Standing Between East & West

04 Aug 2017

Standing Between East & West

As ATF pumps up its VC profile, iNSiGHTS talks to Dr John Liu,
a venture capitalist who sits in Hollywood, but has his eyes set on China

By Lunita S V Mendoza

After more than a decade since graduating, the lessons learnt in one short semester of film studies have remained relevant. That art not only imitates life, but reflects society’s genuine values and stage of evolution cannot be more apparent today.

We watch the waves of political and economic rise and fall dictate clout, while worth is a muscle directly related to spending power, the chump change of disposable income, which Asia seems to be gradually amassing.

Dr John Liu, besides being armed with a PhD from the University of Pennsylvania in Financial Economics, also prides himself as producer and writer, TV series creator, ex-SAC portfolio manager, Wall Street veteran trader, and entrepreneur.

More recently, he is the founder and CEO of New York-based and China-based HAN Pictures & Media Corp and HAN Capital Management, a company that produces Chinese film and TV content, as well as participates in global film and TV co-production, especially China-USA co- productions for global audiences.

In a nutshell, Dr Liu absolutely believes that the mecca of TV and film will eventually shift to Asia, but makes a poignant remark that “we are not there yet”.

“It will take at least another 20 years to get there if the current trend continues. There are several reasons to claim this forecast.

“First, if you look back at Asia’s long history. China was the world centre for many reasons, be it economic, military or technology. However, since several centuries back, China has lagged far behind Europe, especially in the modern industrialization period.

“Japan was in the forefront in terms of adapting political, economic and social reform to become a more western-like nation. In general though, the whole of Asia dawdled behind Europe even before the end of WWII.

“After WWII, Japan became the first industrialized country in Asia, followed by the four little dragons of Singapore, South Korea, Hong Kong, and Taiwan of China.

“After 30 years, China’s open door policy has made the biggest country in Asia, the second largest economy in the world. Today, it is experiencing an escalation on the world political and economy stage.

“Normally, the entertainment sector and cultural influence to other regions follows the strength of economy and politics of a country or region. Thus, the US is clearly a good example of this. Hollywood movies and TV shows/series are everywhere, and so is American culture and lifestyle.

“It is often predicted and concluded that the 21st century could be Asia’s (read: China’s) century. As that moment approaches, Asia will become the global mecca of TV and film. On the other hand, in order to reach this point, the entertainment industry must catch up with Hollywood in production and technology. Only then can Asia provide the same or higher quality of TV/film content for the global audience.”

While frustrations of Hollywood’s dominance in Asia escalading to it being “extremely hard to produce Asia content centred TV and film projects to be accepted globally, especially in USA”, Liu reminds that yes, it will take time for Asian film and TV to be increasingly accepted in the global entertainment markets.

Another immense frustration for HAN Pictures and Media is that there are few A-listed actors/actress/directors, who can bring audiences outside of Asia to consume Asian-centred film and TV programs.

Dr John Liu
CEO, HAN Pictures and Media Corp
President, HAN Capital Management LLC

Investing in Content
What this VC wants…

iNSiGHTS magazine: What are you looking for these days? (In terms of TV)
Dr John Liu: HAN Pictures and Media is working on several TV series and live TV shows for China and the global markets. Some of them are based on the historical international stories that are China/Asia-centred. We do expect our projects to attract the global audience, especially the Americans and Europeans. With China’s long history, there are unlimited excellent and touching stories to be produced for the world entertainment markets. The turn of the 21st century has seen Asia become increasingly important on the global stage. This bodes well for HAN Pictures and Media, as it specializes in various original content creation for this purpose.

iNSiGHTS magazine: How is investment different between film and TV?
Dr John Liu: The investment in film and TV are quite different from several aspects for both risk rewards and audiences.

First, the film box-office revenue always has greater uncertainties than TV. The revenue for TV is relatively certain ahead of time, especially when buyers decide to purchase and price is already fixed. So TV has less risk from an investment perspective. For example, the pilot program model in the US and pre-purchase agreement with satellite TV stations in China highlights this point.

Secondly, the audiences for film can often be quite different from TV, especially in China. Films are habitually for younger audiences, aged 16—30, while animation films may target even younger audiences. But TV programs seem apt for the older crowd, especially TV series. This will help decide the types of TV and live show programs to invest in and be produced with the proper budget for each project.

Thirdly, of course, are online distribution platforms that have become progressively important. Both film and TV converge into the same distribution platform. So the audiences now can enjoy different kinds of TV programs and films on all devices, via pay per view or fixed fees.

Lastly, normally through promotion, a film has more visibility and audience focus compared to TV. The big story of film can have more impact and influence than TV programs. Thus, some films could potentially garner a bigger budget compared to TV programs.

iNSiGHTS magazine: What has been the dominant (note: most influential) platform that can garner the greatest ROI?
Dr John Liu: Today, there is no single dominant platform for film and TV programs – traditional distribution for TV and film has started to converge in one way or another.

As the trend adds a huge number of viewers for both film and TV programs, it’s great news for both TV and film producers. Meanwhile, traditional cinema operators now face the bigger challenge of stolen eyeballs, as do traditional TV stations.

iNSiGHTS magazine: Bringing experts into the development/production of content for China, could it go the other way? (Chinese experts to dev/prod American film)?
Dr John Liu: The TV market in China is relatively closed, leaving few foreign TV programs available to Chinese audience. In fact, TV content from the top TV production country, America, is completely banned, except for online releases.

On the other hand, the quality of Chinese TV programs is still quite low compared to the US, especially in original creative capabilities. So, the trend is to bring entertainment experts from overseas to help develop and produce content for China. Before the ban, the Chinese TV industry imported many TV series and live programs and brought in a lot talent as well. Now, an increasing number of American TV talents, especially writers and directors, are helping the Chinese to produce better quality TV programs in many aspects.

HAN Pictures and Media, a company originally from Hollywood, now operates in both the US and China. We are fully utilizing the Hollywood entertainment industry’s strength to help us produce high quality TV programs and film projects for the Chinese market, as well as for other global markets.

For example, one large TV series we are producing is based on historical stories that played out along the ancient Silk Road, starting from the Middle Kingdom, passing through Central Asia, the Middle East and then reaching the Roman Empire. It is a global story intended for China and the global TV market. We are using top US writers and directors to help us produce this international TV series, bound for numerous seasons.

iNSiGHTS magazine: How do you normally reach out to the industry?Dr John Liu: HAN Pictures and Media is well connected in Hollywood, as well as in China. We can easily access Hollywood top talents, writers, directors, actors/actresses, and distribution channels. This is our biggest advantage in entering the fastest-growing entertainment market in the world, with the potential to become the biggest global market within 5 years.

iNSiGHTS magazine: Will pure foreign films forever be restricted? Will co-prod/dev be the new norm?
Dr John Liu: Not really. Both the film and TV markets in China are gradually opening up to the global entertainment sector, which will provide great opportunities for global cooperation and cultural exchange across borders.

Each year, China imports about 30 foreign films with a flat fee quota, in addition to a quota of 34 revenue-sharing films annually. In 2016, China imported 39 foreign films with revenue sharing, and about 40 foreign films with a flat fee levy.

The import quota for foreign films is increasing annually, similarly for TV too. Several years ago, to promote international cooperation and improve the Chinese entertainment industry level, while avoiding heavy inflow of film and TV programs, as well as protecting domestic culture of the market and entertainment industry, Chinese authorities introduced co-production and development for international contents.

The restrictions are quite high in many aspects of entertainment production. But as the Chinese entertainment market and industry matures, such restrictions will gradually be lifted and relaxed. As China opens up her economy, so will she afford growth to her entertainment sector.

With HAN Pictures and Media Corp being a global film and TV series projects creation and productions company, Dr Liu is keen to be at ATF, always in search for new projects around the world.

Catch Dr John Liu at ATF 2017, as he sits on ATF’s much-awaited VC panel, CONTENT ANGELS, DRAGONS & SHARKS on November 30, 2017. REGISTER NOW!

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