The Huanxi and ByteDance approach highlights the decisiveness that comes with an agile response to what might seem to be an overwhelming challenge. It is hard to imagine two Western companies taking these radical steps in such a short period of time. It is rumoured that there is already a deal in place for phase two of the collaboration: a new online cinema channel and an agreement to co-invest and co-produce a host of film and TV content. But the situation warranted both moves and they didn’t hesitate. ByteDance abandoned its long held point of competitive differentiation (short form, user-generated content). Huanxi risked alienating its core customers, the movie theatres.
It was only possible because of the agile approach taken by Huanxi and ByteDance, both of whom had to challenge deep-seated assumptions about their business models. The situation turned out to be a win-win for both companies and a boon to Chinese citizens. By adapting its operating model, ByteDance managed to significantly increase its userbase, gain additional revenues and entertain users who were otherwise trapped in their homes. By acting quickly and pursuing an unorthodox approach to content distribution, Huanxi covered its development costs and reached a larger audience than it otherwise would have managed. The crisis, however, has led to some significant opportunities. The Wuhan coronavirus has negatively impacted millions of people in China, many more than the 40,000+ infected so far. Not surprisingly, the Chinese film studio and theatre association has complained bitterly about the approach, saying it is “destroying China’s cinema industry” by giving away the content for free. This has led to a massive increase in users – a key growth benchmark for digital giants. EPA-EFE/WU HONGīuilding on the success, ByteDance has started to release other Huanxi titles on its streaming platforms. Not only did the movie gain a huge following, it led to a flood of positive sentiment from Chinese citizens who were frustrated about not being able to leave their homes during the outbreak.Ĭlosed cinema in Beijing, January 2020. Just two days later, Lost in Russia was released on ByteDance platforms and racked up an astonishing 600 million views.
In return, it would pay Huanxi RMD630 million (US$91 million) and give Huanxi a share of the advertising revenues. ByteDance would get exclusive access to Lost in Russia along with a portfolio of other Huanxi movies and TV shows to livestream across its platforms. Chinese digital giants Alibaba or Tencent might have been more obvious partners, except that both owned competing movie studios.Īre you in danger of catching the coronavirus? 5 questions answeredīyteDance, however, proved open to discussions and the two companies started negotiations. Lost In Russia, by contrast, was over two hours long. TikTok, for instance, caps videos at 15 seconds. The company’s video streaming sites tend to focus on short form, user-generated content. Despite the fact that ByteDance boasted hundreds of millions of daily active users, it was not an obvious partner.
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