CHINA LIT New Year Internal Letter Exposed

Author | Huang Yu

Editor | Zhou Zhiyu

In the past year, Tencent's subsidiary, CHINA LIT, has welcomed a "year of explosive hits," receiving recognition from Ma Huateng at the recent Tencent Group annual meeting.

According to Wall Street News, on January 23, CHINA LIT CEO and President Hou Xiaonan issued a New Year internal letter to all employees, reflecting on the development of CHINA LIT in 2024 and thoughts on future strategies.

Hou Xiaonan stated that 2024 is a year of harvest for CHINA LIT, achieving comprehensive breakthroughs in the author ecosystem, hit works, product platforms, IP industry chain, and brand influence.

Authors and works are the core competitiveness of CHINA LIT. The internal letter shows that in 2024, the growth of new authors and new books on the CHINA LIT platform is impressive, with a more than 70% increase in new authors earning over 500,000 yuan annually.

At the same time, hit new works such as "Genius Club," "Night Without Borders," "The Peace Order," and "The Corpse Hunter" continue to emerge. In 2024, the number of new books with 50,000 subscriptions on CHINA LIT increased by 50% year-on-year, and new books with annual revenues exceeding one million yuan grew by 14% year-on-year.

High-quality content has also driven the performance growth of products and platforms. Hou Xiaonan revealed that starting in 2024, the DAU of Qidian Reading reached a new high, and the membership revenue of QQ Reading also increased by 40% year-on-year.

As a comprehensive cultural industry group based on digital reading and focused on IP cultivation and development, CHINA LIT encompasses multiple platforms including QQ Reading, Qidian Reading, New Classics Media, and Tencent Animation.

CHINA LIT's financial report shows that in the first half of last year, it achieved revenue of 4.191 billion yuan, a year-on-year increase of 28%, exceeding market expectations, with significant growth in operating profit and net profit, increasing by 46% and 34% year-on-year, respectively.

Thanks to the excellent performance over the past year, Tencent's PCG (Platform and Content Group), which faced pressure at last year's employee meeting, also received recognition at the recent Tencent employee meeting.

Ma Huateng stated that PCG includes TME, CHINA LIT, Huya, and others, saying, "All businesses have surfaced." He expressed that the company is very firm in its positioning: "Creating high-quality content is our strength."

As the "IP king," 2024 marks an undisputed "year of explosive hits" for CHINA LIT, with several of its film and television works topping annual charts beyond literature.

Especially in the film and television sector, from "Hot and Spicy" to "With the Phoenix," "Celebrating More Years Season 2," and "The Story of Roses," the series and movies produced by CHINA LIT have almost monopolized the domestic box office champion for 2024 and the Top 5 online broadcast volume for domestic series in 2024.

In addition, facing the increasingly popular short drama industry, CHINA LIT has also begun to test the waters, launching over 50 short dramas in the past year, including hits like "Ding! My Rich Husband is Online," "Dragon Emperor of Ten Thousand Ways," and "You Are My Love That I Can't Forget," collaborating with the industry to create a high-quality short drama ecosystem.

In the letter, Hou Xiaonan stated that driven by high-quality hits, CHINA LIT has achieved comprehensive breakthroughs in the construction of the IP industry chain. On one hand, it has realized the full industry chain linkage of books, films, and merchandise. At the beginning of the year, CHINA LIT established the largest IP linkage project team around "Celebrating More Years Season 2," connecting the internal and external industry chains from film and television to literature, derivatives, cards, licensing, games, and short dramas On the other hand, the commercialization of IP is reaching a new level. Hou Xiaonan revealed that as of November 2024, the revenue from the derivative business of China Literature has reached 2.5 times that of the same period in 2023. With the hot sales of card games such as "Qing Yu Nian," "Yu Feng Xing," and "Quan Zhi Gao Shou," the GMV of the card business has reached approximately 100 million yuan in the first half of the year.

In terms of licensing cooperation, China Literature has also performed well. Since last year, several popular female-oriented dramas such as "Mo Yu Yun Jian," "Jiu Chong Zi," and "Guo Se Fang Hua" have been adapted from China Literature's IP. In the gaming sector, China Literature has launched a series of collaborations including "Fox Demon Little Red Bride" with "Honor of Kings," "Dao Gui Yi Xian" with "New Qian Nv You Hun," and "Da Feng Da Geng Ren" with "Peace Elite."

Amid the new wave of Chinese companies going global, China Literature has not been absent, and Hou Xiaonan has mentioned globalization multiple times in an internal letter a year ago.

Against this backdrop, in 2024, China Literature's internationalization efforts have been frequent, successively cooperating with the Switzerland National Tourism Board, Singapore Tourism Board, and the British Library. From the Global Chinese IP Gala held in Singapore at the beginning of the year to the New Year's music carnival at the end of the year, as well as the recently announced IP market, Hou Xiaonan stated that they will explore more diverse IP experiences and business models in the international market.

It is reported that last year, China Literature achieved significant growth in the scale of online literature going overseas, overseas original content, and platform users, and experienced rapid growth in small language markets with the help of AIGC.

In 2025, China Literature will celebrate its tenth anniversary. Hou Xiaonan proposed that in 2025, the focus will be on three aspects: first, to uphold high-quality content and build new peaks on the plateau. Second, to actively embrace IP commercialization and explore new experiences and new scenarios. Third, to fully embrace globalization and recreate a China Literature overseas.

It is worth mentioning that this is the first time China Literature has proposed "IP commercialization" as a key direction for the group.

Hou Xiaonan believes that the global derivative market has reached a scale of 300 billion USD, and the commercialization of China Literature's IP has just begun, with broad prospects both online and offline.

In Hou Xiaonan's view, IP is reshaping the cultural consumption of young people globally. The valuation of emotions and experiences is increasing. "We need to further think about the infinite possibilities of 'playing' with more users through IP, exploring opportunities for IP in various areas such as agriculture, offline experiences, cultural tourism, and VR/XR, and promoting the comprehensive integration of IP into the cultural industry."

In addition, globalization remains a strategic priority. Hou Xiaonan emphasized: "2025 will be a year of accelerated implementation of China Literature's globalization strategy. We have the opportunity to replicate China Literature's leading industrial model in the global market."

Facing a broader global stage, China Literature is building an ecosystem from IP farms to IP factories, and then to IP amusement parks, constructing an industrial chain from "Chinese IP to global IP," which is China Literature's long-term endeavor