| Pai Finance
article | Cai Wenji
html On August 12, Tencent’s China Literature Group released its performance report for the first half of 2024. In the first half of 2024, China Literature’s revenue increased by 27.7% to 4.191 billion yuan, and its net profit increased by 33.9%. to 504 million yuan. Among the two major businesses, revenue from copyright (IP) operating business increased by 75.7% to 2.251 billion yuan; revenue from paid reading and online advertising online business fell by 2.2% to 1.940 billion yuan.In the first half of 2024, "Hot" with a box office of 3.5 billion yuan, as well as three blockbuster TV series "Qing Yu Nian Season 2", "Traveling with Phoenix", and "Rose Story" have become the driving forces for reading. important engine of growth. Popular IP content represented by "Celebrating More Than Years" has driven a significant increase in copyright operations and other business revenue. In the first half of 2024, this part of business revenue even exceeded the proportion of online business, with a year-on-year increase of more than 70%. On the contrary, the revenue of online businesses such as paid reading has declined year-on-year, and monthly active users have continued to decrease. Compared with June 2022, the average monthly active users of Yuewen have decreased by 88.7 million, and the average monthly revenue per paid user has also decreased. It dropped from 38.8 yuan to 31.7 yuan.
However, the capital market does not pay for China Literature, which has performed well. After the release of the financial report, China Literature’s share price opened high and moved lower. As of August 16, China Literature Group’s share price fell 3.26% to HK$23.75 per share, with a total market value of HK$24.301 billion.
It can be seen that China Literature, which currently relies on film and television copyright operations to reach a small peak in performance, has not yet reached the time to "celebrate more than 10 years".
. Online business declined, paying users decreased
Founded in 2015, China Literature Group is a cultural industry group based on digital reading and with IP cultivation and development as its core. It includes QQ Reading, Qidian Reading, Xinli Media, Tencent Animation and other brands.
Online business and copyright operation are the two major sources of revenue of China Literature Group. Among them, online business was once the main source of revenue of China Literature. This part of business revenue includes online paid reading, online advertising and distribution on China Literature platform. Revenue from third-party online games.
In the first half of 2024, China Literature’s online business revenue was 1.94 billion yuan, a year-on-year decrease of 2.2%, and its revenue share dropped from 60.4% in the first half of 2023 to 46.3%.
Specific to user data, in the first half of 2024, the average monthly active users of China Literature's own platform products and Tencent's product self-operated channels were 176 million, which was 35.7 million fewer than in the first half of 2023. If we count from the first half of 2022 when revenue began to decline, China Literature’s monthly active users have continued to decline, with a loss of 88.7 million in two years. The average revenue per paying user of
also decreased by 18.3% in two years. However, the average monthly paying users increased from 8.1 million at the end of June 2022 to 8.8 million at the end of June 2024. The decrease in revenue from
's online business mainly came from Tencent's product channels, which decreased by 26.2% year-on-year in the first half of 2024, and monthly active users fell by 33.5%. In comparison, the online business revenue and monthly active users of its own platform products recorded a slight decrease and were relatively stable.
In this regard, China Literature Group stated that this is because the company focuses on the paid reading business model and distributes more content through this channel with a higher return on investment, resulting in a continued decrease in advertising revenue and users in the free reading channel. The business model of
paid reading was once an important revenue support for China Literature Group. After China Literature went public, it has been saying that it will optimize its revenue structure and reduce its reliance on online reading revenue.
However, some people in the industry believe that it is an indisputable fact that the revenue of China Literature’s online business continues to decline. This is partly due to China Literature’s proactive adjustment of its revenue structure. More importantly, the intensification of involution in the online literature circle has further dispersed traffic, and paid reading The business is being impacted by free reading platforms. The addition of free reading platforms such as Tomato Novel, Douban Reading, Zhihu , Qimao, etc. has had a certain impact on China Literature IP. Competition has spread to China Literature’s IP. Explore the hinterland through film and television.
Among them, the Tomato novels from Bytedance once made Yuewen anxious. According to quest mobile data, the number of monthly active users of Tomato Novels in December 2023 increased by 35.8% year-on-year to 192 million, ranking first in the industry.
Faced with the attacks of free reading platforms, China Literature once tried to fight back in the form of free reading. However, the intuitive impact of free reading was the continuous decline in profits. In response, China Literature once again returned to the paid track. Hou Xiaonan, CEO of
Yuewen, once said that he was also worried about the growth of Tomato novels. Later he figured out that each platform must have its own characteristics, and "it is difficult to grow IP for free content."
. Under the "Celebrating More Than Years" model, a card business worth over gmv has been explored.
On the occasion of the release of the semi-annual report, China Literature repeatedly mentioned popular works such as "Celebrating More Than Years" to boost copyright operating income.
China Literature Group's copyright revenue in the first half of 2024 was 2.2 billion yuan, accounting for 52.6% of revenue, an increase of more than 70% from 1.254 billion yuan in the same period last year. China Literature Group's revenue growth in the first half of 2024 is mainly driven by the growth in copyright revenue.
In the first half of 2024, "Hot" with a box office of 3.5 billion yuan, as well as three blockbuster TV series "Qing Yu Nian Season 2", "Traveling with Phoenix", and "Rose Story" have become the driving forces for reading. important engine of growth.
In May 2024, the TV series "Qing Yu Nian Season 2" adapted from Yuewen IP was launched. The series achieved simultaneous global distribution through Disney and became the most popular mainland Chinese TV series on the Disney+ platform. Currently, "Qing Yu Nian Season 2" is being translated into 14 different languages to meet the needs of audiences from all over the world.
Within China Literature, the importance attached to the Qing Yunian series of projects can be seen. Hou Xiaonan personally took the lead in establishing the largest company-level IP project team in China Literature’s history. The members of the group span almost all departments of China Literature: from the product and content teams of Qidian Reading, to the derivatives, cards, games, short plays, consumer product licensing, ecology, marketing, design and other teams.
Among them, Yuewen’s "Celebrating More Than Years" event area launched on the Qidian Reading app pushed the platform dau to hit a new annual high. At the same time, it launched 11 "Celebrating More Than Years" blind boxes and soft peripherals, as well as high-end collection cards containing 308 card surface designs. Card. Among them, the sales volume of blind boxes exceeded 200,000, and the GMV of film and television cards was as high as 20 million before the show was broadcast, ranking first in the sales volume of collectible cards in the drama series.
At present, although the "Celebrating More Than Years" series has successfully verified its business model, the five-year development cycle between the two parts has caused further concerns in the market. Moreover, "Celebrating More Than Years Part 2" has not received a good reputation in terms of reputation. Not as good as the first one.
In the first half of 2024, China Literature Group completed the asset acquisition of Tencent Animation and welcomed new members of leading national comic IPs such as "Under One Person" and "Fox Fairy Matchmaker".
However, the film and television adaptations of these two popular IPs did not perform as expected. The TV series "Fox Fairy Matchmaker - Moon Red" failed to air, and "Under the Stranger", which was released in the summer, was highly anticipated, but its cumulative box office was only 118 million yuan, and its Douban score was only 5.3 and 6 points respectively.
The addition of Tencent Animation has not yet been able to make up for China Literature’s shortcomings in IP animation development.
However, in exploring the "Celebrating More Than Years Model", China Literature has found a breakthrough point in the card business. In the first half of this year, the total GMV of Yuewen Group's IP cards was approximately 100 million yuan. Among them, the "Traveling with Phoenix" and "Celebrating More Than Years" cards launched in the film and television card series have achieved good results. Next, they plan to launch " Card products for film and television projects such as "Dafeng Watcher" and animation card products such as "The Master" and "Fox Fairy Matchmaker".
However, analysts believe that the derivative linkage of web-based IP and film and television is only an initial success in the model, and there is still a long way to go in exploring the commercialization of IP.
. Will China Literature, which bets on short dramas, usher in a "big hit year"?
Looking forward to the future, at a time when short dramas are becoming a battleground for military strategists, it is natural that Yuewen, which has a large number of Internet IPs, will inevitably place bets.
iiMedia Consulting data shows that China’s micro-short drama market will reach 37.39 billion yuan in 2023, a year-on-year increase of 267.65%, while the micro-short drama market will exceed 50.4 billion yuan in 2024 and will exceed 100.6 billion yuan in 2027.
At the performance meeting after the financial report was released, China Literature Group’s management said that it would accelerate its development in the short drama track this year.In the second half of the year, more high-quality short drama projects are planned to be launched online, including the short drama "Celebrating More Than Years", which is also under development. It is hoped that the long and short dramas will be linked to complement each other. China Literature Group is mainly involved in the script creation and operation of short plays. Throughout 2024, China Literature Group is expected to launch more than 100 short play projects.
Currently, China Literature has adapted "Ding!" My Richest Husband is Online" has a turnover of approximately 30 million yuan.
However, the short drama track is also crowded. According to dataeye data, in the list of the top 100 h1 short drama related parties in 2024, Dianzhong, Jiuzhou, and Tomato ranked in the top three respectively, while China Literature only ranked 29th. In front of it were Chinese online and Palm. Yue Technology is the two leading online writing companies.
The popular IPs currently held by China Literature are all works from more than ten years ago, and so far, no new IPs with popular content have been produced.
And a trend that is not optimistic is that in the past three years or so, there has been a clear downward trend in the number of new writers and works in China Literature. According to
's comprehensive financial reports over the years, in 2021, the China Literature platform added 700,000 new writers and 1.2 million literary works, and the number of new words throughout the year exceeded 36 billion; in 2022, the China Literature online reading platform added approximately 540,000 new writers and 95 10,000 novels, with more than 39 billion new words; by 2023, the China Literature online reading platform has added about 380,000 new writers and 670,000 novels, with more than 39 billion new words. In addition to word count, the number of new writers and new works by Yuewen has declined significantly. From a content perspective, it is not a good thing for a high-quality web article to have more and more words.
Since 2023, with the popularity of short dramas, online articles have also ushered in new trends. Research reports show that by the end of 2023, the online literature reading market will reach 40.43 billion, and more than 30% of Chinese people are reading online literature, truly realizing "mass creation and universal reading", and readers have long accepted and become accustomed to paid reading.
However, complaints and public opinions about "water injection of Internet articles" also come one after another. The paid reading model of online novels is generally calculated based on the number of words. Taking Qidian as an example, ordinary members will get 5 points for reading 1,000 words of VIP works, and premium members will get 3 points for 1,000 words. Under the sharing system, the more words the novel is updated, the higher the income the author will get. Driven by profit, many authors "inject a lot of water" into their works to extend the completion period.
It can be seen that even under the paid model, the incubation of high-quality content IP is not easy. For China Literature Group, which started out as a web-based company, its film and television copyright operations have certainly created a lot of achievements, but returning to the essence of a content platform and continuing to incubate and create high-quality IP content is the real moat and a long-term issue for China Literature.
