A poster of Ruyi's Royal Love in the Palace featuring Zhou Xun (right) and Wallace Huo (FILE) 

How can one realize the "small target of earning $15 million?" This was a question posed by Wang Jianlin, one of China's best-known billionaires, in a recent talk show. One option could be to star in a Chinese TV drama, since a lead actor's salary may take up over half of its entire budget.

Take, for example, the $22.5 million paid for two leads--actress Zhou Xun and actor Wallace Huo--in Ruyi's Royal Love in the Palace, a Chinese TV drama which has been in production in Beijing since August 23.

They're not the only ones being paid exorbitant salaries. According to Xie Xiaohu, a movie and TV drama critic, the average pay for A-list stars, such as Angelababy and Tong Dawei, for starring in a TV drama is over $6 million. This has been a point of contention in the entertainment industry for several years but it has recently come to a head as salaries ramp up.

"The prices asked by actors and actresses are insane," Xie told the New Business newspaper.

Wang Xiaotang, former chief of the Beijing-based August First Film Studio, echoed Xie's views. Wang told National Business Daily that it's unfair that a performer can earn millions of dollars while top scientists are rewarded only a fraction of that amount for their innovative work.

The high pay has also roused public attention. A recent survey conducted by China Youth Daily showed that 93.7 percent of the 3,402 respondents agreed that stars earn too much, and 59.8 percent agreed that their earnings should be capped.

Raison d'etre

Why are actors and actresses so expensive in China?

One possible explanation is the lack of performers with box office appeal. "The demand for popular actors and actresses to appear in TV dramas, films and reality shows is huge," said Shi Chuan, Vice Chairman of the Shanghai Film Association.

China produces the largest number of TV dramas in the world, according to the 2016 Global TV Industry Development Report released by the China Alliance of Radio, Film and Television on August 25. In 2015, China produced 773 TV and Internet dramas, consisting of 21,546 episodes. In other words, 59 episodes were produced every day on average last year.

Filmmaking in China is also booming. Latest figures from a film industry research report released by the China Film Association in May show that 686 films were produced in the nation in 2015.

Despite the surge in demand, the market lacks a good supply of actors and actresses, especially A-list ones. "The human resource supply in the entertainment market is polarized," wrote Zhou Tiedong, former General Manager of the Beijing New Film Association, in National Business Daily. Zhou added that investors are eagerly hunting for profits and dare not pay for films and dramas cast with newcomers. Consequently, well-known stars receive a surplus of offers and become more and more expensive.

The success of video websites is also partly to blame for the hike in prices. After more than a decade of development, China's video website market is dominated by five Internet giants: the BAT trio--Baidu, Alibaba and Tencent--as well as Sohu.com and Le.com.

At the 2016 Internet Video Summit held in Beijing in April, Xia Chen'an, CEO of entertainment company Beijing Culture, said that content is crucial to the development of video websites. To take a larger share of the market, the five giants are pumping capital into buying video content at a crazy speed. They bought 262 TV dramas in 2015, around 66.5 percent of the market in China.

Baidu's latest annual report indicates that it spent $1.15 billion in 2015 on its video subsidiary, iQIYI.com, an increase of 92.8 percent year on year. Among the costs, investment in intellectual property increased by 136 percent year on year.

And in June, Tencent and Youku Tudou Inc., Alibaba's video arm, paid $1.35 million for an episode of Ruyi's Royal Love in the Palace, the highest bid in China so far.

"The BAT trio is in a 'cold war,'" said Sun Zhonghuai, Vice CEO of Tencent, at the 2016 Internet Video Summit. In Sun's opinion, exclusive videos are like nuclear weapons for video websites. To get the upper hand, the BAT group has begun an "arms race," which has led to a vicious circle of price wars--original content as well as leading actors are becoming increasingly expensive.

"Video websites have been engaged in price wars for the past dozen years. Although it makes me feel sick, I will have to continue doing so in the coming years," said Gong Yu, CEO of iQIYI.com at the summit.

Fallout

Soaring costs have been a heavy burden on the industry. Han Zhijie, Manager of the Intellectual Property Department of V.qq.com, Tencent's video arm, disclosed that the price of funding TV dramas has skyrocketed 30-fold from five years ago.

In 2011, The Legend of Zhen Huan, a hit historical TV series directed by Zheng Xiaolong, was sold for $45,000 per episode. Four years later, The Legend of Mi Yue, another TV drama directed by the same director and with almost identical casting, was sold for $450,000 per episode. In June 2016, Ruyi's Royal Love in the Palace cost $1.35 million per episode, 30 times the price of The Legend of Zhen Huan.

"Can the industry afford such prices? That is the question we should think about," said You Xiaogang, Chairman of the China Television Drama Production Industry Association, at the 2016 China International Film and TV Programs Exhibition in Beijing on August 25.

Excessive remuneration also results in diminished budgets for other aspects of production. Sun Baoshu, a member of the Standing Committee of the National People's Congress (NPC), said at a bimonthly session of the top legislative body on August 29 that since casting takes most of the funds, producers have to cut budgets for scriptwriting, stage setting and sound recording, among other things. This consequently leads to poorer productions, which is at odds with the development of filmmaking and the growth of the film market.

Although some Chinese films may have a star-studded cast, they nonetheless suffer from poor storytelling and shooting, said Sun.

Take Ice Fantasy, for example, a TV drama which cost $600,000 per episode. It has a dazzling cast consisting of many highly paid actors, such as Feng Shaofeng and Ma Tianyu. But its viewership ratings were lower than 1 percent, and it was rated 3 points out of 10 on Douban.com, a review website.

Ways out

Gong believes that video websites should produce their own content in order to mitigate the impact of rising costs. "We should take advantage of new technologies and create video works, getting hold of the intellectual property either totally or partly."

And, video websites are working hard on self-produced dramas. The 2016 Global TV Industry Development Report shows that 379 dramas, consisting of 5,006 episodes, were produced by video websites in China in 2015, surpassing the total number of Internet dramas released in the previous eight years.

There will be no more inordinate costs in dramas and films once video websites are capable of producing and marketing all by themselves, claimed Li Zeqing, a senior entertainment marketer, in an interview with National Business Daily.

Some have called for a salary cap for actresses and actors.

"The Central Government should roll out some regulations, like adjustments in financial and tax policies, to curb performers' high pay," said You.

Chinese lawmakers on August 29 suggested that regulations limiting the fees paid to actors and actresses should be included in a draft film law currently being deliberated.

"Since movie stars' remuneration has caused a public outcry and is believed to worsen income disparities, a new law is needed," said Dong Zhongyuan, a member of the NPC Standing Committee. Dong suggested that a salary cap of 30 percent of the total production budget should be set for the cast.

But some believe that the problem should be solved by the market itself.

"This trend is a result of the market demand. Actors and actresses are innocent. I think the most important task is to shift China's growing film market toward a direction of orderly development. When the industry's general environment is in good shape, everything will be on the right track," said Jia Zhangke, a respected and admired Chinese director, at the 2016 graduation ceremony of the Shanghai Vancouver Film School on August 27.

Copyedited by Bryan Michael Galvan

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