Gong Yu, iQiyi

Owned by China’s biggest search engine Baidu, video streaming platform iQiyi has been making waves this year, first by launching a film production arm, iQiyi Motion Pictures, then by cooperating with internationals film festivals including Venice to stream festival films in China.

Working with traditional film producers, iQiyi Motion Pictures plans to utilise crowdfunding, ‘big data’ and its considerable promotional and marketing resources to produce and distribute a slate of seven local films and one Hollywood film each year.

Why did you start working with film festivals in Europe and Asia?

China’s video business has two major business models – one is free but ad-supported and the other is subscription. Right now, film content focuses on subscriptions, while TV content is more ad-supported. The main reason we want to cooperate with film festivals is because we’re hoping we will secure more content to attract audiences and subscribers. As films are often premiering in festivals, we can secure content earlier than our competitors. Attending these festivals also gives us more opportunities to explore co-production.

How much interest do Chinese consumers have in European films and festivals?

Chinese audiences are mostly interested in Cannes and Venice. Although Hollywood blockbusters are popular, Chinese audiences are not really familiar with European cinema and they’re only really interested in big-budget American films. But we think interest in diverse kinds of cinema will grow as the market matures and we to offer our customers more choice.

Why step into film production?

If we have our own IP, we can use the same property to produce movies, TV series, animation and games. We can produce across multiple platforms. We’ve already established separate teams to produce the four kinds of content.

How will you work with Baidu in your content business?

We’re working with them in three ways – firstly Baidu has launched a crowdfunding platform, which is an important promotional tool as well as a way of raising funds. We have a close relationship with this team and some of the investment in our films may come from crowdfunding. Secondly, Baidu is China’s biggest search engine, so they provide us with both data and traffic. And thirdly we will collaborate on selling film tickets. Earlier this year, Baidu acquired Nuomi.com, a web-site similar to Groupon, which has an online ticketing service.

What is the business model for online ticket sales? How can internet platforms offer film tickets so cheaply?

Usually they’re not selling tickets to make profits – they’re doing it to drive users to their platforms to buy other things. Also, the newer cinemas will offer discounts to the online platforms to attract more customers. More established cinemas seldom offer these big discounts.

How will you use ‘big data’ to make films?

Among other things, big data helps us in the casting process because people like us working in this office have two characteristics – we live in big cities and we’re old. We don’t represent the mainstream audience in China, but big data can help us with that. It can tell us who are the most popular actors and actresses in China right now, and the results sometimes really surprise us. We found that young actors such as Chen Xiao and Li Yifeng and actresses Yuan Shanshan and Yang Mi are even more popular than Andy Lau or Zhang Ziyi.

Big data can also help us with storylines for TV programming and gives us more information about our user groups, which in turn helps to attract more advertisers and sponsorship.

What are the first films you are producing?

Our first investment is Jiang Wen’s Gone With The Bullets – we have equity in the film and exclusive rights for the online game and VOD. We have the option to stream the film first and will also sell it to other online platforms.

What kind of Hollywood films are you interested in?

We’re looking at studio movies that can secure a release in China, rather than independent films. We’re only interested in co-producing films that can be released theatrically, which in China usually means big-budget films with lots of special effects.

When you acquire foreign movies, do you ever buy directly from the content owner, rather than the theatrical distributor in China?

It’s a complex situation – we have direct collaboration with Hollywood studios for TVOD and SVOD on library titles and some of their newer titles. But films that are aiming for a theatrical release in China usually sell all rights to the local theatrical distributor. However, we think this model will start to change because the China market is a special case. In future, maybe the US studios will no longer sell all rights to one local Chinese distributor.