Can Tencent Break Through the Ceiling?

The latest reform plan of Tencent’s content sector has been implemented.

On April 15th, Tencent PCG carried out the largest organizational adjustment since the 930 reform: Tencent Video, Weishi and Appbao were integrated into online video BU, which belongs to PCG; QQ business was handed over to Tencent IEG (Interactive Entertainment Group) Tianmei Yao Xiaoguang, the head of the studio, and Liang Zhu, who is in charge of the social platform business, were transferred to the CEO of Tencent Music. Last year, PCG partner and Tencent Pictures CEO Cheng Wu has served as the CEO of China Reading Group.

Taking PCG as the center, connecting Tencent’s content sections IEG, Wenwen, and Tencent Music, Tencent’s digital content business has been integrated, and the outline of a content complex has gradually emerged.

Put together the big content territory

This is a systematic solution.

As early as 2019, on the first anniversary of Tencent’s September 30 reform, Ren Yuxin once talked about his management model, “It’s not a Western medicine thinking. Whenever there is a problem, I will perform surgery immediately. I compare Chinese medicine thinking and hope to solve the problem systematically. Tuning from the entire system.”

Although Tencent still occupies the top position in the field of digital culture, in the past few years, it has been strongly impacted by companies such as ByteDance in the fields of information flow, short video, and online literature. The outside world has questioned the weakening of Tencent’s combat effectiveness. It is a question of Tencent’s lack of content. After the 930 reform, the content-related business groups were merged into one place and PCG was established.

Regarding how to improve Tencent’s content power, in the past two years, Ren Yuxin’s reform of PCG has focused on two points: First, establishing a partner system at the organizational level, sharing benefits and responsibilities, breaking the “departmental wall”, and promoting PCG’s internal thinking The integration of methods and logic of doing things; the second is to establish a technical center, enhance the technical capabilities of PCG, and make up for the lack of content industrialization capabilities.

This major adjustment means that after the integration of the organizational and technical levels, Ren Yuxin’s transformation of PCG has been carried out to the business level.

The main point of the adjustment is not only to focus on PCG, but to incorporate Tencent’s entire digital content industry into it, forming a bigger game. In this game of chess, PCG is the connection point.

The former social leader Liang Zhu had previously served as the general manager of QQ Music and became the CEO of Tencent Music, which is considered to be returning to his old business; Yao Xiaoguang, who succeeded Liang Zhu, is from another Tencent business group IEG, and is also Ren Yuxin’s favorite general; in addition, A year ago, Cheng Wu concurrently served as the CEO of Wenwen. Through three company vice presidents, Ren Yuxin opened up the main node of Tencent’s content industry.

In a sense, this adjustment is a continuation and extension of Tencent 930’s transformation. From now on, Tencent’s entire digital content industry has a clearer layout and flag bearer.

Ren Yuxin’s plan

How to become a mature large-scale content company, there have been successful cases in the world. Such as Disney.

“Disney’s model is very attractive. It has its own channels (TV stations, newspapers, online media, etc.), but also has many IP deployments. It produces content by itself, improves the quality, and releases it through channels to do a lot of extension. The so-called growth flywheel.” Wu Yu, head of Tencent’s PCG Strategic Development Department, explained in an interview with Tiger Sniff last year.

Not only Disney, like WarnerMedia in the United States, it owns world-renowned content brands such as CNN, HBO, DreamWorks, DC Comics, and Viacom, which owns CBS, MTV, Paramount Pictures, etc.

Among the top content companies in the world, they are basically comprehensive groups spanning the film industry, television, music, literature, news, and broadcasting.

The formation of these comprehensive content groups is not accidental.

On the one hand, with the evolution of the industry, the content industry has increasingly shown the characteristics of high investment, high risk, and high return. A typical example is the film industry, where the investment amount of a single film has reached hundreds of millions of dollars, and the content industry is highly related to creativity. If you do not grasp the pulse of the market and hit the street with several blockbuster films in a row, the film company will be in a dilemma. In China, well-known film companies such as Huayi Brothers and Beijing Culture have begun to explode these and other problems in the past two years.

In the past few decades, the top ten film companies in the United States have become the top five, and the top five record companies in the world have gradually become three, and these companies have basically been merged into comprehensive content companies.

On the other hand, IP-based industrial chain development is very mature. An IP can connect the entire content industry of literature, film and television, music, and games to maximize commercial space.

The content industry is integrated, especially by relying on the Internet user screening mechanism of IP sources such as literature and animation, it is possible to identify potential IPs with user resonance, thereby reducing risks and sharing investment based on the IP chain. This is the past For decades, the industry trend of large international content companies.

The solution that Ren Yuxin came up with basically opened up Tencent’s content industry, obviously also referring to the practice of international content companies. Or to put it more bluntly, Tencent’s adjustment has brought the idea of ​​creating a Chinese version of “Disney” to the foreground more clearly.

At present, the top international content companies are mainly occupied by Western countries such as the United States, Europe, and Japan. There are no Chinese companies in it.

Open up Tencent’s content industry, coupled with the technological advantages of mobile Internet, explore Tencent’s unique content development model, pierce the ceiling upwards, and occupy a place in the world. It is a test for both Tencent and Ren Yuxin.

Social + games = online amusement park?

PCG’s adjustment this time is a game of Tencent’s breakthrough for the future. And one of the unique chess pieces is QQ. The person in charge of QQ is PCG’s new partner-Yao Xiaoguang, head of Tencent Tianmei Studio-the famous “Father of the King’s Glory”.

“King of Glory” has many tags: young people, social style, traditional culture. And these labels are connected with QQ at the bottom of the concept. Even the minor protection mechanism of “Glory of the King” can also be used on QQ.

For QQ, the task given by Tencent is not only to seize the opportunity for young people to socialize, but also to explore the future of socialization. But when WeChat became a national software with 1 billion daily activities, the user activity of Tencent’s social product QQ was declining. How should the future of QQ go?

The increasingly clear view in the industry is that the Internet will be a fusion of the virtual world and the real world. It is in this sense that the concepts of “True Internet” and “meta universe” are beginning to be mentioned by more and more people. The future of social interaction will integrate the gaming experience in the virtual world with the real social interaction.

The adjustment of the person in charge of QQ also means that Tencent has handed over to Yao Xiaoguang to explore the future of the integration of games and social interaction.

Facebook has made big bets on augmented reality (AR) and virtual reality (VR). According to reports, Facebook has nearly 10,000 employees developing AR and VR devices, accounting for one-fifth of all employees. Apple is also about to release new AR hardware.

Tencent is also exploring. It was reported in February this year that Tencent Tianmei Studios is developing a 3A game masterpiece code-named “Oasis”, which spans consoles, PCs, mobile terminals and next-generation terminal platforms, and is preparing to benchmark the Oasis in the movie “Number One Player” (Oasis)-style virtual community. This game was created by Yao Xiaoguang, the person in charge of Tianmei Studio.

The head of Tencent’s strategy department once made such a judgment on the Tencent version of “Disney” in an interview, “Of course we hope we can go in this direction, but we are a bit different from Disney. In this era, online Disney’s Digital content may be much larger than offline, and Disney’s model cannot cover all of PCG.”

This difference is largely due to the fact that PCG has the social platform QQ.

For Tencent’s “Disney”, if QQ can realize the integration of gaming and social interaction in the future, it will very likely become the “online amusement park” role in Tencent’s digital content industry.

QQ will become a centralized place for Tencent’s IP, and IP and social networking will be integrated on QQ.

From literary film and television to music video, open up the IP production chain

Compared with the well-known IPs of American companies such as Disney sweeping the world, the biggest weakness of Tencent’s content industry is that although there are IP reserves for reading articles, IPs that ultimately form a huge influence are still not enough.

Tencent tries to solve this problem with a “new cultural and creative” strategy. According to Tencent’s official definition, “new cultural and creative” refers to a cultural production method centered on IP construction in the new era. The core purpose of the new cultural creation is to create more Chinese cultural symbols with a wide range of influence.

There are two keywords: “IP” and “Chinese cultural symbols”. These two keywords can be seen in Tencent’s “Glory of the King”, “Celebrating More Than Years”, “Zui Son-in-law” and cooperation with Dunhuang and the Palace Museum.

“New Cultural and Creative” is an ambitious plan to promote Chinese culture, but it also needs the support of content.

With reference to the IP generation process in the United States, to create an IP with Chinese cultural symbols, a mature industrial chain from creativity, production to distribution is required. This also requires Tencent to open up IP upstream and downstream at the business level.

In April 2020, Cheng Wu, vice president of Tencent and CEO of Tencent Pictures, served as the CEO of Wenwen, opening up the IP chain from literary IP reserves to film and television production. In this adjustment, Tencent Video and Weishi have also merged into one business unit, combining the content capabilities of long videos with the technical capabilities of short videos to open up downstream channels.

The integration of long and short videos has strengthened Tencent’s strength in IP publicity. At the same time, the community atmosphere formed by long and short videos also feeds back user needs to the upstream film industry and reading, and finally forms a complete chain of IP creation.

Of course, there is also the addition of Tencent Music. Music is a kind of “social currency” in a sense. Not only has Tencent Music been working hard on “social entertainment”, QQ has already had the function of “listening together”, this time I am responsible for QQ Liang Zhu’s appointment as CEO of Tencent Music also maintains business continuity. But more importantly, music implements the entire IP production chain from literature, film and television, video to games. Tencent Music just acquired Lazy Tingshu this year, and it is already working on audio-based literature.

Such a complete IP construction chain that implements literature, film industry, music, and long and short videos has been tried in the fire drama series “Celebrating More Than Years” and “Chen Qing Ling”. The latter has even been popular in Southeast Asia as a Chinese cultural symbol Successfully went to sea.

For Tencent, IP creation is a long-term process, and it cannot be completed by Tencent alone. This requires the rise of the entire Chinese content industry chain.

How China’s content industry chain rises

The experience of American content companies has proven that leading companies and blockbuster models can drive the entire industry chain.

In Hollywood, relying on high investment and global accounting, large US content companies have invested heavily in content industrialization technology with their strong funds, which has continuously widened the gap with other countries. This is a model similar to the “Apollo Moon Landing Program”, with a high-pitched approach.

Leading companies have invested heavily in new technologies, relying on platform advantages, comprehensive development, and cost sharing. The industrialization system and talents they have established will be gradually passed on to the entire industrial chain, thereby driving the rise of the entire industrial chain. For example, in the American drama market, the production model of individual studios and large companies is basically adopted.

Some people even assert that the United States has high-cost blockbusters that support the entire film industry system. Without blockbuster films, Hollywood’s small and medium-cost films will inevitably lose the support of the industrial system.

Since Chen Tianqiao, becoming a comprehensive content company like “Disney” can occupy a place in the world’s cultural market. This is the vision of many Chinese Internet companies. But so far, this is still a high ceiling.

Today’s Tencent has a layout in film, literature, video, music, games, and media. Among Chinese Internet companies, Tencent is undoubtedly the closest one so far.

This adjustment of Tencent also means that Tencent is preparing to put its content together, trying to break through the “ceiling” and explore the possibility of becoming a leading content company similar to “Disney”.

The leading effect brought by the head company has appeared in the development of China’s mobile phone industry. With the rise of China’s leading mobile phone manufacturers such as Huawei, Xiaomi, OPPO, and VIVO, it has directly driven the development of the entire domestic semiconductor industry chain.

From the rise of “hardware” to the rise of “software”, and the relay growth from “hard power” to “soft power”, China’s content culture industry is on the eve of a breakthrough.

Tencent’s test

To get through its content section, Tencent’s challenge is just the beginning.

For Tencent, one test is that it takes several years and decades to develop IP. Therefore, the top international content companies are constantly reorganized and merged. Typical examples are Disney, which owns several major film companies. Companies: Pixar, Marvel, Lucas, 21st Century Fox, all come from mergers and acquisitions.

Previously, Tencent and Tencent Music had already invested in Universal Music and Spotify, but in today’s regulatory environment, how Tencent can persuade regulatory agencies and the public in various countries to conduct large-scale investment and mergers and acquisitions in the content industry will be a huge test.

Another test is how the “Chinese culture” IP created by Tencent New Cultural and Creative can successfully go overseas across cultural differences. In the past few years, “Glory of the King” and “Chen Qingling” have achieved a certain degree of success overseas, but they have not yet formed a “midstream” storm like the “Korean Wave”. This year, “Creation Camp” produced by Tencent is also preparing to create an “international men’s team”, inviting players from several different countries to participate, but it is also in the stage of exploration and experimentation. How to become a cultural phenomenon in Asia at least like the daily flow, the Korean wave, the American blockbuster, and the American drama British drama, is worth exploring by Chinese content companies including Tencent.

In an internal letter in January 2020, Ren Yuxin wrote: “Tencent is an Internet-based technology and cultural company. PCG is the core promoter of Tencent’s cultural strategy and shoulders the important task of exploring the development of digital content in the future. ”

This PCG adjustment, through systematic adjustment, formed a game of chess internally. How to transform the comprehensive advantages of the layout into content power, so as to create a highly competitive cultural company. For Tencent, this is the biggest test facing the future.