Beijing Weying Technology exec Luke Xiang opens up

about why China is vastly more advanced than North America at mobile ticketing, the "disappointing" performance of 'Ghost in the Shell' and box-office fraud at Chinese cinemas. Nonexistent just five years ago, China's emergent mobile-ticketing platforms have been embraced by the country's digitally driven youth, drastically remaking the way movies are marketed and consumed in the world's second-largest entertainment market. Luke Xiang, 49, is the vp and international face of Weying, whose Wepiao ticketing service ranks among China's top three — along with Maoyan and Alibaba's Tao Piao Piao — accounting for an estimated 20 percent to 35 percent of all movie, sports and live entertainment tickets sold in the country.

Founded in 2014 by former Groupon executive and tech entrepreneur David Lim, Weying has experienced explosive growth. Valued at $2 billion last year, the service has more than 100 million users, selling an average of 1 million tickets every day. The company's vast data mining also has played a key role in helping the government combat fraud in the exhibition sector — an ongoing problem in which local theater owners artificially inflate or under-report admission figures. THR visited the multilingual Xiang (in addition to Mandarin and English, he's fluent in German and speaks some French) at Weying's Beijing headquarters to discuss his company's recently launched Los Angeles office, its plan to invest in U.S. studio tentpoles and what Hollywood can learn from China's more advanced movie ticketing and marketing landscape.

How does Weying ticketing work?

Our service is embedded within China's largest social networks — WeChat and QQ — which are both from Tencent, our partner and one of our investors. Each of these services has more than 800 million users. As the audience uses the ticketing service to engage with movie-related content, check show times and buy tickets, they generate data, which becomes the moviegoing DNA of each individual audience member. We know their moviegoing history in every detail: what kind of movies they like; what time they go to the movies — are they there on opening weekend or do they go later in the release?; whether they buy tickets at regular pricing or only with discounts; if they go to the cinema by themselves or on dates or with friends; if they are a passive viewer or an active reviewer and influencer on social media; and so on. As we capture this very detailed data from the audience and cinemas, we are able to do big data mining and analysis that informs and facilitates digital marketing and distribution in a very targeted way — and in real time.

Say you are a young guy in one of China's tier-three cities. If you show up within two or three [miles] of a cinema, and we know that you've been a fan of action movies in the past, we push a notice to you with some exciting content about what's going on at a cinema very nearby — do you want to see the latest film from Vin Diesel, one of your favorite action stars? So within 10 seconds, you can reserve and pay for a seat at the next showing. After the movie, the relationship continues when we ask you if you want to review the film and share something about it on social media. We can also push you an offer for some licensed merchandise related to the film and based on your interests, which you can buy instantly on our platform. All of these interactions generate more data.

In China, roughly 80 percent of all movie tickets are bought online, but in North America it's only about 25 percent. Why do you think we are so far behind in mobile ticketing and marketing?

It varies a lot by title in North America. If it's a Star Wars movie, more people book in advance online; but on an average film, it's usually even lower, around 15 percent. There are many people in parts of China who had a smartphone before they ever saw a movie in the cinema. So we had a unique opportunity to leapfrog legacy practices of other more developed markets. We didn't have a lot of baggage, and the whole industry was new and being built on the internet, for a very young audience. So there is a lot of innovation. In this sense, I certainly think it would be smart for U.S. compa­nies to look carefully at what's happening in China.

How much money is the U.S. film industry leaving on the table by lacking high-tech mobile ticketing platforms like China's?

That's really hard to estimate, but I would agree that there is a very large amount of value to be unlocked when the North American market can become more sophisticated with mobile ticketing and marketing. Some U.S. films are achieving greater results in China than North America now, and they are usually the ones that have worked deeply with online platforms here on marketing and promotion.

China's internet landscape — dominated by Baidu, Alibaba and Tencent — is somewhat more consolidated than North America's. Eventually, this would seem to allow for powerful efficiencies, as these internet giants get better and better at sharing and exploiting data across their vast webs of services.

Yes, in the U.S., you can't expect Amazon's video viewership data to be given to AMC and Facebook. But here, that's basically what we see happening — it's all integrated. If you think of the whole industry as an organism with artificial intelligence, the data is the blood. China's blood is flowing. As we learn to circulate it in more extensive and sophisticated ways, the whole machine will become more intelligent and efficient — improving the consumer experience and releasing more value for the whole industry.

How big of an issue is box-office fraud at Chinese cinemas?

Clearly, it was a serious problem because the Film Bureau issued a new law to punish this behavior. One of the reasons box-office cheaters have been getting caught is because platforms like ours and others have been making data available; we do this to make the industry more transparent.

Some believe ticketing services have created price distortions in the market that have hurt growth. Is that a fair argument?

Yes. Because the competing online platforms were trying to acquire users to establish this kind of online prebooking habit, they relied too heavily on subsidized pricing. Of all of the promotional tools, low pricing is the easiest to execute. The next step is using your data to really understand your users' needs. We've come to this second phase in the industry.

So the worst of the correction is over?

This year there are fewer and fewer platforms trying to acquire users with pricing and more using data to fine tune their marketing and messaging tools. Pricing is getting involved, but now you are able to direct your offers in a more targeted way to the users who are most susceptible to price, rather than just spreading discounts across the whole market like peanut butter.

It's an evolving process. There will be more upswings and more corrections, more experimentation and an ebb and flow. But that's normal for a developing market. Overall, I think we are moving in the right direction. On the data and technology side, we are evolving quickly and becoming more sophisticated with incredible speed. And with more Hollywood studios working with the Chinese industry on the content side, our production capabilities and storytelling will continue to professionalize and improve. The broad, long trends are all healthy.

Weying made its first equity investment in a U.S. studio film this year, buying a piece of Paramount's Ghost in the Shell. How would you say that went?

Well, it was a little disappointing, but that was true globally for this title. The investment was an indication of how we want to get more involved in content. When we make an equity investment, we get more access to the creative process and can exercise more control over the marketing campaign's development and the distribution plans in China. This enables us to leverage our data and resources much earlier in the process, instead of just acting as a service provider at the final step.

Do you plan to make more investments of this kind?

We've set up an office in Los Angeles, in Century City, to acquire content for China as well as to build strong, direct relationships with the studios. In the year ahead, we will make several more investments in U.S. studio films, European independents and Japanese titles. We will be diversified because that's what the Chinese marketplace has an appetite for.

Alan Zibluk – Markethive Founding Member