New Third Board Network Literature Enterprises Compete for Charm Opportunities and Challenges Coexist

from the current situation, paid reading is the mainstream of the development of network literature, IP operation is the tuyere of the future, and more cash modes still need to be excavated.

China Literature Group recently listed on the Hong Kong Stock Exchange, promoting the continuous warming of the concept of "network literature". In fact, the new third board market gathers companies in the fields of online literature creation, online reading and digital publishing, such as Tianya Community, Iron Blood Technology, World Book Alliance, Boyi Chuangwei and so on. However, compared with the industry leaders whose profit model tends to mature, the new third-board network literature concept companies on the tuyere are mostly in the growth stage, and derive their own business models.

people in the industry said that from the current situation, paid reading is the mainstream of the development of online literature, IP operation is the tuyere of the future, and more cash models still need to be explored. The comprehensive strength of the new third board network literature concept company is limited, and it is difficult to compete with the head enterprise in the production of high-quality content, distribution channels and IP operation, so the profit model shows obvious diversification. Each has its own emphasis to explore in order to open up more space for development, and at the same time help to accelerate the development of the industry.

strong > intensive landing on the new third board / strong >

on November 8, China Literature Group was listed on the Hong Kong Stock Exchange at an opening price of 90 Hong Kong dollars per share, up 63.6 percent from the issue price. at one point, it hit 110 Hong Kong dollars per share in intraday trading, with a market capitalization of close to 100 billion Hong Kong dollars, making it the highest listed company in the cultural and entertainment sector in China. The successful listing of network literature operator China Literature Group in Hong Kong has a demonstration effect, which adds another fire to the ascendant network literature industry. In addition to China Literature Group listed in Hong Kong, A shares ushered in the leading network literature operators in September this year.

compared with the recent network literature leading enterprises in the capital market, a large number of new third-board network literature concept companies have sprung up in recent years. In July 2015, the World Book League Culture and Media Co., Ltd. (referred to as "World Book League"), founded by the well-known online novel author Cai Leiping (pseudonym "Longren"), landed on the new third board. According to the public transfer manual, the World Book Alliance summed up its business model as "one body and two wings". "one" for the company's new media website "World Book League Network": "two wings" for book production and distribution business and digital reading business.

in fact, the World Book League has opened the upsurge of the Internet Literature concept Company landing on the new third board. In August 2015, Tianya, a well-known Chinese online community, listed a new third board. Tianya community used to be one of the most famous BBS forums in China, and it is also one of the birthplaces of online literature, such as "those things in the Ming Dynasty", "Ghost blowing the Lantern", "Wulin Weizhuan" and many other famous online literature IP.

in November 2015, Iron Blood Technology listed a new third board, and the company operated the military interaction and network literature website "Iron Blood Network". The Reading Channel under Iron Blood Technology, founded in 2001, is a platform for military novels and has produced a series of military network literature masterpieces such as Night and King of soldiers. In March 2016, Boyi, which operates several online literature platforms such as "Xiang net" and "Tiandi Chinese Network", listed a new third board for Digital Media Co., Ltd. (referred to as "Boyi Chuangwei"). In March 2017, Yisou Technology, which owns the "appropriate search novel" APP, joined the new third board online literature concept company club.

behind the dense listing of the new third board of online literature concept companies, there is a growing audience of online literature and a huge market scale, which is expected to reach 59.1 billion yuan in 2020. According to statistics from the China Internet Information Center, in 2016, the number of users of online literature and mobile online literature were 330 million and 300 million respectively, an increase of 12.3% and 17.3% respectively over the same period last year. The latest statistics from iResearch in 2017 show that online literature has 150 million MAU (monthly active users) on mobile, browsing more than 800m hours a month, and nearly 50 per cent of online users are willing to pay for the adaptation of games. The field of network literature shows a huge potential profit space.

strong > explore the business model / strong >

the potential scale is huge, and the industry prospect is full of imagination. All kinds of signs show that the spring of the network literature industry has come. However, even if there is a precedent such as China Literature Group and palm technology, subject to the constraints of enterprise size and the speed of development, the new third board network literature concept company is still mixed. The data show that on the road of exploration and development of network literature, the rapid expansion of the new third board network literature concept enterprises have differentiated into different business models and formed a unique style.

Statistics show that according to market valuation, the top five network literature operators are China Literature Group, Palm Science and Technology, Ali Literature, Chinese online and Baidu Literature. With the tilt of capital and flow, the profit model of the head of the industry is gradually clear and mature, and the proportion of its main business tends to be the same. Take China Literature Group as an example, the company's business revenue mainly comes from online paid reading, copyright operations (including IP's license to cash in film and television games) and other cash businesses. According to the company's prospectus, these three businesses accounted for 77.2%, 9.7% and 2.1% of the main business revenue in 2016, respectively.

compared with the relatively stable profit model of the head company, the profit model of the new third board network literature concept company shows obvious pluralistic differentiation. Iron Blood Technology has formed a profit model based on e-commerce and advertising revenue. According to the 2017 semi-annual report, the company's operating income was 85.05 million yuan during the reporting period. Among them, the income composition is divided into two parts: "military e-commerce sales" and "advertising and technical services", which are 51.86 million yuan and 33.19 million yuan respectively, accounting for 61% and 39% respectively. In addition, Iron Blood Technology is also exploring military literature IP development and military tourism, film and television publicity, game development and other businesses. However, the company says its short-and medium-term contribution to performance is limited.

the profit model of World Book Alliance is mainly reflected in the income of book distribution and copyright transfer. According to the 2017 semi-annual report, the company's operating income is 20.84 million yuan. Among them, book distribution income is 15.6 million yuan, copyright transfer income is 3.96 million yuan, accounting for 75% and 19% respectively; the remaining online paid reading income accounts for only 6%.

in addition to the above two enterprises, Tianya Community, Boyi Chuangwei, Yisou Science and Technology and many other listed online literature concept companies are different from China Literature Group and other leading enterprises in terms of revenue composition. Judging from the 2017 semi-annual report, the sectors with the largest contribution to the main business income of the three companies are online advertising, copyright derivative business and digital content marketing revenue, respectively. In addition, Tianya announced the risk of business transformation in the semi-annual report. The company said, "at present, it is adjusting the strategic direction according to the needs of users, from online advertising revenue to personal value-added services based on community games, as an important revenue direction for the company."

with regard to the reasons for the differentiation of the business model of the new third board network literature concept company, Cai Zhiming, chief executive of Tianxing Capital, said that membership fees, platform advertising or IP derivatives e-commerce are all means for enterprises to explore platform traffic or platform content realization. compared with top enterprises such as China Literature and Palm, the overall comprehensive strength of the new third board company is limited. It is still difficult to compete with head enterprises in terms of high-quality content production, distribution channels and IP operation capabilities, so they each focus on exploring the direction of development.

"paid reading is the mainstream at present, IP operation is the tuyere of the future, and more cash modes need to be explored." The exploration of the business model of the new third board enterprises can be used for reference. " Ni Hong, founder of Xinsheng Capital, who is engaged in the investment research of the new third board industry, believes that the new third board enterprises belong to a group of innovative medium-sized enterprises in the process of development, and their business model is still not completely stable. Therefore, with the help of the new third board market, listed enterprises explore and adjust their innovative business according to market demand and their own core advantages.

with the network literature operators embracing the capital market one after another, the leading position of network literature is gradually stable, and the industry stratification is becoming more and more obvious. There is the squeeze of capital and flow by the head enterprises, and the fierce competition from the latecomers. For the new third board network literature concept company, where will it go in the future? Industry insiders believe that the scale potential of the online literature market is huge, and the competition in the field of subdivision is still insufficient. Future IP derivative operations and other areas are worth looking forward to. For the enterprises related to the new third board, challenges and opportunities coexist.

Peng Hai, head of Lianxun Securities New third Board Research Institute, said that the differentiation of the business model of online literature concept companies is mainly determined by the industry status and subdivision areas in which the enterprises are located. China Literature Group's core profit model is to pay for reading, while the new third-board network literature enterprises should adjust their business direction according to the development trend of their own subdivision field. Judging from the current situation, the penetration of network literature has gradually improved, and most of the companies related to the new third board have a good foundation in the industry, but the access to strong IP resources and the level of long-term operation and governance still need to be improved.

Ni Hong, founder of Xinsheng Capital, believes that whether they are enterprises listed on the new third board or online cultural enterprises that have been listed in relatively mature capital markets at home and abroad, their essence is traffic and users, and the core is IP content brand and value. Compared with A-share enterprises, the volume of new third-board enterprises is generally small, but it has the characteristics of large quantity and rich subdivision of development direction, and its growth can be expected but its development is uncertain. This is consistent with the characteristics of healthy development and classified development advocated by the multi-level capital market. For the growing new third-board network culture concept enterprises, with the continuous change of market and demand, it is expected to produce a number of leading enterprises in network literature, pan-entertainment and other subdivision fields. These leading enterprises can get more comprehensive attention and services through turnboard, IPO and other ways in the future.

"the combination of network literature IP and pan-entertainment fields such as movies and TV dramas is an important development trend of the industry and has great potential for development. If the new third board enterprise can make a breakthrough in the IP derivative link, the development prospect of the enterprise is even broader. " Cai Zhiming, chief executive of Star Capital, believes that the online literature market has a lot of room for growth in terms of total size and penetration, and will still be in the stage of rapid development in the next five years. In addition, there are many market segments of network literature, and the giants of network literature are still not covered in many vertical areas. Through the differentiation of the target audience, there are still great market opportunities for small and medium-sized enterprises to operate the network literature platform. At the same time, the taste of the public is also constantly changing, which will bring market opportunities to the new third board network literature enterprises.

with regard to the challenges faced by the new third-board online literature enterprises in the future, Cai Zhiming said that the policy environment of online literature has changed, starting from 2016 to strictly investigate piracy and infringement of online literary content. for some substandard, vulgar and inferior works to be expelled from the market, new third-board online literature enterprises need to actively respond to changes in the policy environment. In addition, in the case that it is difficult to compete directly with the industry oligarchs in terms of financial strength and pan-entertainment ecological construction, how to retain good content creators is an important challenge for enterprises.

Edit: mary