By Ryan Carroll, Editor-at-Large
Tencent Literature’s acquisition of the remaining stake in New Classics Media, is a telling sign of Tencent Holdings’ motivations in becoming the dominate player in China’s Culture Industries.
On its face, the $2.25Bn M&A of New Classics Media, on-top of its previous $524MM investment this spring, would have appeared more inline with one of its film or streaming content divisions; Tencent Pictures, Tencent Penguin Pictures, or Tencent Video. By having their freemium e-publishing division acquire the live-action content producer, tells a more crucial story of Tencent’s ambition to become the Disney-of-China.
Tencent is not just looking to be an IP-Powerhouse in its application of the Disney model to the Chinese entertainment & cultural landscapes, it is looking to be Brand unto itself. In the mold of Disney, Marvel, Pixar, and Lucasfilm; the Marvel Cinematic Universe is not a franchise, it’s a Brand; Star Wars could be considered, the Original Brand; Pixar’s films may or may not live in a shared universe, but they all belong to the Pixar Brand. Disney itself is the House of the Mouse, which is not just a company but a cross-pollinated platform Brand. That is more than just a Magical Kingdom.
Tencent is looking to become China’s entertainment Brand, and the foundation of Tencent’s drive to become a Brand unto-itself is not via its gaming division(the largest in the world), or through its billion+ users on the most integrated social media app in the world, WeChat. It is through Tencent Literature – that division of Tencent Holdings which has been consistently overlooked in the West as “just” the Amazon Kindle of China.
Tencent is possibly the largest IP holder in the world. A result it has achieve by its multi-year journey to build Tencent Literature, out of the M&A ashes of multi companies before it. From the original freemium e-publishing platform Qidian to Shanda Literature, none of which exist but as the mold that became the vertically integrated platform known today as Tencent Literature.
Tencent Literature is above all else, an ACGN company. Which like many of cultural or entertainment industries in China are known by a series of names: ACGN (Chinese Anime, Manhua Comics / Games / Freemium Light Novels), 2D Culture & Pan Entertainment.Making these markets difficult to follow.
The ACGN markets will reach a combined total of $72BnUSD, in China alone, by 2020. Highlighting why Tencent wishes the base of its IP-Powerhouse to be Tencent Literature.
Simply referring to Tencent’s ambitions as just following the Disney Model, is missing the point. It is like when people ask me what is ACGN or 2D Culture, I simplify the answer to “Chinese Anime”. As it is a point of reference for those outside of China to understand. Just like when I talk about China’s Pan Entertainment I refer to it as, Branded IP.
The issue Tencent faces in its move to become the Disney-of-China, is not its scale, but is its lack of valued IP. As Tencent’s primary source of IP comes from Tencent Literature, by inviting its freemium authors to become VIP members. Allowing the authors to monetize their serialized stories, or other written content, with Tencent Literature’s user-based. While allowing the author, via Tencent Literature, to tap into the 1 billion+ users of Tencent’s social media outlets QQ and WeChat.
In return, Tencent Literature becomes the rights holder of the IP for adaptation across Tencent’s varied platforms. From G. CMay Animation & Films, to Tencent Comics for digital Manhua, and now with New Classics Media for live-action films.
New Classics Media allows Tencent Holdings to fully vertically integrate the IP of Tencent Literature up its ladder from being just ACGN content, to live-action productions for box-office release and franchise building. Tencent hopes that through the acquisition of a reputable live-action studio like New Classics Media, that it will be able to transform its vast ACGN content and transform it into Valued IP. Much like some Saturday Morning Cartoons of the 80s becoming valued brands for major Hollywood studios today.
Though Tencent is looking to become the Disney-of-China, it has not fully capitalized on the Disney Business Model. As it lacks in Location Based Entertainment, with the exception of an upcoming eSports theme park. To fully realize this, Tencent will need to continue its M&A spree of established film studios such as, Huayi Bros. one of the few studios that has viable IP franchises, in order to fully realize its Brand Vision.
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About the Author
Born and raised in the Missouri-Ozarks Ryan studied Film Production, and East Asian Culture, at the University of Kansas where he was a UGRA recipient that led him on a seven-year long, Journey From the West, to China. Where he worked with Warner Brothers, the China Film Group Corp. and the National Bureau of Statistics of China. Before returning to the States, where he specializes in Chinese Anime & Comics, China’s Box-Office, and Chinese entertainment-tech industries. He has a dog in China, Abigail, and a dog in the Arkansas-Ozarks, King Blue, who help ease his anxiety of suffering from the “Two-Dimensional Complex” that is trying to understand the Culture Industry landscapes of the Middle Kingdom.