Chinese tech giants’ future battlefield: Conquering the 2D world

Recently, ACG（”Anime, Comic and Games”）has been so hot, it’s like the weather in Shanghai.

Last month, Baidu hosted a 2017 2DMAX Baidu forums event; Tencent‘s comic convention QQ JOY was held in Chengdu; BiliBili (a Chinese online video streaming website) sold over 100 thousand tickets for an offline concert. The annual event “China Joy” has just concluded with a record high of more than 34 million admissions.

As “post-95s” Generation ( means born after 1995) and “post-00s” Generation (means born after 2000) grow old , intergenerational changes once again lead to cultural changes. ACG groups, once regarded as subcultures, are becoming more and more mainstream. Baidu, Tencent, Alibaba have all been engaged in this market. Whoever wins the battle for domination of the 2D world, will be able to secure the target customers 5 to 10 years from now. This is the future battlefield of the Chinese tech giants.

Tencent

Tencent‘s main carrier is still QQ—a messenger application on the mobile—coupled with their promotion of a hobby social platform: hobby blogs.

For Tencent to pursue after the market of the ACG is very natural. The backstage database Tencent possesses is the ideal lead for observing current trends. The number of groups and users active on QQ basically reflects how popular a specific topic is and its current scale capacity.

Tencent Animation was established back in 2012, hosting primarily anime (Japanese pronunciation for animation) and comics by domestic authors and producers in China. And in 2015, Tencent Animation co-produced with its Gaming department an online QQ Animation website, expanding the business from anime-specific audiences to the pan-2D world audiences. The offline get-together activity QQ joy that’s held twice a year, has also entered its third year of hosting. The purpose of the activity is to gather these online audiences offline (in the physical world), as well as to connect them with the authors of these works.

Among the BAT companies, Tencent is perhaps the one that’s most advantageous. On one hand, the combination of “China Reading (another Tencent-affiliated group) + Tencent Animation + Tencent Video” makes for a great complementary industry chain; and on the other hand, a good proportion of the target audience of 2D products overlap with QQ users, as well as with Tencent gamers. However, for Tencent, who has always been good at making products, whether they can handle and operate the 2D world business is but a major concern.

Baidu

Baidu tries to revive Baidu Tieba via ACG

Baidu‘s official statistics showed that Baidu Tieba (an online forum) still had an MAU of over 300 million. Among 80% of the users using mobile, those “post-90s” accounted for more than 80%. And among the top 20 forum posts, ACG took up nearly half!

After the “post-00s” became the mainstream, will it be able to revive the 14-year-old forums? The core of this question is whether “post-95s” is still interested in the form of products, and paste it is not a good forum in their hearts.

Unfortunately, the results weren’t optimistic. Most people thought that the information posted within the forums were too complicated, of poor quality, or very vulgar. A frequent user of the forums summarized that, “The biggest problem was that the forums were far too messy. You can’t achieve a sense of presence and belonging there. It cannot meet the needs of social interaction.”

Baidu‘s other popular online platform is its video streaming website—iQiyi. Among mainstream video streaming sites, iQiyi is considered one of the earlier pioneers of hosting ACG content. Works such as “Soul Ferry (灵魂摆渡)” (2014), “Spirit Realm (灵域)” (2015) and “God Helm (神明之胄)” all received relatively positive feedbacks.

Alibaba

Alibaba‘s main battlefield is Youku Tudou and Aliwx

The Internet copyright to the highest grossing ACG Japanese animated film in 2016—Kimi no Na Wa (lit. your name)—was obtained by Alibaba’s Youku Tudou. And for individual animated film creations, the two online streaming websites performed rather well on this front too.

The two sites had previously hosted a “creation project” where one of the main goals was to transform original works into widely recognized anime projects by cooperating with Japanese animation teams.

In addition, Ali also owns 33.87% of the shares of A-Stop (short for Acfan, a primarily ACG-based website), and is the largest shareholder of the site.

Aliwx (Alibaba Literature) is also taking a shot at hosting ACG contents. At the beginning of 2017, Aliwx initiated an ACG short stories creation activity that is still in progress, trying to recruit various original works by domestic authors. One of the requirements is that the protagonist must be under 18 years old. This directly reflects Aliwx’s expectation of ACG users to be the “post-00s”. And what’s different about A-Stop is that their take on the whole ACG topic is still rather broad. They have requirements where “the characteristics of the stories and comics should combine with Chinese characteristics, and have be in a narrative style”, and the characters should possesses distinct characteristics, and be suitable for anime and film adaptations.

The pan-ACG’s “post-00s” audience, is really what Aliwx is after in the future. And one can effectively deduce that the website will have increased resource interaction with Youku Tudou.

The future of the Internet in the 2D world

The ACG business is not an easy one to manage.

On one hand, the threshold of the anime industry is still the highest among the field of entrepreneurship. For manga (Japanese comics), Japan’s online manga market operates at a scale of about 7 billion yuan each year, and China is looking to remain at this same scale in recent years. However, the relevant Series A round of financing only amounts to a few hundred million. Even if these projects were to make it through the end and exit the market smoothly, they will only yield a return of five or six folds back to the VCs.

“The current entrepreneurial projects have still brought publishing agencies online, which isn’t any different compared to 15 years ago. The difficulty of creating something original in terms of content is seen as follows: text < audio < video < comics, with the threshold of creating anime being the highest. It is extremely difficult to raise supply simply through technical means.” The Toudou founder Gary Wang once said.

On the other hand, the community operation of the ACG is extremely complex. Compared to other groups, ACG targets a much lower age group and a strong emotional attribute that requires the business manager to be excellent at directing and managing every aspect of the way.

At the same time, if there is not enough stimulus, it is also extremely difficult to maintain a continuous influence for ACG content. Those who were obsessed with ACG when they were students, are likely to graduate from this obsession once they start working and once life gets busy. Some old fans don’t even have time to attend comic conventions once they’ve began their working life. Many of which have comic books that are just on their shelves collecting dust.

But even so, BAT companies are still actively trying to compete for the domination of this battlefield. To them, ACG meant a source of income in the future and the mainstream users and audience of the future. Impressing Internet users via the culture, is the most advanced and defensive strategy one can pursue.

First, the intergenerational culture that hasn’t yet taken shape. In contrast, coupled with the culture, ACG has been considered the most extensive cultural trend within this age group. For them, the subculture itself is the mainstream.

Second, to a large extent, the Internet promoted the widespread of the ACG culture, scrapping intergenerational culture of having a regional aspect to it. For BAT companies, this is a great opportunity for developing second and third tier cities.

And finally, for the ACG population and their ability and willingness to consume, they have become the major source of income for Internet companies in the future. Compared to families of “post-80s” and “post-90s”, those “post-00s” are much more well off. A lot of “post-90” children weren’t allowed cellphones until they were in high school. “post-00s”kids on the other hand, got their first iPhones in junior high! Thus as far as online products are concerned, the future prospects are rather impressive and outstanding.

This article originally appeared in Huxiu and was translated by Pandaily.

Click here to read the original Chinese article.