November, 2017

Online novels among China's most valuable IP

Original article: Straits Times

Online novels have become some of the most valuable intellectual property in China, attracting big-ticket investment from the tech community. Last week, China Literature, Tencent's online-book arm, raised HK$8.3 billion in the biggest tech IPO Hong Kong has seen in a decade. With shares trading at HK$100 each, China Literature has a market value of HK$90 billion.  

About 330 million Chinese - 1/4 of the population - read online novels, which focus on fantasy genres like sword fighting, tomb-raiding, and time travel. Since 2012, China's online novel market has grown annually at a 20% clip, reaching US$1.3 billion last year. 


It seems like just yesterday that TIPG observed Chinese colleagues delving online into sloppily formatted fake books or watching pirated films of such poor resolution that they made us nostalgic for VHS. Many consumers just did not want to pay for content, even though the bootleg material often came loaded with malware. 

But China moves fast - and younger generations are more willing to pay for content than their forebears. Investors have taken note: IP can be a good business in China after all. "The value of online literature IP franchises is rising in China because of many content adaptation opportunities, such as TV dramas, movies, and games," Jeffries analyst Karen Chan told The Financial Times. “Tencent has already established a track record in IP operation across these genres."

Online books are an easy sell in China because the population spends so much time on their handsets, the FT notes. China's top 10 writers who focus exclusively on the online market earn ten times as much as their counterparts who only do print, according to the consultancy Frost & Sullivan. 

Online novels are the top source of IP in the Chinese market today, said Jing Ruyi, an analyst at research firm iResearch Consulting, in an interview with Singapore's The Straits Times. "They sit on the very top of the upstream of the entire pan-entertainment industry chain," she added. 

China's top 10 online authors have created franchises worth RMB 1 billion each, according to a study conducted by China-based Hurun Research Institute and the IP management agency Mopia.