iQiyi, Youku and Tencent compete to create hit products and make online literature IP popular again?

Yuewen Group has once again set off a wave of cultural and creative entertainment market with its strong IP full industry chain development capabilities. From Joy of Life 2 to Hot, blockbuster film and television works have emerged in an endless stream, demonstrating Yuewen's outstanding strength in industrialized IP manufacturing. The outstanding performance of the first half of the year's financial report further verifies the successful practice of its industrialized thinking. Yuewen is reshaping the ecology of the cultural and entertainment industry with a steady pace, leading a new trend in content creation and commercialization.

By opening up the Ren and Du meridians of the cultural, creative and entertainment industries, China Literature is reaping the benefits of the entire IP industry chain.

On August 12, China Literature Group officially released its semi-annual report. The financial report shows that China Literature's total revenue in the first half of 2024 was 4.19 billion yuan, a year-on-year increase of 27.7%.

Specifically, the growth points of China Literature's performance mainly appeared in the IP business segment, with copyright operation and other business revenue increasing by 73.3%, the largest increase in three years. The corresponding market situation is that China Literature was behind many hit film and television products in the first half of the year, including "Hot", "Joy of Life 2", "The Phoenix", "The Story of Rose", etc.

On the one hand, this shows that in the large entertainment industry, which essentially focuses on content, the logic of the driving force of popular IP on corporate performance still exists, so iQiyi, Youku, Tencent Video and Mango TV have never stopped their layout and competition for popular IPs; on the other hand, it highlights the full industrial chain capabilities of China Literature IP, creating a complete and mature "new infrastructure" for the popular IP industry.

At a time when the overall cultural and entertainment market is all about luck and luck in terms of whether or not to create a hit product, China Literature's industrialized ability to manufacture hit products has undoubtedly provided the industry with a stable new paradigm.

1. TV series and movies have been a hit, with performance exceeding expectations

In the first half of this year, from "Fang Hua" at the beginning of the year, "Hot and Spicy" during the Spring Festival, to the recent top-tier "Joy of Life 2", "The Story of Rose" and "Mo Yu Yun Jian", with "A Journey to the West" in between, the hit movies and TV series have been seamlessly connected, leaving the audience overwhelmed.

However, whether it is Tencent's "drama king" or the "drama queen" that Youku, Tencent and Mango are competing for, it shows that iQiyi, Youku, Tencent and Mango are all "hungry for blockbuster" to a certain extent. In recent years, the blockbuster movies and TV series adapted from online literature IPs have made the market re-evaluate the value of platforms such as Yuewen. After all, the several hit movies and TV series in the first half of this year are closely related to Yuewen.

According to the data of Lighthouse Professional Edition, among the top five feature films in the first half of 2024, four of them are from Yuewen's IP or produced by Yuewen. And "Hot and Scorching", which has created the box office champion so far this year with 3.5 billion yuan, is produced by New Classics Media and Tianjin Yuewen Film and Television Culture Media, both of which are affiliated with Yuewen Group.

The hit products have significantly boosted the growth of China Literature’s performance.

The report shows that in the first half of 2024, China Literature achieved revenue of 4.19 billion yuan, a year-on-year increase of 27.7%, far exceeding the market's previous expectation of 3.5 billion yuan. In particular, IP and other business revenue was 2.25 billion yuan, a year-on-year increase of 73.3%. In addition, the net profit attributable to the parent company under non-International Financial Reporting Standards reached 700 million yuan, a year-on-year increase of 16.4%.

Indeed, returning to the essence of content, whether it is online literature, animation, or scripts, the role of popular IP can be completely magnified.

As for China Literature, its current ability to create popular IPs may not be something that can be achieved overnight.

Before officially announcing its “debut” as Yuewen in 2015, many platforms had already tasted the sweet fruits of online literature IP adaptations such as “The Legend of Zhen Huan” and “Startling by Each Step”, but these attempts were mostly seen in female IPs. After Yuewen’s “debut”, it quickly took up the banner of male IP adaptations and embarked on the “flowery road” of developing blockbuster products.

During this period, China Literature also did not miss the difficulties and challenges encountered by other cultural, creative and entertainment companies, including the sustainability of blockbuster products, the diversity of commercial monetization paths for original IPs, the active stickiness of the platform's audience and fans, etc.

By continuously building IP full industry chain development capabilities, Yuewen has produced hit dramas and animations such as "The Son-in-law" and "Battle Through the Heavens" in recent years, and "Joy of Life 2" has become the "king of dramas" since its launch. Behind this, there is inevitability after chance.

It was previously said that a hit product is something that can only be encountered by chance and is considered "metaphysics", especially in the long-form video content industry, where some S-level blockbusters may also "fail". As for Tencent Literature's grasp of hit products, the core keywords lie in the entire industry chain and industrial thinking.

2. Two-step industrial thinking to create a blockbuster IP

The development of the entire IP industry chain is the first step for China Literature to use industrial thinking to create blockbuster products.

As for how to do the entire industry chain, now that the IP development model ecosystem is mature enough, there are still different ways of playing for different industries and vertical segments, and it is also necessary to make choices and refinements based on the characteristics of the IP. It is not the case that "big and complete" is good.

Yuewen, a platform that started out as an online reading platform, is in the upstream field of online literature IP adaptation. During the launch of the "Joy of Life 2" series, Yuewen launched a linkage of the entire industry chain from literature to film and television, games, and derivative cards. First, it launched a special area activity on the original platform Qidian Reading, linked up with Tencent Video to launch a character voting, and then updated the exclusive stories of the selected characters such as "Ye Qingmei's Diary" on Qidian.

The logic behind this is equivalent to using "drama fans" to drive the return of users to the online literature platform. Therefore, the "Joy of Life" special zone activity on Qidian Reading at that time drove the original work reading to increase by 38 times month-on-month. The special zone received hundreds of millions of traffic, and the DAU reached an annual high.

In addition, mini-games, short plays, audio dramas, and derivative products created around "Joy of Life", including blind box figures, soft peripherals, and cards, were launched one after another during the broadcast of the drama. Among them, the sales of blind boxes exceeded 200,000, and the GMV of film and television cards before the broadcast of the drama reached 20 million, ranking first in the history of TV series collectible cards.

Every time a new link is designed, the market will have a new round of heat. On the one hand, this is a reflection of the capabilities of the entire IP industry chain; on the other hand, based on the theory of mass communication, through multi-frequency and continuous exposure, the effect of "setting the agenda" for the audience is achieved, so that hot spots can create hot spots, and the audience will spontaneously take over to increase the discussion heat, and a "hot item" is created.

It should be noted that the industrialization of film and television has a history of one hundred years, and iQiyi, Youku, Tencent Video and Mango TV are still emphasizing the use of innovative technologies to enhance the industrialization of film and television. This shows that for the cultural and creative entertainment industry, industrialization is the only way forward. Whether it is online literature or film and television dramas, if a set of industrialized strategies cannot be formed, then the hit IP can only "take its chances" in the end.

The core element of industrialization is "division of labor", that is, everything can be projectized, standardized and process-oriented.

Focusing on the development of the entire industry chain of IP, China Literature conducts top-level design of IP through the "IP and Content Decision Committee" to ensure the unity of IP and coordinate the development of the entire chain of IP from literature, animation, film and television to games and derivatives. At the same time, China Literature strengthens the responsible person mechanism through the "IP producer" to be responsible for the full life cycle management of IP. Previously, the producers of the two major IPs of China Literature, "The King's Avatar" and "Lord of Mysteries", were both served by the group VP.

"Joy of Life" went a step further. Hou Xiaonan, CEO and President of China Literature, led the establishment of the company's largest IP project team in history - the "Daqing Project". The top-level design, division of labor and coordination around the IP planning, IP visualization and IP commercialization of "Joy of Life" may also be the key factor in its "big hit".

Therefore, the second step of Yuewen's industrialized thinking in creating popular IPs is the project system. The group's senior management will be involved in the process to promote the establishment of cross-departmental and cross-industry upstream and downstream mechanisms, and ultimately achieve multi-terminal collaboration and integrated development of the entire IP industry chain.

At this point, the "formula" for the production standards of China Literature's hit-making machine is very clear, that is, to use the logic of the industrialized industrial chain, carry out unified planning and full-stage operations around the original IP, and realize diversified and serialized development of cards, short dramas, audio, derivatives, animation, film and television, games, etc., thereby forming a very mature industrial line. This line not only stays at the industrial manufacturing level of a single field, but is a "new infrastructure" built around the entire IP industry chain.

3. Internal circulation of ecological vitality, more than one "Celebrating Yu Nian"

Generally speaking, a popular online literature IP has several core elements, including good creators, good stories, and good downstream links. During this period, it needs to be supported by funds, resources, and experience, which is also the moat of a content company.

In terms of good creators, in the first half of 2024, Yuewen's online reading platform added about 170,000 writers, and fresh blood authors born in the 1990s and 2000s continued to pour in. The financial report shows that among Yuewen's new "Platinum God" writers this year, those born in the 1990s accounted for 70%. There is a clear trend of younger writers, and Yuewen also knows how to cherish the source of creation. In 2024, it invested heavily in the "1 billion ecological support fund" to help creators amplify the value of content and retain high-quality creators through tangible income growth and high-quality resources.

From the perspective of a good story, with the pre-operation during the IP serialization period, the creators' creative content output is more guaranteed and they can create in a more stable environment. At the same time, Yuewen provides AI-assisted tools to help creators design and build world views, fighting scenes, etc., which can free up creators' energy to be used in more creative work.

With good creators and good story content, China Literature can continue to produce high-quality products at the source of IP and provide content driving force for the development of the entire IP industry chain.

At this stage, for Yuewen, incubating a high-quality original IP does not worry about the lack of downstream terminal commercial resources support, including animations from Tencent Comics, films from New Classics Media, and even dramas from Tencent Video, etc. The support from downstream terminals can even feed back Yuewen's performance growth. A typical example is this year's box office champion "Hot and Spicy".

In the mid-game battle stage of the current entertainment industry, the market competition among long video platforms represented by iQiyi, Youku, Tencent Video and Mango TV has entered the second half. Each company is scrambling for online literature IPs that may be adapted into blockbuster titles. As China Literature holds the source of original online literature and comics IPs, it has more bargaining chips and more opportunities for cooperation resources in the industry chain.

In other words, in addition to the content ecosystem, the terminal resource ecosystem and circle of friends that China Literature Group has built over the years have formed a vibrant endogenous cycle that is sufficient to support the entire process of a high-quality IP from creation to full industrial chain development.

Previously, with the accumulation of time and project experience, China Literature's IP full-industry chain development capabilities have gradually matured and stabilized, especially the industrialization capabilities honed by the creation of classic IPs such as "Joy of Life", "Fights Break Sphere" and "The King's Avatar". After market verification and positive feedback, it also accelerated the development process of China Literature's high-quality IPs. For example, "The Night Patrol of Dafeng" was adapted into a film and television series shortly after its completion, and IP operations began during the serialization of "Ring of Fate".

In the future, the empowerment of "new infrastructure" will usher in a new growth cycle. China Literature, which uses industrial thinking to make mass replication of popular products possible, will eventually have more than one "Joy of Life".