When U.K.-based Fremantle pulled the plug on its mainland China production unit in September, lots of well-worn lines from a battle-weary industry about restrictions, regulations, shifting sands and a badass set of other challenges resurfaced.

Those may well be part of the reason behind Fremantle’s decision to redirect its China business away from production towards a pure licensing model. Whatever, the end result is a re-org of goals and resources, much like the restructure that replaced the regional production business out of Singapore in 2015 with a licensing model.

If there’s a switch in approach, Fremantle denies taking its eye off China. “We continue to see China as an important market and remain committed to working with local broadcasters and partners,” the company said in mid-September, confirming the exit of China chief executive, Vivian Yin.

Fremantle only cited “a number of market factors” in its response to questions about the reasons behind the shift in direction.

“Following a review of the way Fremantle operates in China and, due to a number of market factors, we have taken the decision that China will no longer be a production territory but will focus on operating as a licensing territory,” the company said.

The mainland China formats business now comes under Singapore-based general manager/executive vice president for Asia, Ganesh Rajaram, who heads to Mipcom in Cannes this month with China formats licensing on his agenda for the first time.

Previously with Star China, Yin joined Fremantle as chief executive for China in mid-2015, reporting to Asia managing director, Paul O’Hanlon, who left shortly afterwards as part of the regional restructure. Yin exits officially at the end of November but is believed to have wound down her involvement already.

Rajaram has been responsible for finished tape licensing for China for 15 years, riding the rise of broadcast and streaming giants with shows such as American idol, America’s Got Talent, Britain’s Got Talent and premium dramas such as American Gods, My Brilliant Friend and Picnic at Hanging Rock.

The China decision leaves Fremantle with three production centres in Asia-Pacific – Australia, Indonesia and India – under Chris Oliver-Taylor in Sydney, and coincides with the company’s focus on high-end drama production out of Indonesia

This too marks a change in Fremantle’s strategy in Asia, adding scripted production to what for decades was the company’s non-scripted stronghold in Asia and home of some of Asia’s longest-running adaptations. Family Feud Indonesia (Family 100 Indonesia), for instance, is currently in season 23. In another example, Indonesian Idol season 10 debuts this month and runs to February 2020.

The focus on Indonesia makes sense, not least because it’s ground zero of Southeast Asia’s intensifying streaming wars. While the quality of video production is ramping up rapidly, Indonesia was also one of only three formats markets in Asia that grew in the first six months of this year over last year, when it registered 19 formats.

In total, Indonesia had 22 formats on air or commissioned in the first half of this year (source: ContentAsia’s Formats Outlook, 1H 2019) – its highest first half since we started measuring in 2017. 13 of them were from Fremantle, giving the company a market share of almost 60%. Its closest competitor in Indonesia is Talpa, which has three titles.

In China, Fremantle had four of 23 formats we counted in the first half of this year – a market share of just over 17% – including the first World’s Got Talent with Hunan TV. The formats leader by volume in China is Japan’s Fuji TV, which logged seven (30%) titles, mostly scripted.

Fremantle’s decision to shutter China production comes about nine weeks after the finale of World’s Got Talent, an ambitious show with Hunan TV that, if industry sources are to be believed, was highly unlikely to have been renewed. At the same time, the show sparked off renewed interest in big-budget shiny floor shows; Shanghai Media Group, for example, is prepping a new version of China’s Got Talent.

Whatever the frustrations of pushing original content over the line in China, the reality is that the market is producing bigger, better and best programming across genres with record budgets and breathtaking scale. Much of this has been driven by mainland streamers, but broadcasters such as Hunan TV are also big spenders with ambitious goals.

Average drama series these days cost between RMB7 million/US$1 million and RMB10 million/US$1.4 million per episode to make. Excluding Netflix, that’s way more than average across the rest of the region.

It’s too soon to tell what happens next for Fremantle in China under Rajaram. But someone must have done the math.

Published in ContentAsia Issue Five 2019, 3 October 2019