After listing in Hong Kong, what happened to Straw Bear Entertainment in Liu Shishi, Nicky Wu？

Author | Liu Liu

Since its listing in Hong Kong in January this year, Straw Bear Entertainment has made great achievements.

On September 30, Hong Kong stock Straw Bear Entertainment released its 2021 interim financial report. During the period from January 1 to June 30, the company achieved operating income of 975 million yuan, a year-on-year increase of 68.15%. Gross profit reached 237 million yuan, a year-on-year increase of 72.3%. The net profit attributable to the parent company was 94.147 million yuan, a year-on-year increase of 73.93%, and the basic earnings per share was 0.14 yuan.

Compared with other drama companies, Straw Bear Entertainment can be described as a listed rookie in the first half of the year, which has the potential to surpass the perfect world, make great efforts in the film industry, and catch up with the contemporary Oriental and Huace films.

As a major producer and distributor of drama series in China, Straw Bear Entertainment was established on January 3, 2018, and its business scope covers the investment, development, production and distribution of TV dramas and online dramas.

One of the most famous concerns of the group is that it is a typical case of star capitalization, in which many star shareholders join. Among them, Nicky Wu is the founder of Straw Bear, its long-term partner Liu Xiaofeng is the actual controller and the largest shareholder of the company, and Liu Shishi and Zhao Liying are also shareholders.

After analyzing the financial report in the first half of 2021, Xiaoye concluded that the number of dramas, corporate revenue and profit scale of Straw Bear Entertainment increased rapidly under the impetus of industrial production mode, which has great potential in production and distribution, customized drama and IP reserve.

Industrial production mode,

Bring stable income to copyright dramas.

In the past few years, Straw Bear Entertainment has made outstanding achievements. According to the number of TV series broadcast in the first round in 2019, Straw Bear ranked fourth among all producers and distributors of TV series in China, with a market share of 6.0%.

Overall, the income of Straw Bear Entertainment has increased year by year in the past four years. From 2017 to 2019, the total revenue of Straw Bear Entertainment increased year by year, reaching 543 million yuan, 679 million yuan and 765 million yuan respectively. This year’s 975 million yuan hit a record high.

This series of achievements benefited from the stable income source of Straw Bear Entertainment. From the income analysis, it can be seen that the business of Straw Bear is mainly composed of two aspects: the license of drama broadcasting rights and the custom drama contracting.

First of all, in the aspect of broadcasting rights license, that is, to issue drama broadcasting rights to TV stations, online video platforms and third-party publishers. In the first half of 2021, the income from the production and distribution of Straw Bear Entertainment was about 484 million yuan, which was basically the same as the 483 million yuan in the first half of 2020, and the income was relatively stable.

During this period, seven dramas were produced and distributed, such as Warm Holidays starring Yao Chen, White and Zhang Jingchu. The drama was produced by iQiyi, Enlightenment Film and Fosun Film, and it was a new comedy to celebrate the New Year and told a warm love story during the holiday. There is also a career life drama "City of the Sea" s tarring Hans Zhang and Zhao Likun, which tells the story of young people in the cruise industry.

It is worth noting that the gross profit margin of production and distribution has increased from 24.1% in the first half of 2020 to 43.9% in 2021. Str aw Bear Entertainment believes that this is due to the platform-based production mode that has been explored, which has controlled production costs and made the number of dramas broadcast, corporate revenue and profit scale grow rapidly.

"Platform operation mode" is one of the signs of Straw Bear Entertainment. It can efficiently integrate key resource elements such as screenwriters, producers, directors and actors, production studios, quality control experts and distribution channels to form a more complete ecosystem. By constantly improving the "Dazhong Taiwan" with professional pr oduction management and quality control capabilities, we will provide all-round commercial services for participants in all production links, which will make the content creation process more compact and the content production more efficient, and realize synergy and industrial production.

Straw Bear’s service for large, medium and Taiwan covers the whole production process of the series, including professional IP evaluation and collection of high-quality IP resources, systematic deployment and formation of the main creative team of the series, operation and management of project funds, control of production process and quality, centralized management of suppliers in the later stage, formulation and implementation of publicity strategy, etc.

The customized drama business increased by 439% year-on-year.

Create nearly half the revenue of straw bear

The second important source of income is the custom drama contracting. In the first half of 2021, the revenue generated by custom drama contracting increased from 84.9 million yuan to 458 million yuan, up 439% year-on-year. It is worth noting that nearly half of the total income of 970 million yuan comes from customized drama contracting.

This is due to the close communication and negotiation between Straw Bear and major platforms in the first half of the year, which increased the number of customized dramas and investment scale.

In the first half of 2021, Straw Bear Entertainment delivered two customized dramas, namely, the mythical new martial arts drama "Lingyu" and the foreign aid medical group drama "Take a Deep Breath", which expanded the fantasy theme, theme theme and special effects. The former was produced by iQiyi, starring Adam and Cheng Xiao, and was adapted from the fantasy IP of the same name, with a total broadcast volume of 360 million. The latter tells the story of China’s foreign aid medical team performing its mission in an overseas isla nd, starring Stephy and Yang Youning, and premiered on iQiyi and Tencent.

In recent years, with the rapid growth of online video platform in video content revenue and investment, the investment volume of online drama customized drama has an increasing trend. One of the mainstream cooperation modes between drama producers and on line video platforms is customized drama, and drama producers can make drama production through capital injection or investment of online video platforms. Coupled with the impact of the epidemic, drama companies have gradually increased the proportion of customized dramas, and locked in the distribution channels of dramas while reducing the pressure on operating funds.

Even if the customized drama will weaken the production company’s right to speak, it will ensure a certain economic return and reduce the production risk. Lingyu and Take a Deep Breath together still bring considerable economic bene fits to Straw Bear Entertainment. At the same time, the volume of customized dramas has also increased. There are 36 episodes of Spiritual Realm, and the length of a single episode is 45 minutes. Take a Deep Breath Together has 40 episodes. From the investment volume and return income, we can see the future development potential of customized drama.

It is worth noting that the gross profit margin of customized drama series contracted by the Group decreased from 16.7% in 2020 to 3.6% in 2021, mainly due to the high investment in the post-production cost of Lingyu. This also shows from the side that Straw Bear attaches importance to customized dramas.

Reserve IP topics are diverse,

Rich projects to be broadcast

For drama companies, having diversified and high-quality IP reserves will help them to lay out the content of multi-circle and multi-track.

Straw Bear Entertainment also attaches great importance to the storage and development of IP, and according to the platform-based thinking, it is left to the team with matching market advantages to create. At present, Straw Bear holds 13 original IPS and 34 adapted IPS. It is rich in content and diverse in themes, covering youth campus, idol sweet pet, modern workplace, family ethics, ancient love, historical themes and so on, covering a wide range.

In the future, Straw Bear will continue to develop IP content and increase project reserves.

For example, Ma Boyong’s "Fifteen Days in Two Beijing" was jointly developed with Boji Tianjuan. This project is a long historical novel, which originated from the true record of Zhu Zhanji in Ming History and depicts the customs along the Grand Canal in Ming Dynasty. In recent years, Ma Boyong’s The Longest Day In Chang’an, The Wind Rises in Longxi, Antique close encounter of mahjong, Daming under the Microscope and many other long historical novels have been adapted and won good reputation, so the development of Two Beijing Fifteen Days by Straw Bear is very worthy of attention.

At the same time, the existing IP development plan also includes the distant "Please Give a Sedan", which is produced jointly with iQiyi, starring Allen and Li Qin, and tells the love story of Lu Yan, a thousand-year-old god of war, and Yu Dengdeng, a heroic female stockade owner. Now it has been launched.

There is also a novel on the theme of workplace love, "On the Lonely and Lonely Stream", which focuses on modern urban emotions. Relying on IP reserves, the market expects Straw Bear to export better and more diversified content.

In addition, as of June 30, 2021, Straw Bear Entertainment has a number of dramas to be broadcast, and the project reserves are rich, ensuring the continuous exposure of Straw Bear Entertainment.

As for the theme of revolution, the modern revolutionary TV series "Party Group" starring Edward Zhang, Nie Yuan and Cecilia Han is still in the air. In the early 1930s, the underground party organizations in Shanghai were severely damaged, and the revolutionary cause was plunged into a white terror. A pair of brothers with different beliefs, life and death, fought a hard-core contest for their own camp.

As for the subject matter involved, the action comedy Fighting Thieves, starring Johnny, Li Xuejian, Dahong Ni and other powerful actors, is under preparation. The drama is adapted from Chang Shuxin’s novel of the same name and tells the story of a national treasure theft that led to a t heft gang. Police Ping Sange went deep into the "thief Jianghu" to investigate, and finally captured the story of the ancient city known as the "thief king" in one fell swoop, which was launched in Xi ‘an on July 12, 2021.

As for the mainstream urban love drama, the urban love drama My Bargaining Queen, starring Kenny Lin, Wu Jinyan and Nicky Wu, was adapted from the novel of the same name and was broadcast on Oriental TV on September 23rd. At the same time, there is a contemporary urban drama "The Family of Love" starring Guo Jingfei, Jerry, Tan Zhuo and Dylan, and the family life story of Qi Guosheng, a retired teacher who has been widowed for many years, and three sons with different personalities.

In addition, the contemporary urban drama "My Girlfriend is the Antidote" starring the idol players Jia Yi and Jin Zixuan of "Youth has You" has been launched. A c ontemporary urban drama "Riding the Wind and Treading the Waves" starring Qiao Shan and Yang Zishan is in preparation.

As for the theme of costume, the costume romance drama "The City of Childe" starring Guanjin Bu and Wang Xingyue will be shown. The love drama "Moon Songs" starring Vin and LULU i s also in the air, which is adapted from shu ke’s novel "Running to the Moon". In the aspect of development preparation, the ancient legendary drama "Floating Map" starring Dylan and Yukee Chen’ is worthy of attention.

Looking forward to the future, Straw Bear Entertainment said in the financial report that it will continue to deepen the platform-based operation mode, strengthen the service capabilities of "Dazhong Taiwan", enhance its own resource integration capabilities, production quality control capabilities and brand influence, increase the cooperation stickiness with outstanding industry participants, and strengthen the efficient development of content and the effect of large-scale production.