reluctantly agree to the proposal, fearing that sticking to their own opinions would earn them a reputation for "obstructing reform."

Ultimately, at this coordination meeting, despite some remaining dissenting voices, the overall situation was settled.

The Ministry of Radio, Film and Television has agreed in principle to allow "30 Days" to be released nationwide under a revenue-sharing model, with the revenue sharing ratio set at 40% for the production company and 60% for the screening company. The settlement period is set at three months after the release.

A seemingly difficult struggle, under the pressure of the phenomenal box office success of "30 Days" and the general trend of reform, ended with a substantial victory for the Beijing Film Studio Alliance.

Meanwhile, the Shanghai forces represented by Wu Mengchen and Zhu Yongde took this opportunity to successfully advance the standardization of the revenue-sharing model, paving the way for their future integration and development.

Faced with the complicated looks from some of his peers, Wu Mengchen simply straightened his collar without any expression.

For him, today's "concession" may be for a better "advancement" tomorrow.

The tides of time roll ever onward, and no one can remain uninvolved.

(End of this chapter)