Shanghai Animated Film Studio, one of China's largest animation movie makers, expects its hit TV cartoon series Music Up to generate some profits this year. Although they will come rather late as the show went on air last summer, this will be quite an achievement as most domestic cartoon makers can hardly survive.
"The Music Up is likely to strike a balance, as most of its revenue generated by licensed products will come in this year," said the film studio spokeswoman, who declined to be named.
If the studio is able to cover its 18 million yuan (US$2.17 million) investment in the 52-episode series, it might have found the right business model to approach the domestic cartoon market.
It is common knowledge that most local cartoon movie makers are bleeding in China, a huge market where pirated cartoon copies reap about 20 billion yuan in revenue each year, said Sun Lijun, vice president of the Animation School at the Beijing Film Academy.
"The prohibitively high initial input and failure in packaged marketing strategy are two major reasons that hurt China's cartoon industry," Sun noted. "They failed to design a new feasible business model before they start making movie."
Domestic cartoon makers can no longer rely on TV distribution rights to survive. The China Animation Arts Committee found out that the production cost for each minute of a cartoon is at least 15,000 yuan.
But "TV stations prefer imported cartoons from Japan or US, which have high quality and sell for less than 10 yuan per minute, compared with our price of 80 yuan each minute," the film studio spokeswoman said. "Foreign companies have recuperated their investment in the home market already," she added.
Music Up generated 5.5 million yuan revenue last year, mainly from distribution right sold to TV stations. Its story about a high-school rock band and laced with pop songs has captured teenage audiences.
Banking on the fan base they make through movies, cartoon makers should gain continuous revenue stream from related licensed publications and other derivative products. But in most cases domestic cartoon makers have already run out of cash and developing products for the lower end of the value chain is beyond their caliber, Sun said.
In Japan, where cartoon makers establish the right model, the animation industry garners more profit than the country's auto giant Toyota every year.
Besides Shanghai Animation Film Studio, Hunan-based Sunchime Digital Cartoon Develop-ment Co., Ltd. is also testing the water in the market.
The company has sunk 100 million yuan in its record-long 3,000 episodes of 3000 Questions for the Blue Cat and the Naughty Mouse, which teaches kids basic science and technology knowledge.
The cartoon series is broadcast on TV channels all over the China's mainland and more than 2,000 stores selling the merchandise related to the series have sprung up in several cities. The series also appears to be popular as Sunchime reported it had found pirated video discs in 21 provinces on the mainland.
The firm is expecting its investment to be recouped within two years.
(Eastday.com February 24, 2003)
