Huayu: Starting from joining the mainstream entertainment industry in 96

Chapter 301, page 299: Weaving a Net

In June, the heat of summer was just beginning to set in in Beijing.

After the initial meeting, the real battle was just beginning.

After seeing off the various "lords" who were filled with both anticipation and trepidation, Han Sanping and Wang Sheng did not rest for a moment. They immediately split up and took action, breaking down the grand blueprint into specific goals that needed to be achieved.

Han Sanping specializes in superstructure.

His primary task was to work with the National Film Special Fund Management Committee (referred to as the "Special Fund Office") to help China Film Group obtain the pilot qualification to establish the first batch of inter-provincial cinema chains in the country.

This step is crucial, as it concerns the "legitimacy" and "legal status" of the entire alliance.

Why is it necessary to join forces with the Special Fund Office?
Under the Chinese film management system in 2000, the Special Fund Office was not a simple financial institution.

It relies on the film administrative departments at all levels and is responsible for the collection, use and management of the special film fund. This fund comes from a 5% surcharge on each movie ticket and is the "money bag" supporting the development of the film industry.

More importantly, the Special Fund Office system is deeply embedded in the national cinema management network, possessing the most core basic cinema information and the original source of box office data.

Although data reporting at this time was still mainly done through manual ledgers, which were not timely and were easy to tamper with, this administrative system was the only film management network that could cover the whole country at that time.

What Han Sanping valued was the readily available, mandatory administrative tool of the Special Fund Office.

A deep connection with the Special Fund Office means:

Regarding policy legitimacy, the pilot program for cinema chains, led by China Film Group and supported by the State Administration of Radio, Film and Television, can minimize local administrative resistance during its implementation.

Data integration: If the data from the future computer network ticketing system can be directly connected to the system of the Special Fund Office, it will be equivalent to obtaining official data certification, and its authority and power in combating concealment will be multiplied.

Financial leverage: the special film fund itself can be used for cinema renovation and upgrading. Securing the support of the special fund office means that it may be possible to secure some funding or policy support for cinema construction projects within the alliance.

Han Sanping, along with his team from China Film Group, frequently visited the State Administration of Radio, Film and Television and the Special Fund Office. The core of their lobbying was: "The reform of the cinema chain system is a national policy, and China Film Group is willing to be a pioneer. Joining forces with the Special Fund Office is to establish an open, fair, and just market order, ensuring that all the money that should be collected is collected, that good films can receive better returns, and ultimately to expand the entire industry pie, which will benefit the country and the people."

The core of the "Opinions" is to transform China's film industry, which is a cultural undertaking, into a cultural industry.

This rhetoric, based on the general trend of reform and national interests, coupled with Han Sanping's rising status and connections, put the approval of pilot qualifications on the fast track.

……

the other side.

Wang Sheng, representing the "Shengying Group" and "Beijing Film Group" forces under his influence, echoed Han Sanping and began specific negotiations with the 31 film studios on the list (with Shanghai Film Studio added as an extra).

This was a more complex game, requiring even more patience and business acumen. Zhu Yongde, the director of Shanghai Film Studio, whom he had specially invited, was also included in the key negotiation process.

Negotiations were conducted intensively in Wang Shengjing's office in the Xin Building, the conference room of Shengying Media, and various tea rooms and private rooms in restaurants.

The core issues revolve around three key elements: money, land, and network.

I. Feasibility of integrating with the internet ticketing system (“Internet”)
This is the core technology that Wang Sheng insists on the most, but due to the realities of 2000, it must be adapted to local conditions.

First-tier cities and developed coastal cities, as well as provincial capitals (such as Beijing, Tianjin, Shanghai, Shenzhen, Guangzhou, Nanjing, Hangzhou, Hubei, Shenyang, Binzhou, Chengdu, and Chongqing), are the first batch of key cities to be covered.

They already had relatively good internet infrastructure by 2000.

China's public computer internet (CHINANET) backbone network is complete in these cities, ISDN (Integrated Services Digital Network) and early ADSL (Asymmetric Digital Subscriber Line) began to enter commercial and some high-end residential areas, and internet cafe culture was booming.

Laying dedicated lines or utilizing early broadband access to achieve real-time connectivity for flagship cinemas in these cities is technically and cost-effective.

Wang Sheng promised that Shengying Media would bear the development costs of the core data platform and subsidize part of the hardware procurement and initial network costs for cinema terminals.

Provincial capitals in central and western China, as well as economically strong prefecture-level cities (such as Chang'an, Zhengzhou, Xingcheng, Feicheng, Quancheng, Harbin, and Chuncheng), have been included in the second batch of targets for advancement.

Their internet access is mainly dial-up, which is unstable and has high dedicated line costs.

Wang Sheng's proposed transitional solution is: "Near-real-time networking".

This requires cinemas to upload their daily ticket sales data, compressed and encrypted, to the headquarters server via dial-up internet after closing each day.

While not strictly real-time, this ensures that the national data from the previous day is compiled by noon the following day, a stark contrast to the past practice of reporting monthly or quarterly, and greatly reduces the window of opportunity for underreporting.

Wang Sheng frankly stated that it would be difficult to achieve network connectivity in economically underdeveloped regions and border provinces (such as Gansu, Qinghai, Ningxia, Xinjiang, Yunnan, Inner Mongolia, and some remote areas) in the short term.

Internet access points are scarce, costs are extremely high, and many areas lack network coverage altogether.

For these regions, the existing manual ledger reporting system will be maintained for the time being, but the use of receipts printed uniformly by the alliance is required, and unscheduled spot checks will be accepted. Meanwhile, Wang Sheng also outlined a blueprint: "With the advancement of the national optical fiber trunk line project and the popularization of telecommunications, we aim to achieve full coverage of nationwide cinema network access within the next three to five years."

II. Construction Capacity and Initial Scale of Multiplex Cinemas ("Money" and "Land")
This depends directly on the economic level of the location where each factory is located and its own strength.

Capable of independent construction:
Shanghai Film Studio (Zhu Yongde) is a powerful and well-established company that dominates the Shanghai film market.

Despite being wary of the alliance, Zhu Yongde, persuaded by Wang Sheng, knew that not joining might lead to further marginalization.

It was ultimately agreed that at least five modern multiplex cinemas would be built in Shanghai in the first phase, and all of them would be connected to a real-time network system.

However, Shengying Media needs to bear 70% of the construction costs, but Shengying Media can only get half of the equity of the cinema, that is, 35%.

In addition, Shanghai Film Studio gained the most influence within the alliance, second only to China Film Group, Shengli Film Studio, and the original committee members, and enjoys priority in future film supply.

Wang Sheng and Han Sanping thought about it for a moment and agreed. Shanghai was an important voting bloc, and they couldn't give it up.

Xi'an Film Studio is highly enthusiastic and plans to build two flagship multiplex cinemas in the first phase, utilizing prime land near the Bell Tower.

As a major economic center in Northwest China, Chang'an has considerable consumer spending power, and Xi'an Film Studio is full of confidence in its box office performance.

Pearl River Film Studio and Shenzhen Film Studio: Both located in Guangdong Province, they have the strongest economic vitality.

After Wang Sheng's coordination, the two decided to join forces to avoid internal friction.

Pearl River Film Studio primarily targets the Guangdong market, with an initial plan of 3 cinemas; Shenzhen Film Studio focuses on Shenzhen, with an initial plan of 4 cinemas. Both cinemas are required to meet high standards and are all connected to the internet in real time.

Beijing (China Film Group + Shengying Cinema): As their home base, Beijing boasts the best resources. Han Sanping and Wang Sheng plan to build five multiplex cinemas in the first phase, spread across core areas such as Haiding, Chaoyang, and Xicheng. The estimated construction cost of a single cinema (including land renovation costs, equipment procurement, and decoration) is between 8 million and 12 million RMB, with a total investment of approximately 60 million RMB for the five cinemas. This will serve as a model project for cinema chains nationwide.

Need allies and supporters:
Wang Sheng coordinated the merger of Suzhou Film Studio and Nanjing Film Studio, establishing the "Jiangsu Provincial Cinema Chain Company." The initial phase involved building two cinemas in Nanjing, with plans to establish another 2-3 in the Suzhou-Wuxi-Changzhou area. Shengying Film Studio and China Film Group Corporation contributed capital and provided management support.

Liaoning Film Studio and Binzhou Film Studio, both located in Liaoning Province, jointly established the "Liaoning Provincial Cinema Chain Company," primarily targeting Shenyang and Binzhou, with an initial phase of 1-2 cinemas each. The economy of the old industrial base in Northeast China is currently undergoing a period of adjustment, with limited consumer spending power, making the cinema scale moderate.

Hubei Film Studio and Wuhan Film Studio jointly established the "Hubei Provincial Cinema Chain Company", focusing on the three towns of Hubei, with an initial plan of two cinemas.

Other individual provincial/municipal film studios (such as Tianjin Film Studio, Zhejiang Film Studio, Fujian Film Studio, Shandong Film Studio, Emei Film Studio, etc.) can mostly build 1-2 cinemas in the provincial capital city in the first phase, relying on their own land or cooperative resources. Sheng Ying and Zhong Ying Film provide financial or equipment leasing support.

Film studios in economically weaker provinces (such as Guangxi, Yunnan, Henan, Hebei, Anhui, Jiangxi, Shanxi, Gansu, Ningxia, Qinghai, Xinjiang, Inner Mongolia, and Heilongjiang) are mostly short of funds. Wang Sheng's proposed solution is:
The renovation of old cinemas encourages them to acquire existing old single-screen cinemas in the area, renovate them, and divide them into multiple screens.

In terms of funding, China Film Group, Shengli Film Group, or neighboring large and powerful film companies (such as Xi'an Film Group and Zhuhai Film Group) will invest cash to acquire controlling or participating stakes in the construction.

Leasing partnerships, seeking local commercial real estate partners, operating with an asset-light model to reduce initial investment pressure.

The initial goal for these regions is to establish a decent multiplex cinema in the provincial capital as a base, without pursuing quantity for the time being.

III. Other Key Negotiation Topics

With unified branding and operation, the alliance cinemas will be uniformly named "China Film Shengshi United Cinemas" (tentative name).

All affiliated cinemas must use a unified logo, accept unified film scheduling guidelines (especially when popular blockbusters are being shown), and follow unified service standards.

The profit-sharing mechanism clarifies the revenue sharing ratio after deducting the national special fund and business tax from box office revenue.

The industry standard generally follows that producers and distributors take about 40%, while theaters/cinemas take about 60%. However, within the alliance, there are more detailed internal revenue-sharing rules based on investment ratios and operational contributions. A networked computer system provides the technological guarantee for accurate revenue sharing.

Regarding film supply, Han Sanping promised that China Film Group would prioritize the supply of films to the alliance's cinemas, especially imported blockbusters. Wang Sheng promised that films produced by Shengying Media would have exclusive screenings at the cinemas for at least one month (which could be extended depending on market performance). This is a huge incentive to attract various studios to join.

In terms of management output, Shengying Media will establish a professional cinema management company to provide managerial talent to franchised cinemas, offering standardized training to ensure service quality.

The negotiation process was not smooth sailing.

Some had doubts about the technology, some couldn't agree on the investment ratio, and some were worried about their own interests being eroded.

However, driven by Wang Sheng's clear blueprint, Han Sanping's authoritative endorsement, and the sense of crisis that "if you don't advance, you fall behind," a cross-provincial cinema network centered on "China Film Group-Shengying" and connecting major film studios across the country, covering the east, west, south, north, and central regions, began to be woven with difficulty and determination.

In July, with China Film Group's application for the pilot qualification to establish a cross-provincial cinema chain, the channel reform of the Chinese film market finally took its most substantial step. Only China Film Group obtained this pilot qualification, and only China Film Group has the strength, ability, and legitimacy to establish a cross-provincial cinema chain.

Shengying Media's application for domestic film distribution qualification has been approved, which was very easy. However, only seven companies nationwide have obtained the pilot qualification, and each of them has a very special background.

From this moment on, Wang Sheng could be considered to have reached the pinnacle of the Chinese film industry.

Directors, speculators, outside capital... at this stage, they are all nothing but chickens and dogs in front of Wang Sheng.

(End of this chapter)