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China video platform LeTV pays $1 million for online rights to popular Chinese films
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Speaking at the Tuesday finance conference at ScreenSingapore, Zhang Zhao, the new head of LETV Pictures Co Ltd, the film production arm of a large Chinese online video company, spoke about the new market and trends in film online distribution.
“The internet has changed the world and is changing the film industry,” he said. “If we only think in theatrical terms we will not change.”
Zhang told the audience that “China’s growing online video distribution sector has overtaken conventional home entertainment and TV to become the largest ancillary market for film and the second largest revenue source for film after theatrical“. He said that his parent company is now regularly paying $1 million for online rights to popular Chinese films.
“In China these days, films of all genres have an opportunity and the battle between old and new media is good for distribution,” Zhang said, adding: “There is no censorship and no quotas on Chinese Internet releases, though sooner or later that will come.”
Zhang Zhao, formerly head of Enlight Pictures, joined Beijing’s subscriber fee-based Hulu clone LeTV in March 2011 to manage a new feature film division. Zhang, who produced Chinese hits such as the All’s Well That Ends Well films (2009-10), is supposed to develop cooperation with China film industry as well as Hollywood.
Subscriber based online business
“LeTV has produced a few films but they wanted to get deeper into the film business and expand their international connections,” Zhang said to Hollywood Reporter. “I’m interested in their Internet business but my job is to build up the infrastructure of the Le Vision Pictures.”
Using “le,” one Chinese word for entertainment as a key part of its name, LeTV started up in 2004 and went public on the Shenzhen Stock Exchange in 2010. In February 2011, PPLive, a leading Chinese peer-to-peer video platform, said it would spend 10 million yuan ($1.51 million) on licensing content from LeTV.
LeTv’s subscriber-based business model is different from Youku and Tudou, the leading online video sharing companies competing to reach the China’s massive web-surfing population of 457 million people.
Letv.com makes net profits in Q1 2011
Online video website LeTV made RMB105 million (US$16.11 million) in revenues in Q1 this year, increasing by 1319% year-on-year according to the company’s financial report. It generated RMB29.06 million (US$4.46 million) in profits, which increased by 83.75% year-on-year. The site contributes the performance to increase in its advertising sales, distribution revenues and users of its pay to watch services. The site raised RMB419.84 million (US$64.43 million) more than planned at its IPO on the Shenzhen Stock Exchange on August 12 last year. According to local sources, “the site has already used 70% of this money”.
SOURCE: Film Biz Asia (8/06/2011)
