Huanxi Media CEO on Launching High-End Streaming Service, Plans to Team With Hollywood
Steven Xiang discusses signing China's most prominent directors, his transition from attorney to film exec, and his thoughts on a coming so-called "cold winter" in the Chinese movie business.
Serving as the CEO of powerhouse Chinese film studio Huanxi Media is Steven Xiang’s second high-flying career. Before jumping into the movie business, Xiang, 56, was a managing partner at the prestigious U.S. law firm Weil Gotshal & Manges, where he took the lead on some of the most notable U.S.-China deals of the past two decades. But it was Chinese billionaire Jack Ma’s decision to buy a movie studio that ultimately lured Xiang away from the law and into show business itself.
Xiang represented the Hong Kong film studio ChinaVision Media when it was acquired by Ma’s e-commerce giant Alibaba Group for $805 million in 2014 (the company was later renamed Alibaba Pictures). ChinaVision Media’s founder and chairman was Hong Kong film veteran Dong Ping, co-producer of Ang Lee’s multiple Oscar winner Crouching Tiger, Hidden Dragon.
Dong exited Alibaba Pictures not long after the transaction closed and quickly got to work on building a new entertainment company. One of his first moves was to recruit his star attorney, Xiang, by now a friend, to lead the new studio as CEO. Huanxi Media was founded the next year, after Xiang helped orchestrate the acquisition of a listed entity on the Hong Kong stock exchange to accelerate the studio’s growth. The partners then rolled out an innovative new business model: They corralled a sizable cohort of China’s most renowned directors — including Zhang Yimou, Wong Kar Wai, Ning Hao (Breakup Buddies, 2014, $188 million), Xu Zheng, Peter Chan and Jia Zhangke — and gave them equity in the company or plush deals in exchange for the exclusive rights to produce their new work.
The pedigrees of these filmmaker partners has helped Huanxi hit the ground running: Its releases so far include Jia's Cannes competition entry Ash is Purest White; last summer’s social dramedy blockbuster Dying to Survive ($451 million), and this year’s Chinese New Year hit, Crazy Alien ($328 million and counting), directed by Ning.
On the opposite end of the film industrial chain, Huanxi launched a direct-to-consumer streaming platform in China named Huanxi Premium. The service, envisioned as China’s first HBO-like destination for ultra-high-end original content, will be the exclusive online destination for the films and series created by the studio's A-list stable of directorial talent.
The company hit its first road bump at the Berlin International Film Festival in February, however, when its much-anticipated Zhang Yimou-directed competition entry One Second was pulled from the event on the eve of its premiere because of censorship issues at home in Beijing. The fate of the film remains uncertain.
Huanxi has maintained its momentum though. Just days after its troubles in Germany, the company announced an exclusive two-picture deal with Wang Xiaoshuai, the Chinese director whose latest drama So Long, My Son won Berlin's silver bears for best actor and best actress. The company then unveiled a $50 million strategic investment from Chinese ticketing giant Maoyan, and announced its next tentpole film project, Lost in Russia, the third installment of Xu Zheng's multi-hundred-million-dollar-grossing Lost In franchise.
THR connected with Xiang for a conversation at his Hong Kong offices about Huanxi's bold strategy to corner the Chinese box office, and its more niche ambitions online.
What was the transition from attorney to film executive like for you?
Well, regarding business operations, I spend a lot of time assessing and executing transactions, which is very familiar to me from my background in mergers and acquisitions. For creative decision-making, we have what we call our artistic guidance committee, which is an advisory committee that consists of most of our top-tier directors, including Ning Hao, Wong Kar Wai, Peter Chan, Zhang Yimou and others. When we are assessing projects and facing creative decisions, they give invaluable advice to Mr. Ping and me, as well as our whole management team and board. In that sense, I have had some of the very best creative minds in the Chinese film business by my side.
How has Huanxi managed to build business relationships with so many of China’s top directors?
To understand why we did what we did, with respect to our alliance with top-tier directors, you need to understand how the content-creation business in China differs slightly from Hollywood and perhaps Europe. In the West, the producer usually plays the bigger role in putting different elements of projects together, while the director tends to focus more on the artistic side. In China, that system never really took off, so directors play a disproportionately larger role, functioning as the artistic head, as well as the commercial operational chief of the project.
In other words, if you have an A-list director working with you and on your side, giving you the opportunity to invest in their project, that in and of itself is a valuable commodity in China. Understanding that, we felt it was quite important for us to align our interests with the interests of China’s best movie directors. So at the very outset, we offered shares and equity in the company to China’s best directors in exchange for exclusive rights to invest in their work during certain periods, usually six years or longer. I don’t think anybody has done this before in Asia. It’s almost like the DreamWorks arrangement when it was first founded in the U.S., but we are just doing it at a much larger scale.
The streaming sector is wildly competitive, both in China and overseas, with some powerful entrenched players in place. What is your strategy for Huanxi Premium?
We think there is still huge opportunity for a more curated version of a streaming service. For that, we are doing the following things that are different from the established services: Number one, we don’t want to provide every piece of content to all people. We want to offer the best possible high-quality content to a more educated segment of the Chinese market, and present it in a highly curated, easy to use, careful and clear way, without ads. No one has done this yet, and China needs a service like that. This includes content that we ourselves produce ... But we’re also acquiring content. Secondly, we’ve introduced a fairly flexible pricing scheme and interface. The service has the option of a monthly membership or a transaction model. Given how fast the paid subscription business is growing in China, and the scale of the market, we think there is still sufficient demand for a really easy-to-use curated offering where users can go for the highest-quality content.
What has your growth been like so far?
We are certainly growing. We launched with an official test run in September 2018, and within a short time we have signed up over a million registered users. Some of our films, including Ash Is Purest White, have already achieved over 300,000 paid views through our transactional model.
Does premium U.S. and European content have a place in your content mix or is it more high-end Chinese film and series? Will you be acquiring in Berlin?
Absolutely, for example, we recently licensed Julian Schnabel’s At Eternity’s Gate and the German film Never Look Away, which is nominated for an Oscar in the foreign-language category.
Traditionally, the major studios have benefited from the growth of China’s market most, because tentpole content is so popular there. I think a lot of independent studios and producers of art-house films or midbudget prestige projects have often wondered when there will be a place for them in the China market, when they can participate in the Chinese film boom. As a premium platform, it sounds like you might be opening the door to them.
Yes, I think we are actually ideally situated to do that. Because of the quota system, the blockbuster, tentpole-type foreign films have traditionally benefitted most. Since only so many films were let in, those with the most commercial potential took precedence. Of course, we are subject to the Chinese government’s licensing requirements, but our model is about building a service around this underdeveloped market for premium, prestige content, so we are definitely looking to partner with the kind of producers you described. And there still aren’t a lot of places that are showcasing their work in China, as much as everything has already grown.
I understand that some of the renowned Chinese filmmakers you are aligned with are also going to be making some series for the first time for Huanxi?
Yes, many of our deals with the directors are for series as well as movies. Wong Kar Wai is planning a 12-episode series that we hope will go into production in the first half of this year. Under our arrangement with Zhang Yimou, he has agreed to make an internet drama series for us. That will be his next project after One Second, which is opening in Berlin. It’s going to be a really exciting series for our service.
Many of these names — Jia Zhangke, Zhang Yimou, Wong Kar-Wai — are among the most globally famous Chinese-language filmmakers. Do you retain the international rights to their work under your partnership deals?
Yes, on the projects that they have agreed to make for us, our rights are global.
With these big, internationally accessible names in your stable, are you also looking to co-produce with Hollywood?
Definitely. Over the past couple of years, we spent a lot of time just getting our first projects off the ground here in China. The results have been quite positive, with both commercial and critical successes. But now we would like to start having more conversations with our potential partners in the U.S. and Hollywood. We can offer a nice curated platform for their content to be distributed in China or we can be a high-quality producer of Chinese content for their platforms. As you said, some of our directors are quite international — their new films and series will obviously be of interest to global streaming companies. Also, there haven’t been many attempts at co-productions in the online series space, which could be interesting to explore together. We are keenly interested in seeing whether some of those projects can be done in conjunction with a partner in the U.S.
There has been a lot of talk in the Chinese movie business about a coming so-called “cold winter,” caused by last year’s tax crackdown and capital flight from the film industry. This has been accompanied by a slowing of overall growth in the Chinese economy. How do you assess the current climate?
I’ll address the macro question first. We don’t see it as a problem, because people still go to the movies when the economy is bad — it’s a cheaper form of entertainment, so it may even become more appealing in such a climate. The negative impact of the economy is primarily being driven by the U.S. and China trade relationship, and our business is still very much driven by domestic consumption, rather than overseas sales, so we don’t anticipate any major impact.
What about the “cold winter” and tax crackdown repercussions?
The tax issue and capital problems have had the most impact on companies and movies that originally were not top-tier. I wouldn’t expect to see A-list directors and talent having any difficulty funding their projects. In a sense, it’s actually a good thing that the investment craze, so to speak, in our movie business is dying down a little bit. More sensible people who actually know how to distinguish high-quality projects are doing the investment in a more rational way. We are actually glad that some of the investment in the business has normalized.
This story first appeared in The Hollywood Reporter's Feb. 10 daily issue at the Berlin Film Festival.