From Weibo to Shanda Literature to Zhonghui Yingshi, Hou Xiaoqiang Always Ends Up Just Short of "Big Shot"

He says the post-90s generation, capital, and IP are just common sense in the film and television industry.

At the end of 2015, word got out that Su Youpeng would direct a film adaptation of Keigo Higashino's The Devotion of Suspect X, and only then did people learn that Higashino's finest novel was becoming a Chinese film. Of all his works, this is the one translated into the most languages. Japan filmed it in 2008, South Korea in 2012.

Fans were excited, and busy begging Su Youpeng not to ruin it — so busy that few noticed the screen rights to The Devotion of Suspect X had been sold in China back in May 2014.

The man behind that deal was Hou Xiaoqiang, a fast hand at trading copyrights who has now decided to make it a serious business. Between late 2014 and early 2015 he helped build what is now Zhonghui Yingshi. Its predecessor was founded in 2012, in the business of investing in, producing and distributing film and television projects. Zhonghui Yingshi today is a company that pairs copyright with investment.

Stories like The Devotion of Suspect X: Hou Xiaoqiang, Zhonghui's general manager, has already bought the screen adaptation rights to more than 50 of them.

Today Hou Xiaoqiang sits on the buying side of copyright deals. A few years ago he was the seller. In 2010 it was Hou who sold Wanda the rights to Ghost Blows Out the Light, the tomb-raiding novel serialized on Qidian, a site under Shanda Literature. Tianxia Bachang's series topped the big reading charts and set off a wave of tomb-raiding fiction. Wanda turned it into the film Mojin: The Lost Legend, which opened on December 18, 2015 and took more than 1.6 billion yuan, fifth on the mainland Chinese box-office chart.

When he sold those rights, Hou Xiaoqiang was Shanda Literature's CEO. Another novel, The Grave Robbers' Chronicles (《盗墓笔记》), was just as popular then, but few people traded adaptation rights yet (the rights dispute over The Grave Robbers' Chronicles did not surface until October 2014). IP was not yet a buzzword in film and television, and screen rights sold cheap. Ghost Blows Out the Light went to Wanda for 3 million yuan — a tiny sum next to Shanda Literature's annual revenue of 1 billion yuan.

That is probably why Shanda Literature had no plans to put more into copyright trading. The online literature company was in the middle of an unprecedented boom and seemed to need no new ideas.

Hou Xiaoqiang was Shanda Literature's CEO from July 2008 to the end of 2013. The company started in 2004 valued at 15 million yuan, and its network of sites at one point held 70% of the online literature market; by 2013 it was valued at 3.6 billion yuan and had closed a funding round worth US$110 million.

He left that same year for health reasons. At Shanda Literature, Hou Xiaoqiang wanted to turn a copyright company into a copyright-operating company. That never happened, he says, because Shanda Literature had its own plans at the time.

"Zhonghui is exactly the model I imagined back then," Hou Xiaoqiang told QDaily. What Zhonghui Yingshi mainly does now is copyright plus investment. It has more than 50 people in three departments: story discovery, production, and administration and logistics.

Story discovery is the largest of the three — ten to twenty of the 50-odd staff work there, looking for original stories worth adapting for the screen. A year and a half after the company was rebuilt, it held the adaptation rights to more than 50 stories, most of them popular with readers born after 1985 and in the 1990s: Chang'an: Night of Illusions (《长安幻夜》), Take My Brother Away (《快把我哥带走》), Lotus (《莲花》), Spring Banquet (《春宴》), SCI Mystery Files (《SCI 谜案集》).

As Hou Xiaoqiang sees it, Zhonghui Yingshi will put up half the money on every project and take part in script development. As an investor, he also has a say in picking each project's director and producer.

That takes capital. In March this year Zhonghui Yingshi listed on the New Third Board (NEEQ). Its listing prospectus says that operating copyrights can win the company many investment opportunities.

The same prospectus says that developing copyrights and turning them into money carries plenty of uncertainty and risk.

One risk is that competitors keep multiplying, as film and television companies fight over popular adaptation rights. Shanda Literature once had the field to itself; it has since been bought by Tencent and folded into China Literature, while Baidu and Alibaba have set up Baidu Literature and Alibaba Literature — companies with far deeper pockets and far more pull.

"Zhonghui Yingshi buys a story every week," Hou Xiaoqiang says. Its answer to the competition is to decide faster. On buying the rights to a story, Zhonghui Yingshi can decide in a single day at its fastest, and usually within a week at its slowest. By the end of this year, Hou Xiaoqiang hopes the company will hold adaptation rights to 100 stories.

In the past month or two, he says, every top-tier production company in China has been in touch with him. They wanted these novels, found that Zhonghui had got there first, and came knocking on their own.

The adaptations announced so far include The Devotion of Suspect X, with Su Youpeng confirmed as director; Lotus, with Li Shaohong; and He Knows Which Way the Wind Blows (《他知道风从哪个方向来》), with Liu Jiang. On top of that, Wu Jing approached Zhonghui about filming Bullet Marks (《弹痕》), and in March the writer Hai Yan, his son, and Lü Haojiji — who had just directed Go Princess Go (《太子妃升职记》) — teamed up with Zhonghui Yingshi to found Zhongsheng Chunqiu Film and TV.

With these rights in hand, Hou Xiaoqiang's plan is to make Zhonghui Yingshi China's Marvel.

The comparison may not fit. Marvel owns more than 8,000 comic-book characters, Spider-Man, Iron Man and Captain America among them, and the films built on those superheroes are already plotted out to 2028. From 2007, when Marvel Comics began turning its properties into films, to August 2015, twelve films took US$8.7 billion at the box office.

But nearly US$8 billion of that came after Disney bought Marvel in 2009. Before the acquisition, Iron Man and The Incredible Hulk ranked 106th and 414th on the global all-time box-office chart. Only once Disney had control of distribution and production did three Marvel films reach the global top ten.

Turning comics into films and shows, though, is slow work: Marvel's Ant-Man began in 2003 and did not reach theaters until 2015. Which means Zhonghui's film and television investments carry risk of their own. LeVision Pictures bought the film rights to You Are My Sunshine (《何以笙箫默》) in 2011, and the movie did not open until 2015, four years later. Because shooting started so late, LeVision ended up in a dispute with the novel's author, Gu Man, and with Enlight Pictures over whether the adaptation rights had expired. As the rights holder itself, Zhonghui will probably not run into that.

Marvel's story does stand for something younger, though. Next to Fox's X-Men and Fantastic Four, Marvel's superhero films — in look and in plot alike — suit the tastes of young people, even teenagers.

Hou Xiaoqiang thinks he knows young people very well. Across 2014 and 2015 he met more than 100 people born in the 1990s: Yu Zheng, the screenwriter of the Palace (《宫》) series, much attacked for plagiarism; Yi Xiaoxing, who goes by "Professor" online and directed the web series Never Saw It Coming (《万万没想到》); the astrology blogger Tongdao Dashu, who has nothing to do with film. He found them on Sina's trending list every day — "whoever is hot, I ask to see them" — with almost no filter.

Because what these people said in conversation matched what he had already concluded, every new meeting with someone connected to the post-90s generation left the 41-year-old a little more sure of his hold on the youth market.

Beyond the 150 advisers from literature websites, magazines and publishing houses — the traditional "experts" — Zhonghui Yingshi has built dozens of reader-recommendation groups with tens of thousands of members in all. The readers are all young: some are college students, the rest high schoolers or even middle schoolers. Like professional advisers, they sift stories alongside Zhonghui's story hunters.

Hou Xiaoqiang has joined nearly ten of those reader groups himself.

In early 2015 Hou Xiaoqiang also built an app called Duyao — "poison" — a community for film and book reviews. In an earlier interview with Caixin, he described how Zhonghui and Duyao fit together: "Zhonghui is positioned as a film company driven by super-IP, and Duyao is a high-quality review platform that produces IP. The two make a pair of wings — one brings in the money, the other supplies the ammunition." Duyao will, in time, help promote the films and shows Zhonghui invests in.

When Duyao launched, Hou Xiaoqiang called in favors to bring in 1,000 cultural celebrities as "seed" users — the actress Liu Xiaoqing, the news anchor Kang Hui, the writer Jiang Fangzhou — hoping their accounts would drive the app's popularity. He had done something like it before: as Sina's deputy editor-in-chief in 2005, he worked hard to talk writers, film stars, directors and journalists into opening Sina Blog accounts. Pulled along by more than 5,000 celebrities, Sina Blog passed 10 million registered users by April 2009, drawing 3.5 million unique visitors a day and some 300,000 posts and 450,000 comments daily.

Except that the celebrities on Duyao generated nowhere near the activity or the pull of the blog years. Duyao's official user count stands at 4 million, less than half of Douban's. In August 2014, Douban's founder, Yang Bo, said the Douban app had more than 10 million users.

Duyao's official accounts include outlets as well as individuals — Tencent Entertainment, Renwu magazine. In public comments, many people have questioned its business model and its ability to produce content. One wrote: "This genetically modified cross between Douban and Weibo has inherited the flaws of both parents almost perfectly — the natural nicheness of books and film, plus the rowdy street noise of Weibo."

Duyao falls short of expectations, and Hou Xiaoqiang admits it. But the app is not even a year old, he says, and "it still has a lot of room to improve." Compared with Douban's UGC (user-generated content) model, he argues, Duyao's PGC (professionally generated content) model fits the mobile internet better, because people holding a phone will not spend the time they would at a computer. "On Douban, good content and bad content sit side by side. What I'm building is a screened, high-quality review platform."

One more change: in May 2016 Duyao will add a fiction section. The team started work on it in March 2016. It has not launched yet, but they have lined up more than 6,000 works, over 800 of them with rights secured, and Zhonghui is negotiating screen rights with the authors of a dozen more.

This looks a little like Shanda Literature's Qidian. Qidian produced writers such as Tangjia Sanshao and Tiancan Tudou and serialized Desolate Era (《莽荒纪》), Soul Land (《斗罗大陆》) and The King's Avatar (《全职高手》). Fourteen years have passed since those novels began running there. Qidian was founded just as online literature was taking off, but the market has changed a great deal since — deep-pocketed companies like BAT have moved into producing online literature themselves, and Duyao is unlikely to repeat Qidian's old glory.

Hou Xiaoqiang looks set on repeating what he pulled off with Sina Blog and Qidian.

In May 2015, after taking over as general manager of Zhonghui Yingshi, he told reporters: "I really do want success. Because with success you can carry your responsibilities — to your own heart, to your family, to society. You get power, and more dignity."

For Duyao, success takes a very concrete shape. Hou Xiaoqiang says he wants it to become the biggest source of film and television copyrights in China. Of Zhonghui he says: "I want it to become a real platform-level company, with Zhonghui Yingshi's name on every blockbuster."

"Blockbuster" usually cuts both ways. On one hand it means something most of the audience likes; on the other, the word is used for things that are chased for a moment and do not last.

In April this year, a note Hou Xiaoqiang posted on his personal social media account reads like an answer to the blockbuster question: "Post-90s, capital, IP — this is basically a return to common sense in film and television. Common sense needs no debate. What all the arguing is really about is this: are films and TV shows works of art, or are they products?"

Below, H = Hou Xiaoqiang, Q = QDaily

Q: Are Duyao and Zhonghui run as separate companies?

H: Yes, they're two different companies.

Q: You've said "Zhonghui operates the IP, Duyao makes the ammunition"?

H: I want Zhonghui and Duyao to work well with each other, but how is still something we're feeling out.

Q: How does Duyao make IP?

H: Duyao will have a fiction section soon — it's about to launch. Duyao also carries film reviews. Say you've made a film: Duyao is a good channel for promoting it too.

Q: If it's a promotion channel for films and shows, doesn't that bring in paid commenters?

H: No, we won't fake anything. But there could be some tilting, and that's normal.

Q: Can you say exactly what "tilting" means?

H: It can serve as a promotion channel, but it's still a market relationship between them — you can buy ads, get recommended, have reviews organized for it, that sort of thing. But we won't change scores. Those things we won't do.

Q: The one thing Duyao absolutely won't do is change scores?

H: Changing scores, hiring paid commenters to pad the numbers — we won't do either. By "tilting" I mean resources: for something like Suspect X, we can invite a lot of people to write reviews and so on, but we won't fake things wholesale, give it a 9.5. That we won't do.

Q: After Zhonghui Yingshi buys an adaptation right, might it sell the rights on? Or does it get into production?

H: We almost never sell rights on; we mainly produce. As a production platform, we make things ourselves and we work with others. We develop premium web series, we develop the feature film, we work with games companies. When we partner up, we always turn it into a script first, find the right team to work with, and so on — all of that is part of running the IP.

Q: In those partnerships, what role do you play?

H: Investor — in every partnership each side puts up half. Second, we develop the script together with our partners. Turning a novel into a script takes a development process — what kind of screenwriter, what direction, and so on — and that's something Zhonghui is quite good at.

Q: Does Zhonghui have staff screenwriters doing this in house?

H: Yes, we've signed a number of screenwriters.

Q: How do they work with the company?

H: Some on a revenue-sharing basis. Mostly we want our screenwriters working for us.

Q: Take the Su Youpeng project you announced — he's shooting the novel The Devotion of Suspect X, and Zhonghui and Enlight are each putting up half. Can Zhonghui cover that? I see you hold a lot of rights.

H: We invest in all of them; any project that's ours, we invest in. Large or small, we hold half the rights; basically we always put up half. That's exactly why we need to make moves on the capital side — the good things we still want a hand in controlling ourselves.

Q: What was the first copyright you bought at Zhonghui?

H: The first was The Devotion of Suspect X, in May 2014. The first writer I signed you probably wouldn't guess: Zhang Jiajia, still one of my signed authors today. I sold all of his rights myself. As you can see, before I left Shanda Literature I hadn't bought a single Shanda Literature work — when I started out I was still in traditional games, and Zhang Jiajia was a traditional print author. It wasn't until October 2014 that I started stockpiling online writers.

Q: Are there many signed authors like Zhang Jiajia?

H: We've signed sixty or seventy.

Q: How do you choose the works?

H: They have to match my four points — new, high, big, up. New means the worldview has to be distinctive, the characters new, the emotions new. Second is high: high click counts, high fan loyalty, high ratings on Douban and Duyao. Big means it has to keep being developed further. Up means we want it to be a dynamic process — we want to find directors and producers who set off a chemical reaction with it. We take a project only if it meets all four conditions.

Q: Why do you do this part of the work yourself?

H: Like I said, over all these years my most important ability has been my high-end connections — I have a lot of resources at the tip of the pyramid. When I talk with people, they tend to take me relatively seriously, so the odds of closing are higher. That's why I go with my team to talk to producers.

Q: What does your work consist of day to day?

H: Making decisions.

Q: Which takes more of your time, Duyao or Zhonghui Yingshi?

H: At both Zhonghui and Duyao I carry two jobs: coach and firefighter. As coach, I make decisions with the team, I teach them how to decide, how to catch opportunities, how to draw lessons after they make mistakes. That's what I do most often at Duyao and at Zhonghui — it's about decisions.

Q: Which part of the company has the most people?

H: IP discovery, of course. The story discovery department. Ten to twenty of the fifty people are in it. Then there's the production department, seven or eight people, eight or nine. Overall we're still a small company.

Q: Who's in the production department?

H: They all came out of story discovery, and they showed strong potential as producers. I want everyone to grow: some will become script doctors, some screenwriters, some will handle outside partnerships, some will become producers. We want to train them from inside our own team.

Q: In that year from 2014 to 2015, why go and talk to people born in the 1990s?

H: I just wanted to know what they'd been through, why they wanted to create what they created. I wanted to understand them. I was curious.

Q: Does that understanding have anything to do with the company you run?

H: Some of it does, some of it doesn't. I want to understand this changing world.

Q: When you meet these post-90s people, what do you actually ask them?

H: We just talk. I think they ask me more questions than I ask them.

Q: You said the more people you meet, the surer you get?

H: The better I understand this group — in every way.

Q: When you set up these two companies, did you define their audience as entirely post-90s?

H: No, it isn't a post-90s company, but it mainly serves the post-90s generation.

Q: Why did you decide to get into Zhonghui Yingshi? Why set this company up?

H: Because back at Shanda I always had a dream. I thought Shanda Literature was a copyright company but not a copyright-operating company, and how to maximize the value of copyright is what I kept thinking about after Shanda Literature. So I went into mobile publishing, then offline publishing, I started distributing and selling copyrights — every day I was working out how to maximize the value of IP. You can look up the speech I gave in 2008 when Shanda Literature was founded; by the time I left, I think almost every prediction I made in '08 had come true. In '08 the most an online author earned was a million yuan, and I predicted authors earning more than 100 million. I predicted that a lot of films, TV shows and games would be adapted from web novels, that many hits would come out of IP, out of online literature. From '08 to now my predictions have basically come true — a platform that combines copyright and investment, China's Marvel.

Q: How did you come to want to build Duyao?

H: I just felt — I like watching films, I like sharing and writing reviews, and I felt China needed a high-quality review platform.

Q: But wasn't Douban already doing that?

H: Douban is a UGC model. The mobile internet is a PGC model; the traditional internet was UGC. There was Tianya before, because it leaned more toward the PC. All those blogs, and self-media accounts — why are self-media accounts so hot today? Same logic. Because the variance in UGC is huge, there's a great deal of uneven content, good mixed with bad. But on the mobile internet people have a real demand: they keep wanting good content screened out, and bad content makes them lose confidence. On Douban good content and bad content sit side by side; what I'm building is a screened, high-quality review platform.

Q: Looking at it now, I can't really see the difference between Douban and Duyao.

H: You can keep watching. Duyao now has 4 million users and produces several thousand high-quality reviews a day. Almost every big account in China that writes reviews — even Tencent Entertainment, Renwu magazine and the like — has an account on Duyao, and we've signed more than a hundred critics who keep contributing high-quality content every day. This too is an ongoing process.

Q: How do you think you can keep that process going?

H: I think you need a really good mechanism, and then you bring in the most professional people. Honestly, your observation isn't wrong — Duyao still falls short of expectations, but think about it, it isn't even one year old, Duyao isn't even a year old. But we're changing now. Take WeChat official accounts: we used to think they didn't matter, then a month ago we decided to do it, and our user numbers multiplied several times over. Each post now runs anywhere from a thousand to three or four thousand reads, and you should know we haven't padded any of it. On today's mobile internet we started from nothing — tens of thousands of followers, thirty thousand followers in a month — and we want the lead post to break ten thousand by the end of this year.

Q: How did you pull in so many people at the start?

H: At the start it was because I came out of media. I had a lot of resources, and many friends were willing to help me.

Q: What sections does Duyao have now?

H: Two. One is Duyao Reviews, and we're about to push Duyao Fiction, in May. I can give you one result already: three months of preparation, the Duyao Fiction platform hasn't launched yet, but we have the rights to more than 800 titles, over 6,000 works in all, and we're negotiating film and TV rights on another dozen.

Q: Are these published novels already online?

H: Not yet, they're all new. Our platform isn't out.

Q: What's your standard for picking them?

H: They have to have potential, and good value for the money. As long as the value is there — as long as the person I sign can make money for me, has potential value, has the right feel, and is workable. With Zhonghui and Duyao both: I've been a professional manager myself and I've been an entrepreneur, and the one question I've thought about every day for two years is how to get our colleagues to make decisions.

Q: I'm not sure how important Duyao's IP production is to Zhonghui Yingshi. Or does Zhonghui Yingshi still depend on finding rights the way it did before?

H: I believe Zhonghui Yingshi will become more and more trees, but I want Duyao to be the ground.

Q: So it's quite important to Zhonghui?

H: Yes, quite important.

Q: Take the 50-odd rights you hold now — how long will they last you?

H: At my pace, I'd say five years.

Q: And the plan for replenishing them after five years?

H: Right now it's one a week; by the end of this year I want 100 IP titles in reserve.

Q: Where does the stock of rights come from at the moment?

H: From all the platforms there are now, and later from Duyao as well. Right now there's Qidian, Jinjiang, traditional publishers, including from abroad.

Q: Plenty of other companies are fighting over these rights. How can you beat them to it?

H: I think we have our own methodology, and we make decisions fairly fast. Very few companies are as flat as we are or decide this quickly. Wang Changtian, Wang Zhongjun — they're not likely to deal with authors directly. That may have to do with where I came from. We do have our own edge there. Our team is also very professional: basically China's best team of story buyers.

Q: "Best team of story buyers" — how can you prove that?

H: By the quality of our IP. Here's an example: every top-tier producer in China has been in touch with me in the past month or two, and every one of them came to me first — not because of me, but because of the IP we hold. They go to great lengths to track an IP down and find out we bought it a year or two ago. We have about 150 story advisers.

Q: As I understand it, they're basically your tipsters?

H: I wouldn't call them tipsters, because they recommend things to other people too. But nobody else is as systematic as we are, this much of a network.

Q: Who are they?

H: They come from various literature websites, magazines and publishing houses. We also have tens of thousands of kids — college students, high schoolers, middle schoolers. We have dozens of groups, and we take part in them so they can help us recommend and screen, confirm which stories are good, and so on. So that's roughly tens of thousands of people. We have 20 story hunters of our own, searching constantly, and finally two or three of China's very best story doctors. So when we screen stories we work through a pyramid structure, and that makes sure we get the best rights the fastest.

Q: Are you in those dozens of groups you mentioned?

H: I'm in at least ten. There are middle schoolers, college students, first-, second- and third-tier cities. I join selectively, and the groups I'm in basically don't overlap — of Beijing middle schoolers I join only one group, of Guangdong high schoolers one. I join more middle-school, high-school and college groups.

Q: These tens of thousands of students — how old are they?

H: Mostly born after 1995. The oldest are college students.

Q: And the youngest?

H: The youngest are born after 2000, fifteen or sixteen.

Q: When you acquire a right, how long does it take from the bottom of the pyramid to the decision?

H: One day at the fastest. I require that our company never take more than a week to decide.

Q: So you really are buying rights every week?

H: Yes.

Q: Do you feel Zhonghui and Duyao are running into any difficulties right now?

H: For now it's fine, we're on a fast track. Because we're a new company, we don't have much experience or many lessons yet. I think if you stretch the timeline out, there will probably be a lot of problems.

Q: What problems do you expect?

H: I don't think there are any yet.

Q: And what do you want Zhonghui Yingshi to become?

H: I want it to become a real platform-level company, with Zhonghui Yingshi's name on every blockbuster.

Q: And Duyao?

H: I want Duyao to become the biggest source of film and TV copyrights in China, and a marketing channel at the same time.

Images are from film stills and promotional posters.