Chapter 31 6. Entertainment industry - who is entertained in the era of national entertainment

According to the predictions of many scholars, the next ten years will enter an era of national entertainment, which will bring about the pinnacle of the entertainment industry. However, this prediction was only half right.The era of entertainment for all may be coming, but the environment is the environment, and individuals are individuals, and those who are blindly optimistic about the situation will often fall into failure. When the era of national entertainment comes, it may really mean a feast of national entertainment. In this grand era of joy, the only person absent will probably be its creator.

Topic introduction: The industry that produces entertainment——Who is entertained by the entertainment industry Today, 10 years ago, the entertainment industry was a space full of temptation, imagination, fanaticism, and dreams. The profits contained in this industry were beyond the imagination of ordinary people. In the next 10 years, the entertainment industry will be a world of gray, losing, and dissociated, and while businesses in this industry will still be profitable, every penny they make will be full of hardships. ingredients. When we say this, it actually means the beginning of a downhill road. If we want to know the correctness of this prediction, we must base ourselves on the present, start with the mechanism of the industry, and understand this industry that has condensed too much glory. Do some thorough research.

The profit model of the entertainment industry has always been an unpredictable topic. Most of us know so little about it that we have made all kinds of bizarre speculations. In fact, like most industries, the entertainment industry’s The profit model is not mysterious, it also needs to follow the existing business laws. To put it simply, the entertainment industry makes profits by producing or distributing entertainment products to the public. The content of this product can be in various forms, it may be a movie, a song, or some kind of Printed matter can even be a form of entertainment, such as the most popular "Fast Girl" competition nowadays. In summary, as long as it can provide entertainment for the public, the specific form of the product is not restricted.

For product release, there are also various methods, whether it is traditional radio, television, books, magazines, or the Internet that has been surging in the past ten years. The means by which the product is sold, in fact, for this industry, there is no real limit to how the product is sold. Now, we are faced with a problem that urgently needs to be deeply understood. Where is the profit source of entertainment enterprises? According to the different sources of profit, this source can be divided into three types: user usage fee, advance payment and advertising revenue. For the media industry, the most important and basic source of its business model is user fees.

In our lives, when we want to watch a new hit movie, when we want to read a best-selling youth literature, or when we want to enjoy the latest hit CD, we must This is a one-time fee paid for the right to use the product. Therefore, in this regard, many well-known entertainment companies such as Huayi Brothers, Emperor Film and Television, etc., are highly dependent on these one-time fees from users, especially when the output of these entertainment companies is very large. The economic benefits are even greater. The second main source of profit is also based on the users of the product. However, unlike the usage fee, the source of this profit is different in time.

Compared with royalties, advance payment is more attractive to entertainment enterprises because advance payment is predictable and easy to determine, which reduces the financial risk of the enterprise to a minimum.At the same time, compared with the usage fee, another advantage of the prepaid fee is that the user pays before obtaining the service, such as the cable TV fee in our life. After the user pays the fee, although the company cannot immediately include it in the financial list, it can immediately turn the fund into free cash flow and put it into operation, thereby reducing the need for and dependence on external funds .

The third major source of profit is advertising revenue. The difference from the previous two is that this profit has great uncertainty, and its amount is often linked to the social effect of the enterprise. A typical example is that TV programs with higher ratings have higher The advertising costs are also higher. From the annual CCTV advertising bid king (CCTV advertising bid king, which means the owner of the golden advertising period before and after the news broadcast, due to the high ratings of the news broadcast, the advertising price of this period is extremely high. Its unit of measurement is often accurate to microseconds. In the annual CCTV advertising bidding meeting, all companies that have obtained this qualification through bidding are jokingly called "Biao Wang") in the fierce competition. This phenomenon that performance is directly linked to profits has clearly become common sense in the entertainment industry.

When we understand the profit model of the entertainment industry, it's time for us to reveal the puzzle, which is why, in the next 10 years, China's entertainment industry will become more and more difficult. According to the predictions of many scholars, the next ten years will enter an era of national entertainment, which will bring about the pinnacle of the entertainment industry. However, this prediction was only half right.The era of entertainment for all may be coming, but the environment is the environment, and individuals are individuals, and those who are blindly optimistic about the situation will often fall into failure.

For China's entertainment industry, its competitive advantage lies in the monopoly and market access brought about by the system. In the past years, all the successful entertainment companies we have seen have occupied a monopoly position in their respective exclusive fields. Due to the existence of this position, they have strong competitiveness and excellent economic benefits. However, we should not forget that it is extremely difficult to form an industry monopoly under pure market economic conditions. It not only requires sufficient funds, technology, time, but also requires some factors beyond manpower—— Like luck.

Therefore, most monopolistic enterprises basically benefit from the protection of the system. From this, we have found the biggest risk in this industry-conflicts with lawmakers. In China, engaging in the entertainment industry requires a high threshold, and its cumbersome approval system has discouraged many operators and investors. Therefore, as long as this situation can be maintained well, the existing entertainment companies with monopoly advantages in China will be It can achieve long-term profit growth, and with the growth of this profit, the value of entertainment enterprises will also increase accordingly.

Television stations and newspapers are the most typical examples of such advantages. In today's China, few cities can support more than one television station and newspaper in terms of consumer demand. At the same time, due to the existence of the market access system, many potential competitors Competitors cannot obtain market access qualifications, which means that it is extremely difficult for new entrants to set foot in this field. However, such a situation is unlikely to exist for a long time, especially in China, where the economic system is undergoing transformation. Due to the demand for funds, the old licensing system and control methods will be gradually relaxed in the future. Funds will inevitably enter the Chinese market in a large amount, and at the same time, investors with strong funds in China will inevitably set foot here, and the resulting fierce competition is self-evident. When fierce competition emerges, problems lurking within the entertainment industry will also emerge. Among the three major sources of profit for entertainment companies, user fees are the most prone to problems. The main risk is the instability of cash flow. For the products of entertainment companies, the sales performance of many individual products is extremely unstable, and as we said earlier, the cash flow of entertainment companies is largely tied to user fees. We can imagine that if an entertainment company can sell several movies in a row, then its prospects are very good, but what we often see in the industry is that several movies in a row have suffered the fate of unsalable failures. plunged the business into disaster. It is precisely because of this uncertainty that we are able to predict that in the next 10 years, difficulties in cash flow may cause our entertainment companies to be in trouble. As for the second source of profit, although there is no uncertainty like the use fee, another problem has caused this part of the profit to be exhausted, and it has even become the norm. For entertainment companies, if they want to maintain their survival in this industry, they often need huge continuous capital expenditures. For example, the investment in the field of cable television is often calculated in hundreds of millions, and the replacement of other equipment often costs Not cheap.Therefore, for entertainment companies, the cost of system upgrades often eats away most of the advance payment, and the remaining part is very small. In theory, once this upgrade is complete, companies can sit back and get rid of the burden of this aspect, but the reality is that in this era of rapid technological revolution, this upgrade will never end. For advertising expenses, this uncertainty is even stronger. An important reality is that in all enterprises, advertising expenses are almost one of the least important expenditures. Therefore, when the economy is in recession, many The management tends to cut this cost first. Therefore, the amount of advertising revenue is often synchronized with the business cycle. Its dependence on the macro economy makes it impossible for this profit to remain stable as before. Based on our above analysis, we can finally recognize the macro trend of the entertainment industry in the next ten years. When the era of national entertainment comes, it may really mean a feast of national entertainment. In this grand era of joy, the only absent I'm afraid it will be its creator.