Making money off “Voice of China” (Business Review)

6 September 2012 14 h 45 min Comments Off

The Voice is the latest in a string of reality TV programs that are based on singing competitions. Originally created by Dutch television producer John de Mol as The Voice of Holland – the series has now made its way to China. The reality talent show’s Chinese adaptation, The Voice of China (中国好声音), premiered in July this year on Zhejiang Satellite Television and proved a ratings hit almost immediately.

The same program format that had managed to capture the hearts and eyes of viewers in more than forty countries around the world, has also become an instant hit in China.

The format of The Voice of China (TVOC) is nothing original; the producers have followed the same play book as the various national versions that have been ratings hits everywhere from Australia to the Ukraine.

Impressed by the unique format that has never been seen in any Chinese talent show before and the global popularity of the franchise, a Chinese production company called Canxing Productions (灿星制作) took the plunge and decided to pay 3 million yuan to acquire the rights to the show. The company signed a three-season contract and will co-produce the series with Zhejiang Television, a provincial satellite channel that already broadcasts several popular talent shows.

A New Mode of Cooperation

Both the record high ratings and the fact that the show was popular right from its premiere, have caused people to wonder what it is about this particular talent show that makes it stand out from many of the other similar programs that appear on Chinese television.

Apart from the format itself, which has been proven demonstrably successful worldwide, a new way of organizing the collaboration between the production company and the TV station has also contributed to the show’s success.

It is unprecedented in China’s TV broadcasting history for a production company and a TV station to form a joint venture, a partnership in which both parties share both the revenue and the risk. This new approach means that the TV station has to take on a greater amount of financial risk. As a consequence, it took Canxing quite some time to find a network that was willing to sign on.

The usual way in which production companies and broadcasters work together in China is for the production company to handle the entire production process from scratch and for the broadcaster to simply make a decision about whether to broadcast after viewing the show. The price for buying the show will be set by the network based on the estimated advertising revenue and potential viewer ratings. After receiving a fixed production fee, there will be no more profits for the production company, no matter the amount of earnings generated by ad sales. This kind of cooperation model usually forces the production company to skimp on production expenses at the cost of program quality in order to maximize profits.

In contrast, the new partnership puts Canxing and Zhejiang satellite station in the same boat. Since there is no cap on profit sharing, both Canxing and the network would bend over backwards to offer the best-possible show and related promotional campaigns.

With this kind of motivational pressure placed on the company, Canxing has invested a large sum of money to make sure that everything from sound equipment, stage setting, audio post production to coaches, bands and technicians are top-class. Zhejiang TV also put forth their best effort in advertising sales to successfully seal a title sponsorship deal that is worth 60 million yuan with a beverage company. A bidding war drove the ad placement during the show to be sold for 360 thousand yuan per 15 second slot.

The joint efforts of the two sides soon paid off and saw the joint venture start turning a profit merely two weeks from when the program went to air.

According to the latest statistics from CSM Media Research, the ratings for the first three episodes of TVOC exceeded 1.5 percent, 2.8 percent and 3.093 percent respectively, topping the nationwide ratings. It can be conservatively estimated that the total soft and hard advertising revenues generated from the first ten episode run of TVOC on Zhejiang TV is somewhere between 250 million and 270 million yuan.

Establishing a Chain of Production

In other versions of The Voice, the relationship between the contestants and the show would be terminated after the season finale. The company behind the show won’t have anything to do the contestants’ future singing career. However, in China, Canxing takes a longer view. From their perspective, the production and broadcasting of TVOC is simply the first step.

Digging deeper into the production company, we find that what they can offer is much more than just producing hit shows. Canxing Productions is a subsidiary of Star China Media (SCM), a media and entertainment joint-venture owned by News Corp and state-backed China Media Capital who acquired a controlling stake in STAR China.

It is the background and connections that grant Canxing the confidence to think beyond the success of TVOC.

In fact, Canxing is intended to break new ground in China’s music industry and build a whole chain of related products, according to Mr. Tian Ming (田明), the head of Canxing Productions and CEO of SCM.

“I’ve always hoped to find a good platform to fill the holes that currently exist in China’s music industry. TVOC could serve as a trigger to activate the value chain,” said Tian Ming. “There are so many music lovers out there and such a huge demand for good music. If we can accurately identify these people’s needs, they will be willingly paying to listen to music.”

Canxing is planning to take full advantage of their parent company SCM’s media assets and rich resources for the “post-show era” market development.

Channel [V], an international music television network, will be utilized as a platform for TVOC singers’ promotions and publicity. The influence of the network will be helpful in giving contestants the opportunity to collaborate with professional music artists, producers and gurus.

Unlike in other countries, where the contestants usually started off their professional singing career with getting signed by a record label, in the TVOC’s case, Canxing will form its own entertainment agency to manage these singers and develop related marketing strategies.

The singers’ coaches will continue to work with them as advisors as well. Through this arrangement, they hope to not only develop and promote new talent, but also to attract more outstanding original musical works to revive the floundering local music scene.

The production company is also considering launching a “V-house” project, in which they hope to combine the real estate/commercial property sector with entertainment business.

For example, they have already made deals with two pub chains and are in talks with some property agencies in relation to venues for regular concerts, tours and other events.

Tian Ming revealed that they might even look to work with stage directors to create a TVOC musical that goes on tour except for the regular concert tours at home and abroad.

Given that there’s no mature paid music download platform like itunes Store in China at the moment, Canxing decided to join hands with China Mobile on paid ringtone downloads. The songs performed by all the contestants (including the eliminated participants) in the show, will likely be made into ringtones which will be sold at 1 yuan a track to mobile phone users. The four high-profile coaches that appear on the show in order to encourage and train the contestants, also receive a share of the revenue from the music downloads. If the show is as successful as expected, it’s estimated that the ringtone downloads could bring in a total 320 million yuan in revenue.

Links and Sources
Time Weekly: 《中国好声音》:来自“体制外”的制作
Chinese Herald: 好聲音,好生意
The Voice of China: Official Website
NBC: The Voice

Source: Business Review (20/08/2012), eeo.com.cn (06/09/2012)

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