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China Literature already was a strong content partner of Tencent’s using its Tencent Video, WeChat and other channels to distribute China Literature content; now it will ramp that up with more video based on China Literature’s material from a partner that has a string of successful blockbusters — titles include Some Like It Hot, Never Say Die and Goodbye Mr. Loser — as well as TV and web shows such as The First Half of My Life, White Deer Plain, The Kite, The Imperial Doctress and Yu Zui. Indeed, the deal is bringing together one of the bigger original content developers (China Literature) with one of the bigger video content producers (NCM) in the region. China Literature, according to its half-year results also out today , said that its monthly active users are up 11.3 percent to 213.5 million, with 7.3 million writers on its platform. The company’s revenues are up 18.6 percent to $345 million (RMB2.3 billion), with gross profit at a 52.4 percent margin at $180.8 million. However, the company’s stock has been in an overall decline this year as After an enthusiastic debut with a $12 billion market cap , it’s now valued around $7.5 billion, as it’s still the number-three player behind Alibaba and Baidu’s own e-publishing efforts. (This is one other way that NCM could have an impact.) China Literature had already been working with third parties to produce video based on its written work, and NCM had been sourcing original content from third parties as the basis of its video, so this will essentially cut out the middle man for both sides. “Users are increasingly demanding high quality video entertainment content which in turn drives the demand for literary works for various content adaptations. We are the pioneer and leader in online literature market and thus in providing source material for China’s most-watched TV series, web series and films,” said Mr Wenhui Wu, co-CEO of China Literature, in a statement. “Further enhancing our content adaptation expertise is a natural next step for China Literature to unleash the commercial potential of our content library, drive integrated development of blockbuster titles, and enhance engagement of our writers and users.” “Mr Huayi Cao and the NCM team have built up an outstanding track record of consistently producing popular, high quality TV series, web series and films,” said Xiaodong Liang, the other co-CEO of China Literature, in his statement. “NCM represents a scarce opportunity for China Literature to extend its content capabilities downstream, enabling it to participate further along the IP value chain and enhance the services it can bring to its writers as well as its users. We believe that this combination will create significant long term strategic value for China Literature’s shareholders.” You can think of this deal similar to what Amazon, as an example, has developed in house with its own original programming: the company will sometimes look to Amazon’s own in-house team and its literature catalogue when commissioning video; but it will also cut deals with outside companies.
For the original version including any supplementary images or video, visit https://techcrunch.com/2018/08/13/tencent-spinoff-china-literature-to-buy-new-classics-media-for-2-2b-in-content-consolidation-play/
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