CFI Interview: Rong Chen, CEO of Perfect World Pictures USA

This interview was conducted in Chinese by Vivian Ying and translated into English by Audrey Siegel.

Rong Chen is the Senior Vice President of the Perfect World Company and CEO of Perfect World Pictures (USA). Perfect World Pictures is a leading entertainment company in China, engaging in the production, distribution, and marketing of high-quality film and television content, advertising and merchandising businesses, as well as talent management. Aside from Chinese-language films, Perfect World Pictures is also one of the most active marketers of foreign films in China, having brought films such as Ghost Rider 2, The Last Stand, Ender’s Game, Rush, and the Divergent franchise into the Chinese market. At the recent Los Angeles Chinese Film Festival, CFI spoke with Rong Chen on entertainment industry trends, Perfect World Pictures’ content strategies, doing business with Hollywood, and more.

You’ve worked in both China and the U.S. Can you tell us more about your work experience? What advantages has your overseas working experience brought you?

After living and working in the US, then coming back to China to live and work, I think you get a better understanding of the two countries’ cultures. This gives you a good advantage in cross-border deals. In this past year, there have been many collaborative attempts between China and Hollywood, but the fact is there is a great cultural difference, and that affects the deal.

Perfect World is an international company. Many of our executives have experience in working and living outside of China. Even those who’ve stayed in China have work experience in multinational companies. Thus overall, the company is able to work cohesively with foreign counterparts.

Our businesses are also international. A significant portion of Perfect World’s income comes from overseas. After Perfect World Pictures went public in 2014, it has been constantly implementing measures to become international.

In today’s panel you mentioned that when searching for a good partner, there are many standards. Can you share in detail of what they are?

In the panel I discussed about co-productions, I’ll share what I didn’t get into. In these past years, some people would say they know some people in the film industry in the US and have connections with Chinese film companies, they’d then gather these people together and start a project. This is not the order of how things should be done.

In creative work, the first priority should be focused on the story, then determining where the market is, and if it’s a project fit for the Chinese market only or if it can go global. Next is knowing what kind of partners you need in order to make the project into a film, and how these partners bring value. So the previously mentioned procedure should be reversed. Only when you clearly know what you need to do, then can you know what kind of people you need assistance from. After that, is assessing whether these people are reliable, credible, have common understandings as you do and can pleasantly work together with you. The premise of all of this is that you must know what you are trying to create.

Perfect World has a long-term partnership with one of Hollywood’s Big Six, Universal Pictures, and has an investment deal with Universal Pictures by film slate, which typically brings in stable income. Such film lineups include major IPs and Oscar-winning films such as Darkest Hour and Phantom Thread. You mention that Perfect World has two companies in the United States. Can you tell us more about them?

We’ve actually always had a team of hundreds of staff in North America for gaming operations, but we also have two companies for film.

The first company is called Perfect Universe Investment, which takes the “Perfect” from Perfect World and “Universe” from Universal Studios and acts as an entity in service of Perfect World Pictures and Universal Pictures’ five-year 50 films collaboration deal. These films will be imported into China on a revenue-sharing basis. Darkest Hour and Phantom Thread are two of them.

The second is the North American company branch called Perfect World Pictures USA, which has the purpose of developing and producing film content.

In previous interviews you’ve talked about the company’s strategy in connecting with people in the industry to see if long-term partnerships could be established in order to reach a goal of fostering diversified development overseas. Why is your focus outside of China? Why do you seek to expand influence overseas?

To a certain extent, in terms of exporting Chinese TV series, we’re still in a preliminary phase. There will be potential for Chinese TV to grow, especially when you compare it with Korean TV series. There’s also a market acceptance factor for Chinese TV series. It doesn’t mean people will surely watch your shows if you release them. This has to do with our content production, marketing and internationalization. We have to see if we can meet the expectations of the overseas audience. We and our domestic counterparts are still working on this step by step.

Many of Perfect World’s TV series have been exported to Southeast Asia, Africa as well as many other countries and regions. Are these shows mainly targeted towards the Chinese living abroad or the locals?

Both. Any content producer hopes their product could be exposed to more people.

Nowadays, online streaming has become an important way of how young people watch movies. How will Perfect World Pictures face this challenge? Will you provide streaming media services? Or stick to bringing viewers into theatres?

Streaming media has given people more ways to watch movies. In the future, movies that will show in theatres will have higher standards to meet because there are relatively cheaper and convenient ways to watch movies. In North America, on average, it takes four hours, including travel time, and ten dollars to watch a movie. You’d only need to spend a quarter of that cost at home, two or three dollars for pay per view, and only time actually watching the movie. Since there are so many alternative ways to watching movies, it’s going to be harder for films to get theatrical release.

So you’re not opposed to streaming, you just require more when it comes to films intended for theatrical release and expect them to be more dramatized.

We call them event films. Like Crazy Rich Asians. Is it watching a movie? Or more like attending an event. I have nothing against streaming. Whatever way of watching a film is an act of support towards the film. It’s just a matter of how you watch it. Your business model must keep up with trends.

Does Perfect World have its own streaming channel?

We don’t have any plans to speak of just yet. Medium matters but making the content good is already priceless in itself. If you can produce good content, furthermore conclude methods that bear fruit, you would’ve found the holy grail.

Will your future content be distributed through theaters or streaming outlets?

Both. We’ll make theatrical films and internet films.

Another aspect Perfect World stands out for is linking games and movies. Can you tell us a little bit about that?

What would be better than linking movies with games is linking TV series with games. Unless it’s a franchise like Harry Potter or The Lord of the Rings, which have a series of movies and their theatrical releases were carefully planned to one distribution every other year or one every one and a half year, a movie’s cycle of market impact can’t compare with that of a game. Our game’s market influence cycle lasts ten years. TV series are a whole different story. For example, Game of Thrones has many seasons and each season has ten to twelve episodes. This kind of cycle coincides better with that of video games. A movie’s market influence usually can’t sustain that many years. A trilogy may be able to, but it’s still rare.

Today, there’s competition between games and movies. Interactive games are fiercely developing and gaining momentum. How will movies survive? For example, Spielberg’s Ready Player One; some people say that it represents a victory for the game, but an end for the film.

I don’t think we should judge the whole environment just by looking at one case. Film and gaming each have their own respective customer base. I don’t believe either movies, TV shows, or games will become obsolete. I don’t even think people will ever stop going to movie theatres to watch movies. At least not in my lifetime, I have confidence that all kinds of mediums will co-exist. It doesn’t mean that when you can watch a movie at home, you won’t go to the theatres to watch one. It’s just a matter of what you’re watching.

I’m very interested in how you define a “commercial film”. In terms of film production and investment, Perfect World Pictures has not only brought us romantic, martial arts films, schoolyard films, modern time dramas and criminal investigation films, but has also invested in arthouse films such as the Piano in the Factory and Angels Wear White. Can you tell us what standards Perfect World has when it comes to selecting projects? And what is a good business model for arthouse films?

The reason why I say a film isn’t either an arthouse film or commercial film is because what we all need to consider are two things: the potential market capacity of a movie and the cost of production. As long as there is a market capacity that can potentially bear profit to cover the production expenses of a movie, from a businessman’s point of view, it is a commercial film. Even if only 2 million people go see the movie, each person paying 10 dollars, generating 20 million dollars in box office revenue, and your production cost is $5 million, like Get out, and you spend $1 million on prints and advertising, you still profit.

Films with smaller audiences maybe not be suitable for theatrical release and won’t get one. The DVD market may have been replaced by streaming media. There used to be films that didn’t go to the theatres and ended up directly going to DVD, like how now some films are directly distributed through Netflix. It’s simple logic, even if a movie doesn’t have a wide span of audience, and has a low production cost, the advertising and theatrical distribution expenses won’t be less because the film has a smaller audience. It would still be displayed on at least 2000 screens. Promotional expenses aren’t affected.

At the panel, someone mentioned that the Chinese and overseas market have different preferences when it comes to content. For example, romantic love stories don’t sell in China but do in English speaking regions. How do you view this difference?

This has to do with language. English language films with loads of dialogue don’t have barriers in English speaking countries, but they’re hard to sell in other places. Comedy relies on language and humor doesn’t travel. When we brought Love is Not Blind to screen in Okinawa, I wanted to watch it with the Japanese audience even though I’ve seen it many times. No one laughed within the first half hour. In China, people would have laughed 15 times already.

And that’s why you sit in movies theatres with the audience, to investigate.

It’s extremely important to do so.

Thank you for your time!

Thank you.