2D Culture & ACG (Anime, Comics, and Games) is one of the fastest growing entertainment and streaming platforms sectors in China, that could lead to China's first real cultural export since kung-fu.
With surprising recent 2D animation hits, Big Fish and Begonia ($86MM) and Dahufa ($13MM) in China. 2D animation and its culture, has become more prevalent in Chinese society and lexicon than ever before.
When I lived in Shenzhen in 2012 and 2013, I would frequent the well known Book City mall to do a little work at their Starbucks. As I could just walk there from either my apartment or office. One thing I noticed that, starting about 2:30 and reaching a height around 5:00. was the prevalence of high school girls, who seemingly appeared out of no-where, dress in Cosplay. At that time, all were Cosplay of Japanese anime or manga characters.
This is something that I never really saw in my previous seven years of working and living in Mainland China. With the exception of when I traveled to Hong Kong. In Hong Kong, it appeared that Cosplayers were mostly college kids, rather than high schoolers, and the biggest event I happened across was at a local university.
This is a possible difference of a Westernized (territory) and the more (closed off) Middle Kingdom, and one that has been frankly overlooked for the past five years.
A trend that I noticed back in 2012, but one that did not truly come to fruition till 2016, and not even remotely becoming aware of in the West till nearly the end of 2017.
The reasoning for this, is because the 2D Culture / ACG fans are just now become a marketable demographic. As their ages are finally reaching a point to where their parents (I doubt the majority of them have their own substantial incomes by now) are providing them with a disposable income.
The 2D Culture / ACG fanbase has been overlooked, at this time, because it is not one that provides large capital flow per consumer into its market. But, in less-than 5 years they will. 2D Culture resonates with the younger, and much untapped, Z Generation, and currently those who spend money on ACG products are of the age group of 16-24 years old. A group that is spending about 100-500RMB per month on 2D Culture and Anime, Comics, and Games products, and as each year passes. Will be spending more-and-more per year, as they enter the non-student workplace environment.
A market that Bilibili aka B Station (B Zhan in Chinese - as in ditie zhan or subway station), is the number one outlet for this cultural market. "According to CITIT Securities ACGN – Anime, Comics & Games - as of 2016, is a $38BnUSD Industry in China."
While a previous study from the "Annual Report on the Development of China's Animation Industry (2015) released by the Beijing Film Academy, the total value of the industry exceeded $15BnUSD in 2014, a year-on-year increase of 15%. With the total industry value is expected to break $30BnUSD by 2020."
A value that by mid-2017 had already achieved $38BnUSD, an unprecedented increase that topped analyst's expectation four years earlier than anticipated. A result that happened due to an overlooked demographic, that in 2015 did not have their own disposable income. The age group that is now 16-24 years old aka Generation Z.
An entire Generation that only knows digital content consumption, and one that grew up on superheroes from Marvel Cinematic Universe, and more importantly Japanese anime and manga content. Like no previous Chinese Generation had before. A Generation that will change the consumption of, a once obscure genre and subgenre in China, to an entertainment force not previously seen.
NOTE. Occasionally, ACG is referred to as ACGN with the N referring to Light Novels. A Japanese sub-division of books that lie somewhere between a novella / serialized story and a manga. The most famous one is, All You Need Is Kill from Japanese light novel writer Hiroshi Sakurazaka, that was adapted into the cult film, Edge of Tomorrow aka Live.Die.Repeat. Starring Emily Blunt.
Despite a recent report (that Bilibili / B Station confirmed), of much of B Station's anime content (foreign content) was suddenly taken down and removed from its platform, due to Chinese Central Government's issuing the removal, this is not a concern for B Station's U.S. IPO.
A $200MM U.S. IPO for a company like B Station is one that could transform China's number one ACG platform, into its own ACG production house and market leader. With such Chinese media companies like The One Media Group, investing $1BnUSD+ into building an "IP Bank" (content library), their obvious focus will be on developing ACG-similar content at the ground level, to then exploit across platforms, reaching a larger more mainstream demographic base through; mobile games, live-action feature films, web series and TV series.
The One's IP Bank is where the "N" in ACGN comes into play. Similar to Tencent, with their Tencent Publishing (Yuewen Group, their merger with Shanda Literature), much of their IP comes from User Generated Light Novels, or Freemium Self-Publishing. A source of, nearly no cost, to the platform, of IP Rights exploitation by the media-entertainment conglomerates.
Similar to this, B Station's primary source of its IPO potential is the creation of User Content, in the form of animation or 2D content. Though it differs from Freemium Light Novels (serialized stories) generated on platforms like Yuewen Group's Tencent Publishing. It is by no-means less significant, as B Station is a 2D Culture entertainment (conglomerate to be) company.
In the past two years B Station has invested into 20 animes from Japan, along with an undisclosed amount of 2D animation coming out of China's own growing market. For exclusive distribution on their platform.
An American comparison to this is, Funimation, which was recently acquired by Sony Pictures Television Networks for $143MM resulting in a 95% stake in the company by Sony. It is said that Funimation, the leader in anime translation who launched their own streaming platform in 2014 (rivaling Crunchyroll), will work together with Sony's own Aniplex animation / anime division, and will potentially be set to boost the PS4's own streaming capabilities; PlayStation Vue.
Beyond User Content creation, B Station has recently launched its own online ticketing service. Online ticketing apps equates to at least 80% (minimum), or 8 out of 10, of all tickets sold in China, through platforms on Smart Devices such as; Tencent's own WeChat / Weixin and QQ social media platforms, Alibaba's Tao Piaopiao, or the recently merged Maoyan-Weiying ticketing app.
The above mentioned ticketing app primarily service the movie theater industry and live events, such as concerts, while Bilibili’s online ticketing services will mainly serve the ACG sector, selling tickets to comic cons, cosplay conventions, gaming expos, and offline meet-up events (organized by B Station's own ACG population, for 2D Culturalist - yep, I just coined that! - to join together and share their common passions.).
According to China Film Insider, in 2016, the top searched keyword on Baiduamong China’sGeneration Z is “Bilibili”, followed by “Taobao.”While according to Bilibili's Chairman Chen Rui less than 10% of Bilibili’s100M active users are above 25.
According to iResearch, one in five Chinese online consumes ACG content, resulting in around 270M customers (users), with 75% of them being under the age of 24. With many of these consumers overlapping with the online video gaming community.
A market that has yet to see its true booming potential, with Bilibili investing in over 30 companies (presumably mostly or all Chinese) in the ACG space, according to public data collectedby IT Juzi."
A strategy that will fit with B Station's planned IPO as it will synergize and allow for company vertical integration through the ACG value chain,from literature, manga, anime, games, social networks to merchandising. Allowing them to tap into their own User-Generated Content (UGC), that drives 68% of the site traffic.
A User-Generated base of 1M active content creators, according to Bilibili's Chairman.
Source: http://chinafilminsider.com/chinas-acg-culture-what-you-need-to-know/
With, not only content acquisition from Japan, B Station's upcoming (reported) U.S. IPO could be significat, as they solidify themselves as the one-stop spot for 2D Culture in China. With user created content (think DeviantArt.com, but as a fancy IP creation hub, for a entertainment corporation's use), online ticketing for ACG related content and events, the U.S. $200MM IPO would place B Station as the dominate player in its sub-industry. In a way that even Tencent, who in 2015 began investing $46MM into local artist and studios, may not fully be able to compete against.
Ryan Carroll is a Partner at 5F Int'l, Inc.an entertainment and technology housing company, that specializes in; China film & entertainment,Generating IP &Shared Universes,Film Production & Development,Interactive & Mobile Platforms,Big Data & IoT, andExecutive Consulting in the entertainment fields of India, Norway, China and Dubai.
Ryan is leading his company 5F Int'l, Inc. in developing properties that focus on the emerging female demographic, along with other minority, disabled, and other cultural demographics, for cross-platform and mediums branding entertainment.
