AI reshape reading

Original: Ketchup

Source: New Abstract Business Review

On August 10, China Literature released its 2023 interim performance report.

According to the financial report, China Literature’s net profit attributable to its parent company in the first half of 2023 was 380 million yuan, a year-on-year increase of 64.8%.

As the biggest bright spot, the sharp increase in net profit this time is certainly related to conforming to the current tide of Internet cost reduction and efficiency increase, but it is also due to the previous structural reforms of China Literature to a certain extent.

Especially after focusing on high-quality content and optimizing distribution channels, China Literature’s paid reading ecological competitiveness has been significantly enhanced. Data show that in the first half of 2023, China Literature’s online business MPU reached 8.8 million, a year-on-year increase of 8.6% and a month-on-month increase of 12.8%. This also marks that the current China Literature has gained a firm foothold in a market environment full of uncertainties.

But the more notable combination is AI+IP. From the largest organization and business upgrade in its history in June, to the release of the first large-scale model of the online literature industry in China "Reading Miaobi" in July, in the face of changes in industry logic and the trend of AIGC, Reading is undergoing transformation and is trying to be in AI. On the eve of the outbreak, the feasible path of AI+IP was explored.

Through the cycle

In the past few years, the online literature industry has fallen into a situation of drastic market changes and overall adduction.

Back in time, a group of free platforms held high the banner of traffic, trying to sell a more "fashionable" story. Facing the torture of the outside world on "imaginary space", even reading articles has to be involved.

However, as the demographic dividend diminishes, the advertising market becomes silent, and emerging content media represented by superimposed short videos rise, free online articles are less attractive to users. A brief struggle.

The market environment, which fluctuates violently and is full of uncertainties, tests the ability of players to deal with market changes. As the most important representative of the 20-year history of China's online literature industry, China Literature's profound accumulation also gives it the ability to go through cycles.

Judging from this financial report, on the one hand, China Literature no longer focuses too much on inefficient growth based on traffic, but strategically reduces marketing points with low return on investment through optimization of content and distribution channels, thereby improving operations efficiency.

Data show that in the first half of 2023, China Literature’s sales and marketing expenses fell by 26% year-on-year; the operating profit margin increased from 6.1% in the same period last year to 9.5%, and the non-IFRS net profit rate attributable to the parent increased from 16.3% in the same period last year to 18.4% , the results of cost reduction and efficiency increase can be described as remarkable.

On the other hand, the Matthew effect in the content industry has increased sharply, and the role of "hot money" has become more and more important. The demand for top IPs in the content industry has also increased.

In this context, the transformation logic of China Literature is to adhere to the basis of paid reading, and use AIGC's new technology to open up content and products and build an integrated IP ecosystem.

The IP business is largely a business of selling "love", and the paid reading position where users are willing to pay for love is naturally the most effective soil for incubating IP.

The financial report shows that the soil of Reading is very stable. In the first half of this year, China Literature added about 200,000 writers and 350,000 novels. Excellent new-generation writers continued to emerge, and the creation and content ecology continued to prosper. In addition, in the first half of this year, the number of new works with an average subscription (average number of subscriptions per chapter) of more than 10,000 on the entire platform of China Literature increased by more than 50% year-on-year, which also confirmed the stability of its payment ecology from the side.

Facing the downstream, Qidian Reading, a subsidiary of Yuewen, has successfully stimulated the centripetal force between users and IP by building interactive communities for users and incubating IP fan bases. Take the official theme site "Curly-haired Baboon Research Society" created by Qidian Reading's "Lord of Mysteries" series of IPs as an example. In the first month of its launch, it quickly gathered more than 600,000 "mysterious" core fans, and the daily activity of users increased by more than 200% compared with before the launch. %.

At the same time, China Literature has also delivered a good answer in terms of IP incubation. Taking the high-quality series as an example, in addition to the popular "Stalker", works such as "Second Season of Celebrating More Than Years" and "Da Feng Da Gengren" have also entered the production stage, while "Fights Break the Sphere Second Season" and " Potential explosive works such as "Walking with the Phoenix" are expected to be launched in the second half of the year.

At the Tencent Video Animation Awards 2023 annual press conference a few days ago, China Literature Animation announced the animation plans for 15 works including "Fights Break the Sphere Year Three", "Lord of the Mysteries" and "Full-time Master S3".

Obviously, in the face of changes in industry logic, China Literature did not continue to indulge in the endless inward rollout of the two modes of free and paid, but anchored the IP ecology to go through the cycle. This goal has also ushered in a deeper transformation of China Literature.

Metamorphosis of Internet giants

In the past, Yuewen, which repeatedly emphasized the "big reading", has always tried to realize the IP industry chain model of Disney and Marvel, which is also the expectation of the outside world for reading. However, looking at the situation of China Literature in the past few years, there are still some gaps between it and "Oriental Disney".

There are external and internal factors. For example, as a content platform, it failed to sort out the relationship between "content" and "platform".

From the perspectives of "Small Reading" and "Big Reading", the former comes from the long-standing foundation of online literature, while the latter rests on the ambition of Reading's IP ecological chain. There is a relationship between me and you in me, but it is not the case.

In this regard, Hou Xiaonan, CEO and president of China Literature, said frankly at the performance conference: "Under the original organizational structure, literary content creation, reading product operation, and various IP adaptation works are managed by different departments, which is not conducive to real-time collaboration. "

Hou Xiaonan, CEO and President of China Literature

That is to say, due to the existence of departmental walls and business walls, China Literature used to emphasize the horizontal expansion of business and IP adaptation rather than vertical mining, making it difficult to achieve integrated IP development. IP fans, on the other hand, are scattered in time and space in different periods, in different forms, and in adaptations with huge differences, thus diluting the original value of IP.

In June of this year, China Literature launched a new round of organizational business upgrades, establishing the "Four Major Business Units" including the Content Ecosystem Platform Division and the Film and Television Division.

One of the key words of this change is "big platform". In particular, the content ecological platform business unit has opened up the content business and product business that China Literature had previously separated, enabling the two to drive in two directions.

Another key word is AI. The Intelligence and Platform R&D Division, which appeared in this organizational transformation, deserves high attention.

At present, the AIGC wave is sweeping the technology industry and is also reshaping the traditional content production model. Under the rapid changes in technology, whether China Literature, as an industry giant covering the upstream and downstream of content production, can grasp this round of AIGC wave will probably determine its position in the next stage.

In this regard, Hou Xiaonan pointed out that AI is an unprecedented opportunity for China Literature. We plan to integrate AI into various business links, such as assisting writers in creation, enriching user interaction experience, publishing online articles, and IP development.

The Intelligence and Platform R&D Division is a product of the AIGC wave. It is reported that this division is mainly responsible for technological breakthroughs and cutting-edge experiments such as AI large models, aiming to improve the quality and efficiency of the IP ecosystem.

Just one month after this organizational change, the first AI answer sheet was completed-on July 19, China Literature released the first large-scale model of the domestic online literature industry, "China Literature Miaobi". In the on-site demonstration, Reading Miaobi not only familiarized itself with the "network stalks", but also answered several questions about well-known works such as "Celebrating More Than Years" and "The Strange Fairy" and the "Golden Three Chapters" of online articles, and also handed over quite a few questions. The content answer sheet of "Sense of Internet Literature" can be called the model that understands Internet literature best.

From focusing on IP to embracing cutting-edge technology, the transformed China Literature is changing from a web-based company to an AI+IP company.

AI+IP, the next chapter of the article

At the time of technological change, players from all walks of life are trying to tell new stories through AIGC. However, whether the story can be told depends on whether the technology can truly integrate with the business.

For reading articles, AIGC can at least solve several practical problems. In the past, limited by the problem of adaptation efficiency, there was often a certain degree of lag and fragmentation in the process of IP cross-category development.

Taking web comics as an example, the cycle to complete a web comic is about 1 year, and the development cycle of an animation is 1 to 2 years. The long cycle not only increases the investment, but also intensifies the risk of reducing the popularity of IP, thereby reducing the fault tolerance rate.

This has undoubtedly slowed down the process of China Literature’s IP ecological chain construction: high-quality IPs have piled up into a mountain, but IP adaptations are often just scratches, unable to meet the needs of audiences in more dimensions; many high-quality IPs do not even get the opportunity to adapt. It is reported that the annual IP development rate of China Literature is less than five thousandths, which is obviously far from meeting the needs of the consumer market.

And AIGC is a good medicine to solve the low efficiency of IP development at the current stage of China Literature.

Take the manga adaptation scene as an example. In the past, it generally took about 2 hours to color a single-frame manga. With the blessing of AI technology, the coloring efficiency has nearly doubled, and the overall manga adaptation efficiency has achieved a 20% increase.

Another example is the development of derivatives. In the past, limited by the efficiency of image production, the development of derivatives often had to wait for the completion of novels and animations before it could start. However, based on the AIGC application, the efficiency of derivatives development has been significantly improved, and it can even be involved in the story update stage.

Facing the upstream creative ecology, AIGC’s effect of improving efficiency is also obvious. Take the first application “Writer Assistant Miaobi Version” based on “Reading Miaobi” as an example. A tool application to improve the author's creative efficiency - share some boring and redundant work with the attitude of "knowing the web best", so as to liberate the author so that he can focus more on the creativity of the story and the creation of core content.

In addition, whether it is an AI virtual character that creates an immersive content experience, or an AI machine translation that exponentially reduces the cost of online text translation and expands the scale of going overseas, all of them reflect the broad application space of AIGC for China Literature. Just on August 11, the Xiaoxiang Academy app under China Literature went online to test the AI-based online text companion function Zhumengdao. Some readers commented that "it's like a character coming to life" and "like entering a different dimension".

Of course, AIGC is not a master key. In this regard, Hou Xiaonan pointed out that the content generated by AIGC lacks continuity, and it is temporarily impossible to convert text into smooth long-form visual content through simple steps. Higher requirements.

However, it is not difficult to speculate that as the technology continues to iteratively upgrade, its application scenarios will continue to expand, and the efficiency of China Literature’s multi-category IP adaptation will also be more significantly improved, and the simultaneous development of multiple forms of IP will be realized—from quantitative changes to qualitative changes. .

This means that actively seeking change and AI+IP-driven reading aims to form a multi-modal content experience platform that is not limited to reading, and then uses AI to improve the development efficiency of IP. This new value model may reshape China Literature and take it to another level.