Beijing-based film and TV production company Perfect World Pictures Co Ltd (002624.SZ) has agreed to invest $250 million to finance Comcast Corp.’s (NASDAQ:CMCSA) Universal Pictures films over the next five years. The Chinese company will receive a 25% share of global revenue for at least 50 co-financed movies with Universal, which is behind film franchises such as “Jurassic Park” and “The Fast and the Furious.”
Perfect World calls the deal a step in building a “comprehensive” entertainment group and expanding its film business globally.
“It is an important step that Perfect World Pictures expands into international markets. The company could learn advanced film technology, production processes and every link of the film industry from its Hollywood partner, which will benefit the development of the domestic film market,” said Huang Guofeng, an analyst with Beijing-based Analysis International.
The cooperation also shows how much Universal Pictures values China’s huge film market. Perfect World Pictures, which has experience with local film distribution, could help Universal distribute its films in China, and enhance its influence in the Chinese film market, Huang added.
Chinese companies are ramping up investment in the foreign entertainment industry, as the country seeks to boost its “soft power,” says AFP. Foreign studios are keen to expand into China’s fast-growing cinema market, now the second-largest in the world.
Movie industry observers expect that China will overtake the United States to become the world’s largest film market by revenue in 2017, says China Daily.
In January, Chinese conglomerate Wanda Group signed a $3.5 billion deal to buy Hollywood studio Legendary Entertainment, said to be China’s biggest-ever cultural takeover. Last November, Chinese film distributor Bona Film Group Ltd said it would invest $235 million in a slate of Twentieth Century Fox movies and help bring Hollywood productions to the Chinese mainland market. Last September, private equity firm China Media Capital unveiled a venture with US entertainment giant Warner Bros. to develop films. State-backed Hunan TV last year also announced a $1.5 billion agreement to fund the movies of US studio Lions Gate Entertainment.
Perfect World Pictures Co Ltd., formerly known as Zhejiang Jinlei Refractories Co., Ltd., is a Beijing-based company engaged in the production and operation of broadcasting and television programs. In addition to film and television, as well as related advertising and merchandising business, PWPIC and its subsidiaries are one of the industry leaders in the talent management business. WPIC went public on the Shenzhen Stock Exchange in China (002624.SZ), at the end of 2014.
Founded in 2008, Perfect World Pictures (PWPIC) was part of the NASDAQ listed Perfect World (PWRD), which, which engages in the research, development, operation, and licensing of online games in China, the United States, Europe, Japan, Southeast Asia, and South Korea. In August 2011, PWPIC completed a spin-off and has since then been managed separately from PWRD, with chairman Michael Chi still as the controlling shareholder. Rong Chen serves as the company’s president and CEO.
Perfect World Pictures is in the process of merging with its former corporate sibling, mobile and online gaming company Perfect World, so that both can be listed on the Shenzhen stock exchange, according to Dow Jones Newswires.
In the six years since inception, PWPIC has established itself as a leading entertainment company in China, engaging in the production, distribution and marketing of high quality film and television content, content related advertising and merchandising business, as well as talent management business.
On the television side, the company produces between 600-800 episode of TV dramas every year, with most of which airing on satellite TV stations at prime time, and is recognized as one of the top TV drama production houses in the nation. The company achieved this by signing up top TV drama directors and producers under exclusive deals, and expanded production capacity by establishing strategic partnerships with top production teams around the country.
On the film side, the company released its first movie Sophie’s Revenge in 2009 (starring Zhang Ziyi, Fan BinBin), which became the highest grossing Chinese romantic comedy until that time. Then in 2011, the company broke record again when its small budget film Love Is Not Blind (produced under a budget of 1.5Mn USD) grossed over US$56 million in the domestic market. In April 2015, the company successfully released yet another romantic comedy titled Let’s Get Married, a feature film that is produced as a follow-on to its massively successful TV drama of the same name (with over 7 Billion internet views in China). Besides Chinese language films, PWPIC is also one of the most active marketers of foreign films in China, having brought films like Ghost Rider 2, The Last Stand, Ender’s Game, Rush and the Divergent franchise into the China market.