The secret science behind hit Chinese movies
Formula can determine which leading actor and actress will make the most appealing screen couple, according to investor Mason Xu Liang
No one can deny the huge potential in mainland China’s mammoth movie market. Box-office takings in the world’s second-largest economy have been soaring by nearly 30 per cent annually since 2011. However, the 30 billion yuan (HK$38 billionUS$5 billion) market in China as of last year still looks small compared with the United States, which generated US$10 billion of ticket revenue in 2014. Mason Xu Liang is a former chief financial officer at the Bona Film Group, China’s major film distributor. He set up a private equity firm last year, Heyi Capital, with two partners, hoping to invest in the burgeoning but chaotic film industry in China using “scientific methods”: quantitative analysis and data utilisation. Along with other backers, they hope to invest 2 billion yuan in the sector.
Q: What kind of movies will you invest in?
We’ll invest in genre films targeting niche markets on the mainland, i.e. romance, comedy, horror and other kinds of movies. China’s moviemakers used to like putting all various elements into one movie, trying to please all kinds of audience. However, box office big performers have been genre movies which devote themselves to a particular formula. For example, Lost in Thailand. It strictly follows the Hollywood formula for a road comedy, booked 1.26 billion yuan in ticket revenue in 47 days starting from December 12, 2012, hitting a record high in the history of Chinese-language movies. It was a huge success given its production cost of 20 million yuan. We will target segmented audiences to achieve our financial goal, with investments of between 10 million yuan and 60 million yuan to achieve box office takings of over 200 million yuan.
Q: Who will be the main audience for your films?
We will only target audiences who are younger than 40. Our research has found that most audiences of Chinese films are young people, with the majority young women. So a film targeting middle-aged or elderly men can hardly succeed commercially in China’s market. There are many examples of box office failures, with some the works of well-known directors. I don’t want to single them out, but it’s a fact that many Chinese filmmakers just act upon intuition, instead of basing decisions on research and analysis.
Q: How does your company differ from others with a “traditional” Chinese film-making mindset and practice?
We define our target audience at the very beginning and make it clear certain genre films are tailored for such an audience. Then we compile a portfolio of directors and leading actors, compare each portfolio and pick the one which is expected to excel. For example, we look into fans’ preferences for leading actors and actresses based on social media data. In order to attract as big an audience as we can, we don’t choose pairs of actors who share a highly overlapping group of fans. Also, we don’t choose couples whose fans are completely different because that suggests fans probably won’t envisage the pair acting together. Our model shows a 20 per cent 30 per cent overlap of fans makes the perfect screen couple. In addition, we use data from search engines to predict first-week and life-cycle box office takings.
Q: Have you proven your methods lead to commercial success?
My box office prediction model was proven correct in estimating the ticket performance of a US film Hummingbird last year. The prediction, made six months before the film was screened on the mainland in May 2014, was between 20 million yuan and 25 million yuan, while the actual ticket revenue turned out to be 23 million yuan. Since the company was set up last year, we have invested in two movies. The first one is a romance called the Rise of a Tomboy. The story idea came up last year when I read a popular article on WeChat. It was about a girl capable of handling everything from leading a successful career to fixing furniture. There are more and more such “tomboys” on the mainland as they pursue excellence and independence. As they often overshadow their male peers, it makes marriage a difficult issue. I communicated the story idea with my team members in November last year. It took us five months to find an internet writer who has a proven track record in writing about such topics, then writing up the screenplay and having it polished by professional scriptwriters. Production will be finished in the middle of next month and the movie will be released in November. The second movie started shooting last month.
Q: How do you think the internet is reshaping China’s entertainment industry?
Unlike US counterparts such as Netflix, China’s online video service providers have not developed a sound business model for charging subscription fees. However, even with their advertisement-supporting model, online video companies have turned themselves into a decent revenue source for Chinese films. A movie could be sold for 3 million yuan to 30 million yuan to video websites nowadays. To us, the internet also provides a marketing arena for films we invest in. It also serves as a source of story ideas as we research which topics people want to watch stories about.
Q: There are more than 100 culture investment funds on the mainland. How do you expect future competition to shape up?
We are among a few institutional investors which are dedicated to project and equity investments in China’s entertainment sector. Compared to other professional institutional investors, such as investment banks and TMT [technology, media and telecom] funds, we are more familiar with the ecological system of China’s film and TV circles. Compared with entertainment sector insiders, we are more professional in terms of investment.
Q: Are you interested in any cooperation deals with foreign peers?
Yes, actually, we are in talks with some US counterparts about possible cooperation. We hope US partners can contribute production capabilities, while we will contribute our marketing and distribution capability on the mainland. In addition, we’d like to learn from Hollywood’s three-act structure [ which divides a fictional narrative into three parts, often called the setup, the confrontation and the resolution] in screenwriting to tell China stories. We hope to produce films about China primarily targeting a Chinese audience.
Mason Xu Liang spoke to Jane Cai
