Zongbo Media takes aim at new channels

By targeting China''s blog community, founder Chen Weiming could be revolutionizing the film industry.

Sometimes you encounter an entrepreneur with a business model that is so wacky it puts all the earnest attempts by other business people you have met so far into the shade. One such is Chen Weiming, the short, cherubic president of Zongbo Media Co (the Chinese name for the company is composed of the characters for 'middle' and 'knowledge'.) Dressed in a colourful sports shirt, tan trousers and sockless in his leather moccasins (unheard of in China!) Chen comes across as self-effacing and soft spoken.

He is a native of Hunan and attended university in the pretty and dynamic coastal city of Xiamen. "Hunan is a very traditional province. Many people become academics or join the army. It is a province where Chinese culture is highly prized," he says.

While he is interested in business, his upbringing in an environment which reverences the arts led him to entering the film industry. Originally, he set up a terrestrial sports channel in Dalian, making money the old fashioned way by selling advertising against content.

He turned out to be so good at it that the company was re-possessed by the government.

This was a classic case of Chinese regulatory risk. The thick grey band covering so much of China's economic activities is a brilliant device by bureaucrats: Since the area is grey, it is by definition easy to retrospectively indict the founder and take over a successful businesses.

The grey area means that entrepreneurs are always vulnerable to a government crack down , meaning they live under the sword of Damocles, and ensuring a great deal of servility towards the government. The company, naturally, is located closed to the high-tech, education nexus of Beijing's Zhongguancun.

But what a relief not to walk into another cold and grimy office, denuded of furniture and knickknacks, so esteemed by most of the capital's engineers. Instead, Chen's office is set within a four-storied flat, dominated by a winding, rather rickety wooden staircase. The four floors are crammed with posters, traditional Chinese art work (including a conspicuously placed god of wealth) and photos of Chen and his guests.

The posters provide a clue as to the function of the company. Mainly of famous films, including Korean, Japanese and Taiwanese imports, they reflect that Zongbo, which had revenues of $5 million last year, is currently a distributor of films both in and out of China, as well as supplier of film and drama content.

Zongbo was a co-investor in one of the splashiest films of the year, House of Flying Daggers, for instance, and helped distribute it in Korea. Zongbo has far more ambitious plans for the future, and they include making a commercial bet on the numerous forms of new media that have blossomed in the past few years, including 'blogs'.

China has also fallen victim to the blog craze, whereby attention-hungry individuals put their thoughts onto a publicly accessible website. The biggest blog ring in China is China Blog, and this has become the focus of Chen's efforts to change his company into a 'new media' company.

"The great advantage of blogs is that they are so 'sticky'," he says. "Blog writers always come back to the Internet to check their writing and the comments left by others. So we are trying to tap into that."

The plan is a cunning one. Chen intends to use the blog ring as a detonator to a wider explosion. It works by exploiting the stickiness and interactivity of blogs.

The first step is making a series of three minute films and launching them at the blog ring, where they can be downloaded for three to four Rmb ($0.50 cents - one twentieth of the price in the US). The films will also be distributed to mobile phone users; however in the early stage, it is the blog ring that will create the necessary buzz for the shorts to spill over into the mass market.

The next step is exploiting the interactivity of the medium. All the films will be perfect minis. Like carefully crafted short stories they will be perfect unto themselves.

However, they will also have the potential to be turned into 90 minute films. Bloggers who download them will be encouraged to comment, criticize and change the films on the China Blog forum.

The best ideas will be taken up by Zongbo and incorporated into new versions of the film. By the equivalent of viral marketing, Chen hopes that these films will become fashionable, reach a 'tipping point' and fan out to China's novelty addicted youth markets.

The convergence of technologies will play an important role in this process. Already in Europe, 'moblogging' or blogging from your mobile phone is a widespread phenomenon.

Once moblogging takes off in China, "we expect to put China's hundreds of millions of mobile phone to good use. People will be updating their blogs and downloading our shorts, all the while making comments and using online tool to make their own contributions.

We believe the shorts we will be making with famous directors and beautiful actresses will be perfect for downloading during the many moments of downtime that city dwellers face," he says.

It is the very act of making or suggesting a change to the films that will raise the profile of the films amongst the fashionable and youthful segment of China's mobile phone market, he concludes. That will then be turned into a revenue earner when millions of people download the films based on the comments of the blogging community.

The operation will have another bonus, one that could revolutionize the art and industry of film making, reckons Chen.

"Usually when you make a film it is a huge gamble. However commercial you try to make it, only great film makers are able to gauge what the public wants and to combine that instinct with first rate film making skills," says Chen.

But Chen will be able to recruit leading film companies to contribute to the making of the shorts, because they will get invaluable feedback from the online community. That could prevent expensive flops ever appearing and ensure that the risks inherent in presenting a film to the public is diminished.

There are a few flies in the ointment. While Chen definitely has first mover advantage, he could be ahead of his time. Although Hong Kong, Korea and Japan have third generation phone networks with sufficient bandwith for video that is certainly not the case for China.

3G is a contentious topic, given China's much lower levels of personal wealth; however the government seems keen, in principle, to rollout a 3G network which will initially add capacity to old-style voice data services for China's booming conventional market.

Chen explains out that 3G would be ideal for popularizing video services, but that intermediate technologies, 2.5G or 2.75G such as GPRS, are adequate for such services.

"I'm realistic. At the moment we're a traditional media company. There are plenty of obstacles, but I think we will be well placed for the future," he says, adding that the first shorts will be released on the China Blog ring at the end of the month.

Investors would seem to agree with him. IDG, surely the most ubiquitous VC investor in China, has made a minority investment, alongside a partner of IDG who has put in his own money. Chen is still the majority shareholder, however.

Nevertheless, the fact that China Mobile refuses to offer video services is telling - they are short of bandwith and do not want to compromise voice quality. China Unicom has launched video services, but the company is plagues by running two incompatible networks as well as rumours that it will be broken up.

There are also few service providers who are interested in video. Tomonline is such a service providers, but is not interested in marketing and selling Zongbo's shorts to its customers. (Tomonline is the biggest supplier of SMS services in China.)

Of the five main service providers, only one has agreed to sell video to its online customers. Zongbo will commit itself to make a new short every seventy days, which the service provider will then market through their own channels in addition to Zongbo's.

It will be interesting to see whether Chen's vision will surge ahead based on first mover advantage, or fail as a result of the being ahead of his time. In any case, for Chen it will have been an exciting ride through modern Chinese culture and technology.