Gaming, Cinema and How China Will Influence Them
Last week, WeChat's owner Tencent agreed to pay $8.6 billion to gain control of Finnish mobile games maker Supercel. This was less than two weeks after the game-to-movie adaption Warcraft stormed the Chinese box office with a record-breaking $156 million in just five days - more than Star Wars: The Force Awakens total haul of $125.4 million in China.
Tencent had also invested in the Warcraft. Following the Supercel purchase, we are likely to see the company backing more film adaptions of games and the corresponding Marvel-type merchandise, theme parks and everything else they can make a buck on.
Chinese love gaming; Tencent alone made $9 billion in gaming revenue last year. Chinese gamers account for more than half of the 5 million World of Warcraft players globally. You've got a winning formula when you can couple that with China's growing affection for cinema, which soared around 50% last year and is expected to be the biggest market globally by 2017. 15 new cinemas open a day in China providing more and more consumers with an accessible and affordable experience.
What is interesting about the Warcraft in China, is that it bombed in the US, earning just $24.4 million on opening weekend, and receiving a rating of just 4.2/10 on Rotten Tomatoes. It is another sign that success in the US is becoming less crucial for the overall triumph of blockbusters worldwide.
The increasing importance of wooing Chinese cinema-goers is already changing the face of film, but this is just the beginning. Tencent, like Alibaba, is scrambling to invest billions in the entertainment and film industries.
With China's middle classes being so active online, its big Internet companies have immeasurable insights into consumer preferences. Take Tencent, they have an enormous bank of user insights - of Chinese likes and dislikes, just from WeChat Moments, messages and games. This is likely to factor into themes and paraphernalia for film and game development. Alibaba's customers' ecommerce, Youku and other preferences will also help shape the direction of movies.
What does that mean for brands? It should reemphasise the popularity of gaming with Chinese consumers, and urge brands to incorporate this into marketing initiatives where relevant. There are also increasing opportunities with film associations and product placements. On a deeper level, it is likely that companies like Tencent and Alibaba will increasingly integrate their gaming and movie assets into their platforms such as WeChat and Tmall, allowing a new suite of targeted and engaging marketing opportunities on digital channels. Stay tuned!
Here are this week's news and highlights for China:
Entertainment
Clash of Clans May Spur Tencent’s Marvel-Like Aspirations: Tencent is spending $8.6 billion to gain control of Finnish mobile games maker Supercell Oy, which could see Tencent following the Marvel model to build on its emerging entertainment empire which has already leveraged Warcraft and League of Legends into global powerhouses.
China’s Entertainment Industry: Ready to Boom: Despite economic and cultural headwinds the future of China's entertainment industry looks bright because of 1) The sheer size of the market; 2) China's mass market is apolitical; 3) A dynamic, expressive online community has blossomed; and 4) Ecommerce presents opportunities to experiment with new monetisation models.
The Warcraft Effect: Why the Future of Film Belongs to China: Although panned by critics and having a dismal $24 million opening weekend in US, Warcraft opened to $156 million in its first 5-days in China. But with China only allowing 34 foreign films a year, and locals tending to pay for popcorn-primed blockbusters, foreign-produced low-medium budget films are unlikely to reap the same rewards from China's growth this year.
Chinese Consumers
China Home Prices Rise at Fastest Pace in May: Few things make Chinese consumers feel wealthier than house price gains, which increased 6.9% in May from a year ago across 70 major cities. 50 cities experienced rises with Shenzhen the top performer increasing 53.2%. 'Smaller' cities are seeing good gains, with Xiamen up 28% and Nanjing and Hefei rising over 20%.
Three-Quarters of Chinese Consumers Plan to Maintain or Increase Spending in 2016: Chinese consumer sentiment remains strong, led by upper-middle-class and affluent households, younger consumers, and those employed in high-paying services according to BCG.
Find-a-Journalist App Highlights Murky Media Practices in China: A new app Zhao Jizhe — Find a Journalist in Chinese — connects companies seeking publicity and journalists interested in pocketing some extra cash using a similar model to Uber. Fees start at ¥1,000 ($152), with ¥8,000 ($1,217) getting a senior writer, and guaranteed coverage on 25 publications, including four well-known ones.
Digital China
China Embraces Cross-Border Ecommerce: By 2020, a quarter of China's total population are expected to make online purchases abroad according to eMarketer. 11.2% of the population or 31% of all online shoppers, will shop cross border this year, accounting for $86 billion or 4.2% of China's total ecommerce market.
When Do China Internet Users Leave Negative Comments?: 30% of Chinese female social media users leave negative comments, and 46% of males according to Tencent. 74.2% write negative comments related to livelihood issues such as real estate, prices and careers. 61.8% leave negative comments about corruption and 51.3% about violence.
China Smartphone Maker Purchases Patents from Microsoft: Xiaomi has purchased 1,500 patents from Microsoft, as part of an effort by Chinese companies to acquire intellectual property rights in preparation for expansion into overseas markets and to compete in an increasingly sophisticated domestic market.
JD, WalMart Make a Chinese Connection: WalMart’s Yihaodian marketplace is merging with JD.com. WalMart will receive a 5% stake in JD and provide a little more firepower in the battle against Alibaba.
Food & Beverage
When Western Junk Food Hits Chinese Tastebuds, Unexpected New Flavors Emerge: Potato chips have taken on a whole new meaning in China, with flavours such as cucumber, blueberry, braised pork, and numb and spicy hot pot. Even Snickers, Oreo cookies and Diet Coke all taste a little bit different in China. Packaged snacks in China typically don't have such a strong taste, but are available in a wider variety of flavours.
Chinese Tourists
Outbound Travellers Shrug Off Declines in Yuan Value: The yuan's lowest level in five years - a 1.4% depreciation this year against the USD - is being shrugged off by Tourism industry insiders. Chinese travellers' overall spending is expected to grow 86% between 2015-2025 from $135 billion to $225.4 billion.
Property & Banking
Brexit Doesn't Scare Chinese Homebuyers: Chinese demand for UK real estate is based on lifestyle factors that are unlikely to be too affected from the Brexit vote according to Juwai. Around 50% of enquiries the company receives for London and 70% for Birmingham are centred around schooling. The UK's tanking currency will also make housing and education cheaper for Chinese.
Phone Tracking, Nude Selfies See Chinese Bare All for Credit: Chinese consumers are allowing lenders access to social accounts for discounted interest rates. Data analysis has found talkative people pay back loans and the very talkative default. Loans taken out at 4am aren't promising, and defaulting may see naked selfies sent to family members.That's the Skinny for the week! See previous newsletters here. Contact China Skinny for marketing, research and digital advice and implementation.
