China says it wants to open its economy to the rest of the world, but it has continued to keep a stranglehold on technology and access to media. However, right now some investors may have found opportunity after one company has snuck in under the radar.
Leaders in China have vowed to take on a more significant role in its goliath economy, and a litany of economic reforms has begun to get underway. But in many areas, the country is still rather closed off to the outside world with much of the Chinese population only seeing what the government allows them to see.
To understand this without having ever been in China, you really don’t need to look that far. Outlets like Facebook (FB) and Instagram, Netflix (NFLX) and Twitter (TWTR) plus myriad others are foreign to people in China (pun intended). One company, however, may have found a work-around and could be well positioned to benefit handsomely; Wizard World Inc. (WIZD).
But to truly understand the opportunity ahead, investors new to this arena need to understand how limited the overall market in China is to western groups. Again, Facebook is not allowed in the country.
That means no sharing, no messaging, no streaming video, and most importantly no advertising revenue to Facebook. At a time when Facebook is literally scrambling for a way to find new ways to leverage its ad platform, there’s an entire country of over 1.4 Billion people! This also goes for the previously mentioned Netflix, Twitter, or even Snapchat (SNAP) and Google (GOOGL).
Another front in Beijing’s censorship campaign is foreign digital content.
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Apple’s (AAPL) iBooks and iTunes Movies offerings and a Disney (DIS) video-streaming service have both been shut down. They appear to have clashed with new rules that need government approval for foreign companies looking to provide online content like videos, games and books.
Experts have explained that the regulations reflect what the authorities were already doing, but they are obscure, allowing officials room for interpretation. This being the case, investors are very limited when it comes to gaining exposure to the world’s most populous country in terms of entertainment stocks.
But what Wizard World just announced could signal a very real and near term opportunity that could leave big companies like Facebook, Apple, and even Disney in the rearview mirror.
In October, Wizard World Inc. (WIZD). announced a partnership with CNLive to distribute streamed content in the People’s Republic of China. To give an idea of the actual scope of this partnership and what it means for Wizard World, CNLive is one of only seven entities licensed to distribute content over the internet in the People’s Republic of China.
CNLive holds this license to distribute content via mobile and IP-enabled devices nationwide. The main enterprise of CNLive is the distribution of content to internet-connected mobile devices. The channel programmed by Wizard World China will be the first English language channel carried by It is estimated that the Wizard Channel could aggregate an audience of up to six million viewers a day.
The Barrier To Entry Into Content Distribution In China Is Extremely High!
Wizard World Inc. (WIZD).’s free, non-subscription channel will exist in a market which had roughly 731 million internet users in 2016, 620 million of whom are mobile Internet users. An estimated 390 million Chinese nationals are “English speakers and English learners.” Much of the program content consumed in China is viewed on mobile devices.
Right now, Wizard World is flying under the radar of many big Wall Street firms and for an obvious reason: They’re focused on why the big names in entertainment ARE NOT able to enter. This could give first mover advantage to those who are searching for a company that is able to break through this huge hurdle, Wizard World (WIZD).
Now for those who search for the history on the company, Wizard World (WIZD) is no stranger to entertainment. In fact the company has already made a very big name for itself in the event production space with their brand of comic, gaming and pop culture conventions across North America.
But just recently the company has begun to evolve and has found a niche with a new digital initiative. WizPop, a daily pop-culture news service, pushes Wizard World directly into the emerging industry of streaming entertainment. This new content arm will start acquiring program content for distribution on the 24/7 channel in China from the world’s leading studios and producers.
High Costs In China Mean Huge Retention Rate For Media Outlets
What has been a burden to people in China could become a huge asset to approved media outlets in the country. High rental costs in China’s capital have forced workers to travel for six or more hours a day to work!
According to a 2016 report by the Global Cities Business Alliance, Beijing is the world’s most expensive city for renters, with average prices 1.2 times higher than average salaries. Prices are also soaring for those looking to buy – in the twelve months to September last year, property prices rose by 28%.
According to a 2013 Chinese government survey, even Beijing residents spend nearly an hour (on average 52 minutes) on the road to work each day. Those living outside with considerably longer commutes. This is where the opportunity is for media companies.
With hundreds of millions of the country’s population using mobile devices to “entertain themselves” during commute times, this leaves a relatively significant amount of time that media companies can guarantee a captive audience. In turn this could quickly equate to growing the bottom line!
Is This Like Seeing Netflix In 2002?
Wizard World (WIZD) is one of just a handful of the media outlets and because the barrier to entry is still very high, those in the know early could be looking at a similar situation when “Netflix” first began to revolutionize streaming entertainment in the US!
Imagine for a moment that you had a chance to go back in time to May 23, 2002 when Netflix went public. This was a time when so many skeptics saw the company, heard the pitch, and said “so what”. Fast-forward to today and those same people are kicking themselves for not looking to the future.
Here’s how the value of $1,000 invested on Netflix’s IPO day would have changed in the last 15 years:
Of course there was an incredible amount of volatility as is with any tech sector play but those smart enough to have gotten in early would be looking at an original $1000 investment worth somewhere in the ballpark of $176,000 today!
Keep in mind that the adjusted price, accounting splits, in Netflix at the time of the IPO was around $1.08. Today it’s trading at over $190. In the case of Wizard World (WIZD), right now before the company even begins one second of streaming in China, shares are trading less than $0.50; less than half that of Netflix when it first entered the US markets.
Could you imagine what might happen once (WIZD) takes full advantage of the hundreds of millions of viewers that will spend upwards of 9 hours per day watching streaming entertainment?
Wizard World (WIZD) could be Netflix all over again but on a much greater scale! In 2002, Netflix had an opportunity to tap into some 169,578,752 people in the US with access to the internet. Even today there is roughly 287 million people with access but this pales in comparison to the Chinese demographic!
With about 53 million US subscribers, Netflix has captivated nearly 20% of all US internet users. In comparison to Wizard World’s (WIZD) potential, a 20% capture rate would mean some 146 million viewers thus completely eclipsing the entire global subscriber base of Netflix alone.
With so much anticipated growth on a global scale for both internet users and mobile consumers, there’s no doubt that the potential for streaming companies will be a major driver for larger investment into the space.
With the case of China, not only is this an untapped market for US-based issuers but first movers could have a huge advantage if they find the right company. Apple, Google, Netflix, Twitter, Snap, and even Disney have limited if any exposure to the hundreds of millions of viewers within this marketplace!
Now, through a very recent development, investors may be seeing a major paradigm shift within the market and Wizard World (WIZD) could be at the forefront of this revolution!