Booming China film industry mines web for oddball talent

BEIJING — Yi Zhenxing’s movie career started by posting clips of himself online with a paper bag over his head commenting on computer games.

The videos got lots of views so Yi, formerly a civil engineer, graduated to a web-only comedy series about a young loser’s misadventures based on classic Chinese stories. To garner the biggest audience, he monitored which episodes and parts of episodes were most popular before releasing the next one. Now, the 30-year-old’s playful and largely plot-less videos are being worked into a movie aiming to get his millions of online fans into the cinemas.

The unusual path to the big screen shows how the Internet, granular data on online usage and private investment are driving changes in China’s film industry. The market is developing at a faster pace than in the US and Europe while viewing habits are less entrenched and easier to change. But the influx of new money isn’t chasing cinematic quality, say film critics and industry observers, who don’t foresee homegrown Chinese films attracting a global audience.

Before, films were funded by state-owned or, sometimes, private studios. Now, billionaires and companies in industries from mining to tourism are jumping into the booming and glamorous film business whose pace of growth is stunning even by China’s standards.

“It’s sexy to have a movie company,” said Victor Koo, CEO of video streaming business Youku Tudou Inc., which co-produced three of China’s top-10 grossing films last year.

Despite restrictions on what can be shown in Chinese movie theatres because of state censorship, the country’s film industry is a force to be reckoned with. Box office revenue in 2014 was $4.9 billion, almost three times as much as 2010.

China is building an average of 15 screens a day and is expected to surpass the stagnating North American box office and become the world’s biggest by ticket sales by 2020. Hollywood is using Chinese actors and locations to appeal to local audiences, partnering with Chinese production companies, and sending stars such as Johnny Depp on publicity tours.

Yet the blossoming of the industry is mostly about quantity.

Film critic Raymond Zhou said that the quality of films produced last year worsened even as the box office broke records because investors chased “quick money” and producers churned out screwball comedies and other low brow fare.

“They just aim so low it’s a shame to call themselves artists,” he said.

Companies that include e-commerce giant Alibaba, online game and social media operator Tencent, and Baidu, which runs China’s most popular search engine, have created their own film units or snapped up shares in entertainment businesses. They have huge reach and can use big data to glean information about the preferences and habits of their millions of users to target them with advertising, content and recommendations. That’s information a traditional movie studio can only dream about.

Smartphone maker Xiaomi announced in November it would invest $1 billion in entertainment content, the first tranche of which would be spent with Youku.

Marcel Fenez, an entertainment and media expert at PwC in Hong Kong, said whereas the entertainment industry has been “neatly packaged” into film, TV and publications, “the online digital platform enables people to transcend those traditional areas and to be able to do anything.”

This blurring between the online and offline is already happening in the United States. Netflix struck big with its own content such as “House of Cards”, putting whole seasons online at once. The sequel to Ang Lee’s “Crouching Tiger, Hidden Dragon” will be the first Netflix-backed film to premiere both on an internet TV platform and in IMAX theatres.

In China, online video sites position themselves as a one-stop shop, unlike US users having to go to YouTube for home videos and Netflix for movies and TV dramas. Sites such as Youku Tudou are no longer content with streaming movies and making their own web series. It set up a small film unit of 20 people with no movie background that takes Youku’s original content and turns it into low-budget movies costing less than 100 million yuan ($16 million).

Youku Tudou CEO Koo said that in the past, people deciding on a film to watch or back relied on established directors.

“But in the last two years that has fundamentally changed,” he said, “I think partly because of the proliferation of screens and partly because of the Internet.”

Yi, the online star who goes by the web name of Yi Xiaoxing, was noticed by Tudou when his short videos became popular. That led to him forming a company and making the web series “Surprise”, about a young man for whom things often go wrong.

The series had a budget of about 50,000 yuan ($8,000) per episode. Yi said revenue from the first season was more than 10 million yuan ($1.6 million) and the second season doubled that figure.

“When an episode was released online we tracked data and looked at where the viewers fast-forwarded in order to see which bits were the most liked or disliked” to guide future episodes, he said.