Le Vision Pictures CEO, Zhang Zhao

With a ten-year track record, Jia Yueting’s LeTV is one of China’s oldest video streaming platforms and has also sold more than 650,000 units of its smart TV system, Super TV, which it is now planning to launch in overseas markets.

The company hired Zhang Zhao, the former head of Enlight Pictures, to head its film production and distribution arm, Le Vision Pictures, in 2011. Since then, Le Vision has scored hits with the Tiny Times franchise, US import The Expendables 2 and Zhang Yimou’s Coming Home, which premiered at this year’s Cannes film festival.

Zhang explains how the company is catering to the cinema-going masses, but also has China’s vibrant digital eco-system in its DNA.

 

Q: China’s box office is booming, but so is online viewing, which is mostly free to consumers. Will it eventually pose a threat to cinema admissions?

A: No, because online behaviour can be used to drive cinema admissions. Movie consumption in China is now either location-based, which means theatres in your city or neighbourhood, or home-based. Why do you need to go to the cinema when you have a 120-inch smart TV in your home? Not for the content, but for your social life. We can watch at home but we still want that shared experience.

We have 600 million internet users in China but only 60 million regular moviegoers, so to get people into theatres we need to use the internet and play up the social aspect of films. That’s why Tiny Times was so successful. The majority of moviegoers in China are aged 25-35, so we use the internet to pull them in because that’s where they live.

 

Q: So will this affect the kind of content that is being made?

A: Yes, eventually, because when I’m looking at projects to invest in, I’m more likely to choose ones that people will want to see with their friends. Films like Tiny Times, you want to see them with your old friends and former roommates and share the memories.

 

Q: Will the internet open up a market for specialist and foreign-language films in China?

A: Every film is worth a life in the theatres but we have to locate your target audience and get them in. Any good film can work and it has nothing to do with big or small budget, local or foreign. We distributed [Korean drama] Miracle In Cell No 7 through our O2O system – online and offline simultaneously. With smaller films, we can’t afford to reach out through traditional media, but we can find an audience through the internet and use our online platforms to market the film. Then the audience can pick whatever theaters they want to go to.

The real change the internet brings is that it’s going to turn every traditional business into a service business. Traditional businesses are all manufacturing businesses – Hollywood is a manufacturing system. It’s product driven but not customer driven. That’s why IBM wanted to sell its PC business to Lenovo – IBM is now a service company providing service resolutions. Every traditional business is going to be turned into a service business. And how do you define a service business? By whom you are serving and not what you’re selling. The revolution is starting in China – this is very much an internet-driven market, so we’re at the centre of the storm.

 

Q: How does rise of mobile affect the film industry?

A: Ticket-buying behaviour is materialising on mobile. We’re out of the PC era and people don’t sit on computers during work making purchasing decisions. They’re doing that every moment of the day on their phones. We have an app store to sell tickets and also market films through mobile. You can watch all the trailers on your phone but this is just driving you to a bigger screen. The place to watch a movie is still the theatre and the living room.

 

Q: How do LeTV and China’s other video streaming platforms acquire foreign content?

A: It’s still the old model of theatrical buyers. Yes, online platforms can buy content directly from Western sales companies, but you still have to pass censorship and that takes time. The platforms have deals with the US studios, and we’re gradually picking up the indies, but SAPPRFT still controls the theatrical aspect. When you buy a newer title, you can’t guarantee that it will get a theatrical license, and its risky to buy online-only because theatrical is still a big promotion for online. Library titles are less complicated but still have to pass censorship.

 

Q: Do you expect much growth in online subscription services in China?

A: The market is still dependent on advertising revenue, but subscription is increasing with the growth of smart TVs, new distribution platforms and content offerings. Demand is there for movies and sports and lately foreign TV dramas have been quite popular. But its not just content driven – the technical aspects are improving and all kind of services are being offered on top.

The film industry is still driven by content makers and we’re not thinking enough about the technology and marketing methods and that is what is really changing. We need to also focus on how consumer behaviour is changing throughout the internet era. That is the key.