From "China's Marvel" to "China's Disney" and Back to "China's Marvel": What Has Hou Xiaoqiang Been Up To? | 20 Years of Web Fiction ⑩

From Sina Blog to Shanda Literature to the day he walked out, the one thing Hou Xiaoqiang keeps coming back to is the thing later called "IP."

On October 31, the web fiction site Mars Fiction held a press conference to sell the film and TV adaptation rights to its titles. It came not long after China Literature announced its IPO timetable. As the former CEO of Shanda Literature, Mars Fiction founder Hou Xiaoqiang always gets some version of the same question: "Does it bother you that you never got to pick web fiction's fruit?"

Perhaps because he has been asked so often, Hou Xiaoqiang raised the subject himself, in an even-handed tone, in an interview with QDaily. "It's all the result of choices two giants made for themselves, Tencent and Shanda. Every one of us is a piece on that chessboard ... everyone has their own wheel of karma. If someone climbs higher than you, you envy and resent them. If someone falls lower, you mock them. I'm not that kind of person, and that's not what I want to do."

What Hou Xiaoqiang wants to do, in fact, has barely changed: turn web novels into comics, games, films, and TV dramas. That was already his goal when he joined Shanda Literature in 2008. Today the goal is phrased as making Mars Fiction "China's Marvel." A year and a half ago, speaking on behalf of Zhonghui Film and Television, another company he helped found, he said the same thing — that Zhonghui would become "China's Marvel."

As Hou Xiaoqiang understands it, Marvel is a platform that combines rights and investment. Apart from the fact that Marvel also has its own film production team, that is broadly right. The comics publisher, founded in 1939, launched the Marvel Cinematic Universe in 2008. Ten years and 17 films later, its cumulative global box office stands at $13.5 billion, making it the world's most valuable entertainment brand.

In 2008, the job Shanda founder Chen Tianqiao handed Hou Xiaoqiang looked very much like what Marvel was doing. The differences were that Shanda Literature would be adapting web novels, and that Marvel was not yet worth what it is today — so what Chen Tianqiao told Hou Xiaoqiang was that he wanted Shanda to become China's Disney.

Disney formally acquired Marvel at the end of 2009. Hou Xiaoqiang never reached that goal at Shanda Literature. After he left, he kept doing the same business, with several times as many rivals and partners as before, and the industry now has a short code name for it: "IP."

To the web fiction industry of 2008, Hou Xiaoqiang was an outsider through and through.

Before joining Shanda Literature, Hou Xiaoqiang was a deputy editor-in-chief at Sina. The product he was proudest of was Sina Blog, which had its moment in the sun around 2007. His job was to persuade writers, celebrities, directors, and media figures to set up blogs there, and out of it came some of the country's earliest internet KOLs, Xu Jinglei and Han Han among them.

It was the network of contacts Hou Xiaoqiang showed in that work that caught Chen Tianqiao's eye. In 2008, Chen Tianqiao invited him to join Shanda Literature, hoping he could break down the wall between web fiction and film, television, and games.

The web fiction world was a fairly closed circle then. Mostly that was because, after the VIP pay-to-read model was invented in 2003, web fiction sites could live on that revenue alone. On top of that, China's film and TV industry ran lukewarm until 2010, so no site wanted to take on the thankless work of courting production companies.

The push that turned web fiction into part of the entertainment industry came largely from outside. In 2004, Shanda acquired Qidian. A news report from the time recorded these remarks from Chen Tianqiao: "We've seen many successful cases of much-loved novels interacting with film, including Harry Potter and The Lord of the Rings. The entertainment literature Qidian owns is not only popular with Shanda's users — it will also supply rich content as Shanda develops its own online games."

Those remarks were the seed of the concept the entertainment industry would later chase under the name "IP." It was on that basis that Chen Tianqiao proposed making Shanda China's Disney. "When Chen Tianqiao painted that picture for me, I felt I could get there," Hou Xiaoqiang recalled. "It was a dream Chen Tianqiao planted in me."

Even today, with the entertainment industry swelling at speed, becoming China's Disney is no easy thing — let alone ten years ago. Over the past two or three years, Hou Xiaoqiang has told and retold a handful of stories about how hard it once was to sell the film and TV rights to a web novel.

"Back then, when I went to sell rights to Cao Huayi, now the boss of New Classics Media (the company behind The First Half of My Life and Love Is Not Blind), everyone told me: 'That stuff of yours is all ghosts and monsters. You can't make a TV drama out of it.'"

"When Chen Kaige decided to make Caught in the Web, the project I'd given him, I was overjoyed. I remember writing a post at the time saying I'd hand our best rights to the big directors for free."

"Even Ghost Blows Out the Light — I sold it for 3 million yuan and thought I'd struck it rich." Hou Xiaoqiang ran through these stories again at high speed, then summed up: "Back when I was out selling film and TV rights, nobody took them seriously. The market was hard then."

Now he no longer has to worry about rights he can't sell. The film and TV boom has flipped the balance of power between buyer and seller. "Now several companies fight over it and you pick which one gets it. It's a seller's market."

In under a week, only 5 of the 68 flagship titles Mars Fiction rolled out at its IP conference were left without a taker. In early October this year, Hou Xiaoqiang posted on Weibo: "People come to Mars Fiction to buy IP in an endless stream," attaching a photo of a tourist site packed with holiday crowds over National Day.

"Last week alone I sold 12, more than 10 million yuan. And it's like that every day, morning to night, people coming in to ask for IP," Hou Xiaoqiang said in a late-October interview with QDaily. "In an ordinary month we might not open a single deal, but in August and September we did more than 10 million yuan in sales each month." Asked what he expects to sell over the full year, Hou Xiaoqiang said: "I don't know, and I don't care."

Hou Xiaoqiang's rights business now rests on two companies, Zhonghui Film and Television and Mars Fiction. Zhonghui buys rights, packages them into projects, then looks for production companies to work with, keeping half the investment stake for itself. Mars Fiction serves ordinary readers like any other web fiction site, but it also grows IP and takes part in developing it.

The two overlap, though they may also work together later. Hou Xiaoqiang describes the relationship this way: "I think China's IP market is big enough to hold both a group of people cultivating good IP and a group of people buying good IP."

Mars Fiction, with close to ten million users, is a year and a half old and still building up readers and titles. Hou Xiaoqiang has been at Zhonghui Film and Television three years now; the company's 2016 revenue reached 134 million yuan. On the IP side, its most recent release was The Devotion of Suspect X, which opened over the Qingming holiday.

In 2014, Hou Xiaoqiang paid 700,000 yuan for the film and TV rights to Keigo Higashino's novel. Three years later the film's box-office revenue share came to 378 million yuan. "Given the market in April, that was very satisfying, because the year overall has been sluggish, and it still finished among the top domestic films," Hou Xiaoqiang said.

Hou Xiaoqiang has handled a great many rights since leaving Shanda Literature and helping start Zhonghui and Mars Fiction, yet The Devotion of Suspect X is one of the few that has actually become a film or a show. And since his IP business in the Shanda Literature years was not much of a success either, the film is also a case of him learning by feel.

At Shanda Literature, his test for which web novel to pitch was simple. "Back then I'd look at the click counts, look at how the book was selling, and once that looked about right I'd start working people — it's like selling anything, you just find a way to move it." Ghost Blows Out the Light was seen then as Shanda Literature's most important title, and Hou Xiaoqiang asked everyone he met: "Interested?"

By the time of The Devotion of Suspect X, he had arrived at the idea of a "greatest common denominator." "My feeling was very plain: it's a super-bestseller. There's always a reason a book becomes a super-bestseller. The reason is that it catches a greatest common denominator in the feelings of countless people, a feeling everyone has expectations about. Adapt that well and it will pull people into a cinema too."

Today Hou Xiaoqiang can hold forth at length. He has built a large, elaborate vocabulary to explain what he thinks IP is.

"Head IP" means male-oriented web novels with very high click counts, by authors like Tang Jia San Shao or Tiancan Tudou. "Seed IP" means high click counts, a high Douban rating, and strong "wall-breaking" power — the ability to cross over to a wider audience — as with Ode to Joy or The Journey of Flower.

Some novels he calls "pay-oriented," mostly male-oriented monster-slaying, level-grinding stories. Many female-oriented novels he calls "IP-oriented"; that kind demands more of its characters, its structure, and the look of its prose.

"New high-end woman," "core IP," "mobilizing power," "wall-breaking power," "tested," "tested again and again" ... Through the conversation Hou Xiaoqiang kept throwing out new terms. He believes Zhonghui and Mars Fiction understand IP better than anyone else in the business: "This isn't something other people can learn in a short time."

Part of that judgment comes from his team. Every so often, on Moments and on Weibo, he praises the Zhonghui team and rates their eye for IP highly. "In this area we already have a complete methodology, like using the tools of calculus to solve a math problem."

The other part comes from his own legwork. One year, Hou Xiaoqiang made time to meet more than 100 people born after 1990, among them the screenwriter Yu Zheng, the director Yi Xiaoxing (known online as "the Professor"), and the astrology blogger Tongdao Dashu. "Whoever's hot, I ask to see them" — he is barely selective. He also spends a great deal of time reading on Mars Fiction. "Last week I spent 1,400 minutes on Mars Fiction." That is more than three hours of web novels a day.

The thing that appears most often on Hou Xiaoqiang's social media accounts is novel recommendations. He admits that not every novel he recommends is one he has read; some rest on his team's analysis and judgment.

Hou Xiaoqiang believes the IP market is always shifting, so he describes himself, modestly, as having to be "on edge every hour of every day." So much is uncertain that he is "sometimes fearful, sometimes pleased with myself." The Devotion of Suspect X is a case he is happy with; missing The King's Avatar still nags at him. The asking price he was quoted was 3 million yuan, and he thought: "I bought The Devotion of Suspect X for only 700,000. Why would I pay 3 million for The King's Avatar?"

"You're going to keep making a lot of mistakes, and I think in the end they all turn into experience." Asked whether he had IP fully worked out, Hou Xiaoqiang did not answer directly, but he said: "Every day we may handle a hundred, a thousand pieces of IP ... I don't think any company has been through more of it than we have."

In May 2015, Hou Xiaoqiang posted an essay on Weibo titled Tonight I Am Going to a Date That Does Not Exist, in which he described pouring tea for young people and being thrown out of a bookstore by staff while testing the book-excerpt feature of an app called Duyao ("Poison"). "I really do crave success. Because success lets you carry your responsibility to your own heart, to your family, to society. It gives you power, and more dignity."

By then a year had passed since he joined Zhonghui Film and Television, and Mars Fiction was still in preparation. He was still saying how badly he wanted to prove himself.

Two and a half years later, Jinying Technology, the company behind Mars Fiction, announced a $40 million Series B+ round. Yunfeng Capital and Xiaomi led it; Fosun and SAIF Partners followed on. But neither Mars Fiction nor Zhonghui Film and Television is anywhere near the more than 1 billion yuan in annual revenue Shanda Literature had when Hou Xiaoqiang left it.

Looking back on his five years at Shanda Literature, Hou Xiaoqiang sounds wronged. "I cracked down on piracy, and people outside said I was showing off. I built Cloud Bookstore, and everyone said I was shackling the other literature sites. I pushed IP, and everyone said it was all ghosts and monsters. I tried to join the mainstream, and everyone said I was crashing the Writers Association's party."

As a professional manager dropped in from outside, Hou Xiaoqiang's authority rested on Chen Tianqiao's backing. As Chen Tianqiao adjusted his own strategy and gave up on "China's Disney," the friction between Hou Xiaoqiang and the various web fiction sites under Shanda Literature sharpened. At the end of 2013, Hou Xiaoqiang described himself as "leaving, covered in wounds, the Shanda Literature I had fought for over nearly six years."

In 1993 he took refuge in Buddhism. In 2014 he took Shaolin Temple's abbot Shi Yongxin as his master, saying it helped him settle his feelings about the past. In public interviews he talks about "the turning of karma" and the "wheel of cause and effect," and sometimes quotes the Heart Sutra: "With no hindrance in the mind, there is no fear, and one is far removed from all upside-down dream-thinking." On Weibo he records what he has learned about management, his gratitude to colleagues, and his secrets of success.

On November 8, Mars Fiction put out a poster with modest congratulations to the newly listed China Literature. After a salute to Chen Tianqiao and good wishes to web authors, a line at the bottom read: "We have already seen the ocean; our journey is wider than the ocean."

That same day, Mars Fiction announced its Series B+ round. It said the platform had close to ten million active users, but disclosed no valuation, revenue, or other figures.

That same day, China Literature rang the bell at the Hong Kong Stock Exchange, its market value passing 90 billion Hong Kong dollars. 86 percent — the final gain on its first day of trading, and all anyone was talking about.

Cover images: Mojin: The Lost Legend, The Devotion of Suspect X