(Chinese Version)

At the end of August, many listed Chinese entertainment companies released their semi-annual reports. We rank these companies based on their total revenue and net profit. Let’s have a look: which company earns the most during the first half of this year?

In this age of entertainment, entertainment companies, however, seem to be struggling for their development model: some TV series producers turn to advertising industry by acquiring advertising companies (such as New Culture Group, China CCYS), others turn to sports industry (such as HBN), and still others quit producing TV series and shooting films instead. Film producers are also looking for opportunities to make more money. For example, Huayi Brothers Arist Agency’s game and theme park businesses have already been contributing to over 80% of its total revenue, far more than film business.

Indeed, shooting films means nothing but building up an entertainment company’s reputation. To make profit, they will have to work out other approaches.

No.1. Huayi Brothers Arist Agency: Turning to more profitable games and location-based entertainment business

Performance:
According to the report, Huayi Brothers’s revenue in the first half of this financial year rises by 167.26% compared to a year earlier and hits 1.293 billion RMB, while its net profit rises by 35.41% compared to a year earlier to 504 million RMB.

Analysis:
With excellent performances in all its three major sectors of businesses (film and TV series, brand licensing and location-based entertainment), Huayi Brothers’s net profit in the first half of this financial year surpasses 500 million RMB, making it the most profitable company in the industry. To be more specific, the gross margin of its brand licensing and location-based entertainment business is 10%, the gross margin of its Internet entertainment business is 82.44%, while the gross margin of film and TV series business is merely 42.52%.

Back in the first half of last year, Huayi Brothers’s film and TV series business faced great challenge. A year later, however, Huayi Brothers recovers and comes back to the public attention with a series of box-office champions, including Dragon Blade, Running Man, Lost and Love, Love on the cloud, Kung Fu Hustle 3D, The Ark of Mr. Chow, etc., grabbing unprecedentedly 770 million RMB for Huayi Brothers, an increase of 110.92% compared to a year earlier. In Internet entertainment sector, Huayi Brothers profitebd by 488 million RMB during the first half of this year with games such as Space Hunter, Forsaken World and Dragon Hero, etc.

At present, the business volume of brand licensing and location-based entertainment businesses remain quite limited but is increasing with incredible speed. For example, the business volume of these two businesses during the first half of this year increases by 151.43% compared to a year earlier. Two weeks ago, Huayi Brothers just signed a contract with Pin’An Bank, which planned to invest 30 billion RMB in Huayi Brothers’ location-based entertainment business.

No.2. LeTV: More a TV manufacturer than an entertainment company

Performance:
LeTV makes a profit of 4.46 billion RMB during the first half of this financial year, an increase of 51.79% compared to a year earlier. At the same time, its net profit increases by 67.70% to 255 million RMB. To be more specific, LeTV’s advertising business brings to it a revenue of 1.034 billion RMB, an increase of 49.96% compared to a year earlier, terminal service business brings another 1.893 billion RMB to LeTV, an increase of 60.24%, and paid service business generates 1.075 billion RMB for LeTV, an increase of 65.13%.

Analysis:
Actually, we feel reluctant to include LeTV in this list, since when we look at its revenue structure, we may find that LeTV has almost become a TV manufacturer, not an entertainment company. More than half of its revenue is generated from its TV business, while its 1 billion RMB revenue from paid service also has to do with its TV and hardware business.

In online video sector, LeTV has already fallen behind three major Chinese online video service providers Youku Tudou, Iqiyi and Tencent Video. As can be seen in their advertising revenue, Youku Tudou gains around 3 billion RMB during the first half of this financial year, while LeTV only earns 1 billion RMB. However, LeTV did well in its UV performance by producing several popular films, such as Tiny Times 4.0, My Sunshine, and exclusively live broadcasting several sport events.

No.3. Huace Film&TV: Not merely a TV series producer

Performance:
During the first half of this financial year, Huace Film&TV earns 926 million RMB in total, an increase of 20.45% compared to a year earlier, among which net profit increases by 7.55% to 21 million RMB. On the whole, Huace Film&TV’s development has slowed down.

Analysis:
The revenue of Huace Film&TV used to grow rapidly by 30%, so a 7.5% during the first half of this financial year is far from satisfactory.

Huace Film&TV earns 813 million RMB in total with its TV series business during this period. Although TV series sector remains the principal source of Huace’s revenue, the profitability of this sector has been actually declining, since Huace fails to produce any popular TV series in the first half of this financial year.

Huace Film&TV is no longer satisfied with being regarded merely as a TV series producer. During this half year, Huace Film&TV has steadily divided its efforts also to producing Internet series, films and even entertainment shows, etc.

To grab a share of the film market, Zhao Yifang, a typical Zhejiang businesswoman and the founder of Huace Film&TV, focused her attention on distributing sector, one that is less risky, most profitable and easiest to start with. Up till now, Huace Film&TV has already got the exclusive distribution right of films including The Assassin, Lost In The Pacific and The Last Women Standing. No wonder, she has made the right decision.
Moreover, Huace Film&TV just launched a Super IP project, that it, to develop different versions (TV series, Internet series, film and game, etc.) of the same IP. In the latter half of this financial year, Huace Film&TV is going to work on several Super IPs and cooperate with online video service providers on pay-per-view service, advertising, etc. to diversify sources of its revenues.
In terms of financing, Huace Film&TV rolled out a 2 billion RMB financing plan last October. Internet giants such as Baidu and Xiaomi all cashed in. Baidu singly vowed to invest 1 billion in Huace Film&TV. On August 26, China Securities Regulatory Commission approved Huace’s financing plan, facilitating Huace’s future development.

No.4. DMG Media: Dropping advertising service on CCTV proves to be the right decision

Performance:
This is the first time for DMG Media to release a semi-annual financial report since it listed as a promising food company. According to the report, DMG Media’s revenue in the first half of this financial year decreases by 31.25% compared to a year earlier and drops to 829 billion RMB, while its net profit rises by 16.37% compared to a year earlier and hits 215 million RMB.

Analysis:
DMG Media is the first one to release its semiannual financial report among these ten companies, and also the only one whose net profit remains high while the total revenue declines. During this period, DMG Media keeps its advantage in marketing business and expands its service to the investing, producing, distributing and other derivative businesses.

In terms of film&TV series producing, DMG Media not only produces the popular TV series Diamond Lover, but also builds a few more theatres. Still, how can its net profit rise while the total revenue decreases? The company’s spokesperson suggests that the reason why the total revenue drops is that DMG Media adjusts the advertising strategy and drop its low-net-profit advertising service on CCTV. However, such adjustment didn’t affect the net profit much. On the whole, the net profit even rises a little bit.

No. 5. Enlight Media: Lost In Hong Kong is going to be the turning point

Performance:
Enlight Media’s revenue reaches 82.1875 million RMB during the first half of this financial year, a decrease of 19.78% compared to a year earlier, among which net profit also drops by 40%.

Analysis:
During this period, Enlight Media earns 300 million RMB from its film business, an increase of 54.8% compared to a year earlier. While the revenue from its main business is increasing, the total revenue is decreasing. How come?
Enlight Media’s spokesperson explains that: for one thing, the net profit rate of its film business has dropped from 64.27% to 36.05% with the rapid increase of cost; for another, the financial expenses have also increased from minus 4.66 million RMB a year earlier to 2,099 RMB during the first half of this financial year, an increase of 550%.
However, the total revenue of its film business is still expected to roar with 13 new films to reach the box-office, including Lost in Hong Kong. Besides that, Enlight Media is going to open testing of the 3D action play game Bahamut Lagoon and other 2D card games, which will for sure grab a huge sum of money for Enlight Media.

No.6. New Culture Media: Up with advertising business, down with Film&TV series business

Performance:
During the first half of this financial year, New Culture Media (NCM) earns 430 million RMB in total, an increase of 45.62% compared to a year earlier, among which net profit increases by unprecedentedly 88.73% to 110 million RMB. However, NCM suffers from the “one TV series, two satellite stations” policy carried out by the SARFT, so its revenue from film & TV series business reduces by 39% and drops to merely 178 million RMB.

Analysis:
Although the revenue from TV series business has been declining in the first half of this financial year, the total net profit has been roaring. How come? For one thing, two of its advertising subsidiaries merged together; for another, NCM drops the traditional business model and turns to a more comprehensive one, so that NCM will produce all kinds of contents, such as TV series, films, Internet series and entertainment shows, etc.
In the latter half of this year, NCM’s revenue chart is even going to be out of red with two new films: Saving Mr.Wu, starring Andy Lau, and Skiptrace, starring Jackie Chen and Fan Bingbing.

No.7. HLBN Media: Becoming the best sport events broadcaster

Performance:
HLBN Media’s revenue reaches 876 million RMB during the first half of this financial year, an increase of 300.22% compared to a year earlier, among which net profit hits 62.37 million RMB, an increase of 37.74%. To be more specific, TV series and entertainment show business brings HLBN Media a revenue of 565 million RMB with shows such as Dream Maker and Duets, and TV series such as Peach Blossom and Chun Jiang hero and Xiu Cai and soldier, an increase of 163.63%.

Analysis:

Different from other entertainment companies, sport event broadcasting is the core business of HLBN Media. HLBN Media even set up a subsidiary to better integrate resources and sign up contracts with organizers of Chinese and European sport events. Up till now, it has already got the exclusive broadcasting right and business development right in China with 15 organizers around the world. Moreover, HLBN Media vows to cooperate with Hebei provincial government and hold a snow carnival (including sport events, music festivals, concerts and tourism festivals, ect.) during the 2022 Winter Olympics.

No.8. Talent TV&Film: The full support of Fan Bingbing & Zhao Wei

Performance:
According to Talent TV&Film’s financial report, its revenue during the first half of this year increases by 153.67% and reaches 269 million RMB, among which net profit reaches 54.4592 million RMB, an increase of 121.18% compared to a year earlier.

Analysis:

Although the total revenue of Talent TV&Film remains low among these ten companies, the growth rate, however, is the highest among them.

According to the report, owing to the first, second, third and fourth-round broadcasting of The Empress of China (starring Fan Bingbing) and transfer of right of the first round broadcasting of Left Hand Cleaver, the TV series business brings Talent TV&Film a revenue of 21,000 RMB, an increase of 111.22% compared to a year earlier.

Moreover, the film business brings 46.6752 million RMB to Talent TV&Film, an increase of 2557.34%. How come? By co-distributing The Hunger Games: Mockingjay - Part 1, which later on takes more than 230 million RMB at the box-office, Talent TV&Film really makes a fortune.

No.9. CCYS Media: Advertising business on the rise

Performance:
CCYS Media’s revenue reaches 204 million RMB during the first half of this financial year, an increase of 67.30 compared to a year earlier, among which net profit hits 49.9565 million RMB, an increase of 26.63%. To be more specific, TV series business solely brings CCYS Media 92.7132 million RMB with popular TV series such as Hero sui and tang dynasties and New Sack Monk and several old TV series.

Analysis:

During the first half of this financial year, CCYS Media grows steadily and gradually expands its businesses to advertising, making film&TV series producing and advertising two of its pillar business.

Although CCYS Media runs well on the whole, the profitability of film&TV series business is gradually reducing while that of advertising business is increasing rapidly.

No.10. Beijing Culture Media: From dark horse to undefeatable champion in the box-office

Performance:
During the first half of 2015, Beijing Culture Media(BCM)’s revenue increases to 86.5565 million RMB, an increase of 5.05% compared to a year earlier, among which net profit reduces to 3.3616 million RMB, a decrease of 46.79%.

Analysis:

Breakup Buddies, released during last year’s National Day holiday, championed the box office, bringing BCM’s subsidiary Beijing Skywheel Entertainment a huge fortune. This year, Monster Hunt, partially invested by Zhejiang Star River Media (ZSRM), again championed the box office during this year’s summer vacation. It happens that BCM is planning to acquire ZSRM. Moreover, BCM invited Xia Chen’an, former director of Zhejiang Satellite TV Station, as CEO, who will for sure unleash huge possibility for its future development.

Although BCM’s revenue during the first half of this financial year dropped the most, its revenue chart might turn green in the latter half with a series of TV series and films to be released and three entertainment companies to be acquired, whose net profit is bet to reach 212 million RMB. On the whole, BCM’s revenue is even going to outstrip its expectation, if there is good news in the box office during the latter half of this year.

[The article is published and edited with authorization from the author @Yulezibenlun, please note source and hyperlink when reproduce.]

Translated by Levin Feng (Senior Translator at ECHO), working for TMTpost.