"The Legend of Zhen Huan" is still transfusing blood for LeTV, what is the value of the long-tail effect of popular dramas?

Afterwards, iQiyi went online and Youku went public, and the competition became increasingly fierce. Long-form videos moved from the budding stage to the growth stage, and copyright prices rose. According to the statistics of New Times Securities, in 2006, the online price of the leading drama "Wulin Biography" in the market was about 1,250 yuan per episode, and in 2011, the online broadcasting price of the leading drama "The Legend of Zhen Huan" was about 300,000 yuan per episode. The price has doubled by 100 times.

At that time, LeEco was also in its heyday. Having tasted the sweetness, LeEco became bolder in purchasing copyrights in the later stage. In the initial financial reports, LeEco always mentioned the strategy of "pre-intervention" in copyright and insisted on purchasing copyrights at high prices. This is the story of the later 20 million purchase of "The Legend of Zhen Huan".

The producer of "The Legend of Zhen Huan" is Huaer Film and Television. The relationship between LeTV and Huaer Film and Television can be traced back to 2005. The first work "Happiness is Like a Flower" invested by Huaer Film and Television was purchased by LeTV. Let Huaer Film and Television become famous at one stop, and also laid the foundation for the cooperation between the two. Since then, LeTV has successively purchased works such as "Golden Wedding", "Zhen Huan's Biography" and "New Editorial Story" by Huaer Film and Television. Among them, LeTV bought "New Editorial Story" in 2013 at a cost of 50 million yuan, setting a new copyright price at that time. new highs.

As of December 31, 2013, LeEco owns more than 5,000 film copyrights and more than 100,000 TV series copyrights, ranking first in the industry in terms of coverage.

After purchasing several dramas one after another, LeTV recognized Huaer Film and Television very much, and finally decided to win Huaer Film and Television in one fell swoop. In October 2013, LeTV announced the acquisition of 100% equity of the film and television company Dongyang Huaer Film and Television Culture Co., Ltd. (referred to as Huaer Film and Television), with a total consideration of 900 million yuan.

However, this acquisition was questioned in the early stage. The industry believed that the value of Huaer Film and Television lies in Zheng Xiaolong. Once Zheng Xiaolong leaves, Huaer Film and Television will have nothing to rely on.

Fortunately, during the agreement period, the industry's worries did not happen, and Zheng Xiaolong has been tied to Hua'er Film and Television. Huaer Film and Television has also completed the original gambling agreement in several years of output, that is, the agreement requires Huaer Film and Television to realize net profits in 2013, 2014, 2015 and 2016 (deducted by the shareholders of the parent company) The lower of the net profit before and after the sexual gain or loss is the basis for calculation), which is not less than 63 million yuan, 81 million yuan, 103.2 million yuan and 109.2 million yuan respectively. Huaer Film and Television overfulfilled its performance, but in 2017 after the commitment period, its net profit was halved to 583.946 billion yuan.

Since then, LeEco has also started to face a capital chain crisis, and has received inquiries from the Shenzhen Stock Exchange one after another. By the first half of 2018, its debts had reached 19.06 billion, and it was finally inevitable that it would be delisted.

Big dramasLong-tail effectOra drop in the bucket?

After LeTV was delisted from the A-share market, it did not go bankrupt. Instead, it changed its name to LeTV 3 and transferred to the third board for bidding transactions. However, the company’s debts are still at the top, and coupled with the 240 million yuan fines received last year, the benefits brought by the long-tail effect of several film and television dramas may be just a drop in the bucket.

The once aggressive purchasing strategy allowed LeEco to purchase a number of popular film and television dramas after "The Legend of Zhen Huan", including: "Legend of Wu Mei Niang", "Legend of Miyue", "Princess Concubine's Promotion", "White Deer Plain" and so on.

In LeTV’s 2013-2016 financial reports, copyright-related membership and distribution business (including payment business, copyright distribution business, and film and television drama distribution business) accounted for 43%, 35.5%, 29.6%, and 47.64% of revenue, respectively. Maintain a high ratio, where copyright distribution contributes the most.

The financial report shows that in the four months since the broadcast of "Legend of Miyue" at the end of 2015, LeTV's total terminal playback volume has exceeded 12.5 billion. According to media estimates, the copyright sales of a single episode of "Legend of Miyue" are around 4.5 million to 5 million yuan, and based on the actual broadcast of 81 episodes of "Legend of Miyue", the copyright fee exceeds 200 million yuan. At the same time, the "Legend of Miyue", which has high hopes, attracted many brands such as Lianjia and Vipshop to invest heavily in advertising.

The financial report shows that in the first half of 2016 after the broadcast of "Legend of Miyue", the distribution revenue of TV dramas increased by 338.71% year-on-year.

And another phenomenal hit drama "Princess Concubine's Promotion" is LeTV's self-produced drama, and its broadcast volume exceeded 100 million in 9 days after its broadcast on the platform. According to Gan Wei, the show's producer, the cost of the drama was 20 million. At that time, LeTV attracted more than 500,000 new members. If the monthly membership price is 19 yuan, the membership fee income alone is nearly 10 million. At the same time, the copyright of "Princess Concubine's Promotion" was bought by South Korea in 2018.

After being burdened with debts and unable to purchase copyrights, how much benefit can the long-tail effect of LeTV's blockbuster dramas bring it?

First of all, for film and television works, it is a rare thing to be able to have a steady stream of "long tail effects" after becoming a blockbuster. The income of most film and television dramas is concentrated in the first broadcast, and there are only a handful of film and television dramas that are truly enduring like "The Legend of Zhen Huan" and "Huan Zhu Ge Ge".

The realization of the long tail effect is user payment, advertising revenue and multiple rounds of broadcast copyright fees. Among them, what users pay depends on the exclusive broadcasting rights. The reporter found out that among the top 5 hit dramas of LeTV, only "White Deer Plain" has the exclusive broadcasting rights, and "Legend of Wu Mei Niang" has even been offline. Advertising revenue and multiple rounds of copyright broadcast fees will also be greatly reduced compared to the first round. The long-tail effect is the icing on the cake for a normally operating platform, but it is a drop in the bucket for LeTV, which has tens of billions in debt.

"Will LeEco pay off its debts when it makes money?" Many netizens are concerned about whether the income from LeEco's video website and copyright distribution will be used to directly pay off debts? Zhang Chi, a lawyer from Jiangsu Anbozhi Law Firm, analyzed to the Beijing News Shell reporter, "It depends on whether it has the ability to pay. The relevant creditors can apply to the court for enforcement after the judgment is made. The same is true for administrative penalties. enforced by the courts.”

Now that the price of copyright has already entered the era of tens of millions per episode, the heavily indebted LeTV has been unable to spend a lot of money, and it will be even more difficult to hit the blockbusters in the future.

Beijing News Shell Finance reporter Song Meilu editor Chen Li proofreader Liu Baoqing