Wanda’s Mtime deal adds what movie-mogul em­pire needs: toys

China Daily (USA) - - Q & A WITH CEO - By BLOOMBERG

Chi­nese bil­lion­aire Wang Jian­lin’s al­ready got film and tele­vi­sion pro­duc­tion com­pa­nies, theme parks and cine­mas. Now, he’s bet­ting on toys.

Mtime.com Inc, the movie por­tal and trin­kets seller Wang’s Wanda Cinema Line Co bought in July, says sales of T-shirts and fig­urines re­lated to War­craft are boom­ing. The com­pany is now chas­ing li­cens­ing deals with other block­buster films af­ter sign­ing China agree­ments for the rights to Star Wars, and Min­ions, said Mtime Chief Ex­ec­u­tive Of­fi­cer Kelv­inHou.

“This is a global trend and China is part of it,” Hou said in an interview in Bei­jing. An­cil­lary rev­enue in­clud­ing mer­chan­dise and stream­ing rights will prob­a­bly grow to 70 per­cent of movie-in­dus­try sales in as lit­tle as five years, he said.

The push sig­nals China’s en­ter­tain­ment in­dus­try is grow­ing up. It also comes out of ne­ces­sity as the slow­down in the coun­try’s box-of­fice sales is pres­sur­ing com­pa­nies such as Wanda to branch out into the $107 bil­lion global mer­chan­dis­ing mar­ket to jus­tify their in­creased in­vest­ments in film-re­lated as­sets.

China’s box-of­fice sales are poised to grow at the slow­est pace this year since at least 2008 — re­ceipts rose 4.1 per­cent dur­ing the first 11 months — com­pared to an av­er­age of 38 per­cent per year be­tween 2007 and 2015.

China’s grow­ing mid­dle class has fu­eled de­mand for movie tick­ets and ris­ing in­comes are now damp­ing the coun­try’s ap­petite for coun­ter­feit goods, said Hou, a for­mer Mi­crosoft Corp ex­ec­u­tive. He di­ver­si­fied into the toy busi­ness four years ago af­ter start­ing Mtime in 2005 as a film in­for­ma­tion data­base, en­ter­tain­ment news por­tal and tick­et­ing ap­pli­ca­tion.

Wanda has made Mtime part of a broader em­pire that in­cludes theme park and ho­tel com­plexes like the $7.3 bil­lion Wanda City the com­pany plans to build in the south­ern Chi­nese city of Haikou. The com­pany an­nounced the Haikou project, the third of its kind, onWed­nes­day.

Brand-con­scious­ness

“No one be­lieved this could work in China be­cause of ram­pant knock-offs,” said Hou. But younger, richer Chi­nese con­sumers are in­creas­ingly brand-con­scious and will­ing to pay a premium for Mtime’s li­censed items over pi­rated ver­sions, he said.

As ev­i­dence, he cites Mtime’s sales of prod­ucts based on the sum­mer hit War­craft. De­spite a luke­warm re­cep­tion over­seas, the video-game-fran­chise movie grossed 1.5 bil­lion yuan ($218 mil­lion) in Chi­nese the­aters. Mtime sold 100 mil­lion yuan worth of War­craft toys, sou­venirs and clothes through its web­site, re­tail stores and mo­bile apps.

Mtime op­er­ates a movie data­base, a tick­et­ing app down­loaded 70 mil­lion times, a movie re­view fo­rum and an en­ter­tain­ment news por­tal, and helps Hol­ly­wood stu­dios mar­ket films in China. The ad­di­tion of mer­chan­dise and film-re­lated sales will al­low Mtime to re­port its first an­nual profit this year, Wanda Cinema Pres­i­dent Zeng Mao­jun said in Novem­ber.

The War­craft section of Mtime.com of­fers a two-me­ter ac­tion fig­ure of Durotan the orc for 107,142 yuan. Tat­too stick­ers start at 5 yuan, while a se­lec­tion of badges, phone cases and mugs sell for around 100 yuan.

Out­pac­ing pi­rates

The ris­ing pace of Hol­ly­wood block­buster films com­ing to China has also made it harder for pi­rates to keep pace with li­censed toy and sou­venir mak­ers, Hou said.

“Now on av­er­age we have one block­buster a month screen­ing in Chi­nese the­aters and each stays for an av­er­age 40 days,” he said. “This turn­around time is dif­fi­cult for pi­rates.”

Still, the toys don’t sell them­selves. Some ques­tion whether China’s en­ter­tain­ment groups can field the kind of block­busters that would trig­ger de­mand for re­lated mer­chan­dise, said Jane Kong, a Shang­hai-based en­ter­tain­ment and me­dia part­ner at con­sult­ing firm PwC.

“The ques­tion is whether there’s enough good lo­cal con­tent and in­tel­lec­tual prop­erty that are ap­peal­ing enough to en­er­gize the po­ten­tial of mer­chan­dis­ing,” Kong said.

As for lo­cal movies, Hou cit­edHongKong di­rec­torRa­man Hui’s Mon­ster Hunt, the sec­ond high­est-gross­ing film ever in­China, as an ex­am­ple ofhow lo­cally pro­duced films can de­velop into a fran­chise that fu­els sales of toys.

Hou now hopes to repli­cate the suc­cess of Mon­ster Hunt and War­craft with The Great Wall a $135 mil­lion fan­tasy movie, based in an­cient China and star­ringMatt Da­mon. The 50-year-old Mtime co-founder took to the cat­walk this month at an event in Bei­jing to in­tro­duce clothing from jack­ets to evening gowns in­spired by the film.

“A suc­cess­ful movie fran­chise is built from decades of cre­ative work,” said Hou. Star Wars, for ex­am­ple, was made through four, five decades. It takes time, episode af­ter episode, for the char­ac­ters to bond with view­ers.”

Kelvin Hou, Mtime chief ex­ec­u­tive of­fi­cer

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