Disruption in the Chinese Anime Industry - One Giant "Anime Comics Fun" Falls, While "Half Dimension" Rises (UPDATE)

There was two big shifts in the 2D Culture market this week, that could potentially shake up one of the hottest growing sectors in Chinaland.

AcFun being shutdown, possibly for good, and Toutiao acquiring Half Dimension; one of the biggest moves yet in the 2D Culture space.

• "I really want to live another 500 years."

AcFun posted this last week after the site went down - yet again- and rumors persist that they have not paid employees since October of 2017, and their lease on the Alibaba-owned server is up. With no ability to pay in sight.

The ACGN - Anime, Comics, Games, & Light Novels - is one of the fastest growing Cultural Industries in China, but one that is overlooked and misunderstood by Western investors and companies. As "2D Culture" the localized form of ACGN, is the next frontier for Generation Z consumers in Pan Entertainment.

In June of last year, AcFun or A Zhan (Station), as its fans call it, was temporally shutdown, and fined 120,000RMB for failing to register its live-streaming platform, and for providing content that was "harmful for morality" in China.

This was followed by another shutdown in November, reported to be related to the issues it is facing today. Failure to make payments to Ali Cloud, its employees, etc.

AcFun - short for, "Anime Comic Fun" - was once the darling of China's 2D Culture platforms, and reigned as number one, until it was displaced by B Zhan (Station) / Bilibili Group. Who is now the dominate platform for everything 2D Culture in China.

Will AcFun survive this?

It is unclear right now, with either potential UPDATES to be added or a follow-up article to come, as there is just not enough information to gather and read; the proverbial tea leaves. That make up AcFun's turbulent 11 year history, and it's future in the 2D Culture market.

It was said that Alibaba, who hosts the platform on its Ali Cloud server, has been in talks to purchase A Station outright, but nothing has seemed to come of it. Since AcFun is currently down from the Ali Cloud.

As of February of 2018 Alibaba now holds stakes, or strategic partnerships, in every major entertainment / film company there is in China. AcFun would be just another part of this growing empire, but unlike Tencent, Alibaba's strategy seems more to spread its investments and capital. Across a large pool, betting on one big fish to emerge.

While Tencent's strategy, including purchasing a stake in AcFun's rival, Bilibili Group, is more inline with its Vertical Integration of becoming the unrivaled IP Powerhouse of China. Resulting in Alibaba possibly passing on an AcFun acquisition, due to the high risk it may represent.

There is also one other piece of the puzzle that has dropped this week, along with AcFun's potential disappearing act gone bad. That being the news of China's top news aggregation site Toutiao, or as we know it here in the West, Bytedance, taking full ownership of the anime community platform, Half Dimension.

Jinri Toutiao purchased Half Dimension, via its subsidiary Beijing Shanxing, and is said to be looking to purchase other ACGN platforms. To take on, not only Bilibili, but video platforms; Youku Tudou, Tencent Video, and iQiyi - the "Netflix of China" itself.

How much of a rival will Toutiao's "Half Dimension" be to Tencent's "B Station"? Maybe not too much, as even though the information at hand is fragmented. It appears that Toutiao may not directly be setting itself up to compete with Bilibili Group, but possibly more with BAT itself - Baidu / Alibaba / Tencent.

As this is not the only major news coming out of Toutiao / Bytedance this week, with Toutiao and BuzzFeed partnering to host BuzzFeed videos on Toutiao's news aggregation site in China.

2D Culture is a booming Cultural Industry in China, and for AcFun to completely disappear, as its one of the oldest named brands in the ACGN game. Would be surprising, but who will be its Kingmaker; Alibaba? Tencent? Toutiao? Some Company You NEVER Heard Of! Or, will A Station just go the way of the dodo bird....

We shall probably know in the coming weeks. Stay tuned China Watchers - Same Bianfu profile, Same Bianfu publishing!

UPDATE: After 11-days "hiatus" AcFun returns with no explanation for, yet-again, being down. This time handing out Red Envelopes (as it is the Chinese Lunar New Year) to its subscribers. Has AcFun found a Kingmaker, or is it like Former Chairman & CEO JYT's EV start-up Faraday Future and just potentially has a lifeline?

More news surely to come!

Ryan Carroll is an Asian Emerging Markets Consultant, who specializes in; China Film & Entertainment, Developing IP & Shared Universes, for cross-pollination & licensing across all platforms.

Ryan has direct Executive Consulting experience with partners in a range of entertainment & media fields in; India, Norway, China and the United Arab Eremites.

For IP, Ryan focuses on the emerging markets worldwide, and emerging female, minority, disabled, and overlooked cultural demographics.