Zhang Zhao, the Game Changer

Zhang Zhao, CEO of Le Vision Pictures, is forcing a strategic remodeling in the Chinese film market.

“A film company in the New Media Age” is his Le Vision manifesto in film production and distribution. His adept adoption of new media crowns him the game changer. In a land rich in copycat innovations, he stands out with genuine breakthroughs. While others are busy imitating the Hollywood way, he analyzes its problems and bottleneck.

That partially explains why The Expendables 2, a film Le Vision invested in and distributed in China, defeated The Dark Knight Rises and The Amazing Spider-Man and grossed $54 million, as the 8th highest-grossing film in 2012 mainland China. A close look at these three films’ American box office performance shall reveal what Le Vision has achieved by specific targeting of a huge addressable market based on big data generated by social media users.

In 2013, Le Vision’s sweeping distribution of the two Tiny Times films once again justifies the company’s new media default setting. Fans in the whole nation rush into the cinema, trying their luck to meet their idols, an appointment that can be booked through the Chinese Twitter and Facebook: Weibo and Renren, besides Le Vision’s own APP. Posts written by the director and actors are retweeted or shared by millions of social media users. It is a summer carnival for the teens and twentysomething: a group aged 13-23 that Le Vision particularly targets. A mere investment of about $6.53 million has generated $114.32 million of box office by mid-August. Film critics are dumbfounded, fans enraptured and investors stimulated.

Zhang Zhao lately declares that different from general comments, Le Vision is not a distribution company, but a marketing company that serves its customers, the audience.

Le Vision, the filmmaking entity of online video portal LeTV that Zhang founded in 2011 ranked No.4 among private film companies in the Chinese market share within a year. Earlier this August, it has attracted about $32.67 million investments (¥200 million) from local venture capital, with an estimated value of $253.15 million, a big rise after Le Vision’s signed long term cooperation with director Zhang Yimou.

This rapid expansion is based on Le Vision’s precise positioning, its frequent interaction with LeTV, and above all, Zhang’s experience, vision and execution.

Born in the summer of 1962 in Shanghai, Zhang Zhao attributes his odyssey largely to a great education he received from his lieutenant father, a submarine scientist in the PLA Navy, who dreamed of becoming a wartime reporter but chose to study fluid mechanics to answer the nation’s call for experts of submarine research. It was a time when military men were widely respected and that shaped Zhang’s sense of duty and honor since young. Quick reaction, debating techniques and mental arithmetic were among the assorted daily routines in Zhang’s household. Later, he would find his peerless speed in 24 card game would help him when making budgets and counting box office, without a calculator. A daily long run before dawn was also a ritual of the father and son. Elementary reading assignments include Marx and Engels.

The teenager Zhang played Chinese flute and got to see lots of films from friendly countries like Albania, Romania and Vietnam. There was a day that he’d watch an 11-hour long film from the Soviet Union. A leader in high school theater club, “every time I passed by Shanghai Film Studio near Xujiahui, I would feel an unspeakable longing.” Zhang recalls. He did seriously thought of going to a film school but chose to study what would be called Information Engineering today due to “a national fascination with mathematics, physics and chemistry” so that one day he could serve the country when he is summoned.

In the early 1980s, a large group finally found their way into university after years of farm labor or factory work. When their wisdom absorbed from translated classics in politics, literature and philosophy met their previous manual work, a contemporary Renaissance in China took place. In Fudan University, the recently admitted Zhang remained a leader in its theater club and found his place in the poetry club, besides indulged in stories shared by his much older schoolmates. A regular listener in different lectures on campus, he turned to philosophy after graduation in order to find possible solutions for the nation’s future. He acquired the English language during his postgraduate years in Fudan and received a fully funded PhD position in Philosophy from New York University, though Russian was his first second language in 1990.

From science to philosophy, Zhang wanted to find an applicable way for a Chinese revolution.

But the answer was elsewhere.

Zhang resumed his longing for films after attending a few seminars in the film school. Winning a number of awards with his short films, Zhang was named Mr. Passion by his classmates, who were impressed by his words and deeds. It seemed the right time to settle down in the United States with an MFA degree, but Zhang chose to come back to China in 1996 to make a change.

The first years of working for Shanghai Film Studio as a film director is now a priceless experience, but a somewhat frustrating one at the time: once the film was produced and screened, it was like throwing a petal into a valley, with no echo at all. He pondered on the market. Four years later, he was invited to be Vice President of a subsidiary in China’s State Council Information Office, in charge of the nation’s international publicity to show China as a stronger force in the global arena with films. And this started his quest in marketing.

In 2004, Zhang was invited by a Fudan alumnus Wang Changtian to join Enlight Media as its Chief Content Officer. Two years later, Enlight Picures was founded with Zhang its President. Zhang’s eye for film investment and emphasis in building a local distribution team in as many cities drove this Enlight to No.4 private film company in China within four years.

When people were about to celebrate Enlight’s approaching IPO, Zhang was wooed away by Le TV and built a new company: Le Vision Pictures, an industrial revolution he launches in the chaotic Chinese film market. SoLoMo, long tail and innovation are some of the keywords in his speeches.

Never has data from social media like Weibo been so fully used by a film company: from The Expendables 2 to Tiny Times, Le Vision’s statistics report convinced theaters in various parts of the nation to arrange more scheduling for its films thanks to an on-going promotion both online and offline. In the Hollywood blockbuster’s case, “the heroic legacy from one generation to another” was highlighted in ten different trailers targeting seven core groups of audience from mobile phone addicts to group purchasers. The young embraced the idea of forming a group of “heroes” to win souvenirs like a cloth scarf or a tattoo sticker while senior fathers organized the family to experience a “heroic legacy”. In the local films tailored for fans of Guo Jingmin, girls’ heartthrob author and now a director, the employment of stars was put to a climax. Queues of fans waited religiously in and outside the theater, for a chance to join the local Tiny Times party in order to meet or just have a glance at their favorite stars.

Souvenirs and star-fans-face-to-face are not uncommon in film promotion; the challenge is to locate the right group and bring them to the theater. Tiny Times 1.0 broke a few records: its first day theater screening reached 38,000; its first trailer had 45 million clicks and the writer director has 24 million readers. By the time the film was finally shown on the big screen, the number of its Weibo searching has amounted 33 million. Le Vision located these fans and potential audience and adjusted different regional promotions. In an age of untold fragmented information, the film company Le Vision put data collection and analysis into commercial use. A map of concrete details of theater is thus created: whether a theater is frequented by white collars or students, what are their movie-going habits, etc. Le Vision’s manifesto “A film company in the New Media Age” is certainly not a mere tagline.

After partnering up with Radical Studios, establishing a Los Angeles branch and signing the nation’s most internationally-acclaimed director Zhang Yimou, Zhang is thinking about expanding his territory to Africa. For a game changer like Zhang Zhao is, the world is his playground.

HERE IS AN INTERVIEW THAT I DID WITH ZHANG ZHAO, AFTER LE VISION’S DISTRIBUTION OF TWO TINY TIMES FILMS

THE CHINESE FILM MARKET: Two out of the top five privately-owned film companies are founded by you. What is your opinion about this?

Zhang Zhao: This is just a media buzz, but for me personally the saying means little. Our top five has not much competitive edge in a global context. It is the one that can lead the industrial evolution in China matters, not the ranking alone.

CFM: What is Le Vision’s core value? What are your requirements for a Le Vision employee?

ZZ: Le Vision’s business mode is based on two aspects: the internet and Le Vision’s going international. To be responsible for the investors or merely work for one’s interests is not alone. We need to have one bigger industry ideal in the hope that everyone would be proud of himself or herself.

What delights me is that, back in Enlight Pictures, I was not able to create a corporate culture, but now in Le Vision, I start what I would call a “rapid advance” culture: dump the old baggage, keep going on a daily basis with passion. My managers sometimes would feel intense when our employees complain the changes in their job requirement, but as a member in a rapid advance, there is no time to think about how the army formation looks. We need to catch up the speed of the Internet’s development.

Three years ago, my job title was President, who was in charge of the business, not finances or human resources, but now as the CEO, I learn everything from  theory to case studies, from online video marketing  to social media. I now have my own Weibo and Wechat accounts.

I appreciate those who could learn fast. I cannot stand lousy approaches. Stay creative. For instance, to launch a press conference, is it possible to use some interactive games? This could be a rather tiring business: neither the most profit-making, nor the most relaxing and 9 to 5 could be really consuming. And it sometimes takes a long time to succeed. You don’t have to repeat yourself. Creativity could alleviate your fatigue.  I recently recommended my staff to read a book Segmentation Marketing. Also, I asked my distributing team to do without watching a film: as we need to achieve more not by selling products, but by more accurate branding as a taste maker.

CFM: What did you learn from your involvement in The Expendables 2? Rumor says that despite being a minor investor, Le Vision fought hard to get a slice in its overseas profit-sharing.

ZZ: Overseas profit-sharing is very important. It’s not about the money that we might obtain, what we value is Lionsgate’s financial statement: how Hollywood make budgets and how an American film company operates, so that we could learn the specifics of deals outside China. It would be helpful later when we try to invest overseas projects. Also, setting a managed account helped Le Vision to learn about how to find a trustworthy insurance company and how to spend our money wisely. We also learned the union system, as well as the operation of investing and legal teams. Among the five negotiations, the bargaining about cast was one of most fierce. In the end, Yu Nan was cast a role and is technically the only Chinese actress that has acted in a recent global blockbuster.

CFM: What do you think is the biggest problem in the Chinese film industry at the moment?

ZZ: That should be the people’s capacity of learning, in fact, the inability to learn from other fields. Read any magazine about the internet and the digital age, you’d find ideas to combine traditional business with the internet. For example, Jack Ma, founder of the Alibaba Group is now building an online banking system. By using the internet to access other fields, one can learn how to connect financing or retail business with the internet, while the film industry is too slow to adjust to this online mode.

Also, it is problematic to set Hollywood as the benchmark. You could learn from it, but don’t take it as a ideal model and do a series of plastic surgery accordingly. The Chinese film industry’s opportunity lies in spotting Hollywood’s pitfalls and devising respective solutions.

People wonder why Le Vision managed to beat Hollywood blockbusters, the reason is simple: I am targeting the niche market while they are aiming at a general market. To attract more audience into the theater is key. The Chinese film industry is still small and could be shaped with better marketing and O2O strategies. Le Vision is good example that what a Chinese film company could achieve within two years.

What’s more, Chinese filmmakers are too proud. Director is a respectable title here in China, probably owing to Soviet tradition. But this title is too heavy for many, who thus find it difficult to stay creative. How to change this ecology? By using innovation the benchmark in this business. One’s creativity should not be judged by his experience or how many Bingbing-s he knows.

The fundamental problem might be that this is not a very lucrative business so talented people are quite limited and relevant training is absent. Look at the internet business: how many talents it has!

CFM: What strategies Le Vision will use under current circumstances?

ZZ: A traditional film company’s potential profit lies in its box office, but Le Vision is a film company with an internet edge: with Le TV’s tech support, four screens: the theater screen, PC screen, TV screen and the mobile phone screen is an integrity for distributing the content we created. We have content and we build pipeline.

There are terminals and films, but not enough pipelines. The audiences are all at home or stay in the office: you need to reach and attract them with relevant film information so that they would know how to choose from the tank of hundreds of films.

In 2010, China announced a notice that each county should have one cinema and up till now, there are still several thousands to be built. It is a long way to go. Le Vision’s focus will be put on the second, third and fourth tier cities as the film market in Beijing, Shanghai, Guangzhou and Shenzhen, the first tier cities on our map has been mature and only modest growth could be expected. Also, residents in these cities could easily be distracted away from the cinema by other kinds of entertainment, yet in smaller cities, segmented promotions and marketing could boost an audience boom. We will use our online resources to inform and to attract our potential audience to participate our online promotional events and local gatherings to ensure an effective O2O varied marketing in different regions.

In terms of film production, we will continue to make conventional films for general audience to make films like Tiny Times to satisfy its huge army of fans both online and offline, and to make co-productions with Hollywood in projects like The Expendables 3 and Clans of the Sacred Stones.

zhang zhao, the game changer

The article was originally published in THE CHINESE FILM MARKET 2013 Venice issue.

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