At the 17th Shanghai Film Festival which ended on June 22, the buzzword on everyone's lips was BAT, referring to Baidu, Alibaba and Tencent, the three leading Internet companies in China.
Baidu is the largest Chinese search engine, Alibaba owns China's largest online business platform Taobao, and Tencent has multiple products widely used by netizens, such as social networking and communication service providers WeChat and QQ.
The online giants are now turning to filmmaking. Tencent vice-president Sun Zhonghuai announced at SIFF that the company will invest in six films, including Dragon Blade, starring Jackie Chan, and Zhong Kui: Snow Girl and Dark Crystal, a fantasy blockbuster starring Chinese A-lister Chen Kun. Sun would not reveal the exact sum of money, but Chan's film has a budget of $65 million.
Alibaba launched the second round of fund raising on Yulebao, a crowd funding service for films, on June 13. In less than 24 hours the funding target of $14.6 million was met by 160,000 purchasers, who have collectively financed five films.
Baidu has set up a venture based in Los Angeles, the first project of which will be Kong, an animated picture adapted from the Chinese literary classic Journey to the West.
Many other Internet companies have also entered the film industry, providing diversified products and services, including making films available to online viewers and discounted tickets. Gewara, an online ticket-selling website, sold 1 billion yuan worth of film tickets last year, more than many traditional theater chains.
The biggest impact these Internet companies will have on the industry will be their influence in clamping down on piracy, according to Sun from Tencent, "People are now more used to paying to watch a film online," he says. "With more and more video providing websites joining in, a reasonable pricing system for copyright has been set up."
Tencent releases a monthly package of more than 1,600 films on its website, priced at only 30 yuan, the cost of about five pirated films on DVD. Youku.com, a leading video sharing website, has similar products.
"We are in fact eliminating pirated DVDs from the options available to viewers, because they will have easy and economic approaches to legitimate films of good quality," says Zhu Huilong, vice-president of Youku.com.
The online video sharing can expose a film to more viewers – China had 618 million netizens as of December 2013, according to China Internet Network Information Center.
"A film is usually screened in theaters for one month. It can be available on a video website seven or eight times longer," Zhu adds.
But the Internet companies are more ambitious than to simply broadcast films, and moguls from traditional film companies are taking notice.
Yu Dong, the chairman of Bona Films, a NASDAQ-listed studio and distributor which also owns theaters, claims that "all the film companies will work for BAT in the future".
"As the number of big screens increases dramatically, small screens are developing with equal speed," Yu says. "Mobile Internet, iPads and the sitting room have become popular ways to watch films. Traditional film companies are facing severe challenges."
LeVision, the film arm of Internet company LeTV, has a special team studying data collected from various online communities. The analysis of the fanbase of Tiny Times, a 2013 Chinese film based on young writer Guo Jingming's novel, has contributed significantly to the film's success, says CEO Zhang Zhao.
"The traditional model is, we make this film and we want you to see it, but in future the model will be, we find what you want to see and we make it for you," Zhang says. "It is totally possible that netizens will be involved in story development in the future."
Zhu from Youku believes that the Internet is also an excellent platform for rising actors and directors. "By online short films or drama series we can easily collect feedback from viewers on new actors and filmmakers," Zhu says. "From our platform we have easy access to find what kind of films are more popular than others, who are the favorite actors among different age groups, what is discussed the most by viewers."