Despite financial and cultural headwinds, however, several factors merit optimism.
First, the Mainland market is both gigantic. As Oriental DreamWorks’ James Fong puts it, “In China, niche is mass.” After decades of limited diversion options, the new middle class, now 300 million strong, is clamoring for choice. The Communist Party seems more open to foreign investment in entertainment companies than “strategic” sectors such as health care, education and financial services.Shanghai Disney’s Magical Kingdom, now in the middle of a soft launch, is already drawing huge crowds. Under the watchful eye of municipal cadres, the park has been designed with Chinese characteristics. Main Street USA and Space Mountain are out. The Wandering Moon Teahouse and a vast central garden aimed at older visitors, are in. In partnership with Li RuiGang, the well-connected former CEO of the Shanghai Media Group, Oriental DreamWorks will open the Dream Center, a five million square foot entertainment complex, on Shanghai’s South Bund. Attractions will include a Broadway musical theater, a stadium for concerts and sporting events, a Lego Discovery Center, several art galleries and a next-generation Apple store.Second, China’s mass market is apolitical, unbothered by censorship regulations. Most folks are eager to take a break from the stresses of modern life and like light-hearted fare. Big hits such as Goodbye, Mr. Loser, Tiny Times, Lost in Thailand and Pancake Man are irreverent comedies that depict a regular guy striking it rich or getting the girl.Third, a dynamic, expressive online creative community has blossomed. It is only a matter of time before internet celebrities become creative forces, both on- and offline.Chinese story telling skills are evolving quickly. Web series such as Go Princess Go, Surprise S1 and Year Hare Affair are hugely popular. Writer Chai JiDan’s Heroin, China’s first gay-themed internet series, was so popular during 2016 Chinese New Year that it was quickly banned by SARFT, the government arm responsible for enforcing film, television and content regulations.Tang Jia Shan Shao is the king of web novel. (In 2014, he received royalties of more than RMB 50 million.) He harnesses the immediacy and speed of the online universe. Although he bases his novel on classical stories, he creates fresh characters, coins new words and provides continuous updates for fans addicted to his work. Mr. Tang is not alone. Digital platforms such as Douban - a quintessentially Chinese fusion of Amazon, IMDB and Facebook - allow artists of all stripes to congregate as a virtual community and attract a mass following.Fourth, e-commerce presents opportunities to experiment with new monetization models. Online shopping is instant for consumers and cheap for companies. Content-hungry consumers do not drive to DVD stores to buy a Toy Story video game or the Frozen sound track. The ubiquity of mobile phones eliminates set up costs and lowers incremental cost per unit sold. Marketers also anticipate convergence of online and offline properties. IP-based content, easier to enforce online than offline, will drive offline merchandising, and vice versa.
China’s infatuation with digital transactions is difficult to overstate. In 2016, the country is projected to spend $911 billion dollars online, or almost 20% of total retail sales. The United States will spend only $384 billion. Meanwhile, per capita in China income is only 14% of America’s.
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