1. Deal-Making Galore
Over the past few months there has been a great deal of foreign investment deals and joint ventures reported, including:
- Shanghai Media Group, China’s second biggest media group, signing a multi-year deal with Walt Disney Studios to develop Disney-branded movies. In this reported $100million deal, U.S.-based writers will team up with local writers and filmmakers to develop stories and scripts that incorporate Chinese themes in Disney movies, which could allow for easier releases of English-language films in China.
- Huayi Brothers Media, China’s largest private-sector entertainment company has announced that it is to invest $120 million to $150 million in former Warner Bros. chief Jeff Robinov’s new Studio 8 company and its upcoming slate.
- Producers Robert Simonds (production credits include Happy Gilmore and Steve Martin’s remake of The Pink Panther) and Gigi Pritzker have partnered with private equity giant Texas Pacific Group (TPG) and China’s biggest and oldest private equity company, Hony Capital (holding shares in SMG Pictures, PPTV and others), on an up to $1 billion production venture that aims to generate as many as 10 movies a year for the next 5 years.
- Wanda Cinema has announced that it to help design U.K.’s Pinewood Studios’ festival and museum complex and studio to be built in the coastal city of Qingdao.
- Jeff Berg’s Resolution talent agency announced it has signed a deal with Chinese venture capital firm Bison Capital Holdings which will see a capital injection of an undisclosed amount into Resolution.
- Sony has confirmed that, with New Classics Media, it will be investing in Chen Kaige’s martial arts film “The Monk” and a Chinese remake of “My Best Friend’s Wedding,” which is in addition to the previously announced involvement in Jiang Wen’s “Gone With the Bullets,” and acquisition of North American rights to Zhang Yimou’s “Coming Home.”
- On March 20, Discovery Communications announced a content partnership with WASU Digital TV Media Group for WASU’s new 24/7 pay-TV subscription channel, Qiu Suo (roughly translated as “seeking knowledge”). The establishment of a joint venture will see registered capital of US$20 million, with Wasu taking a 51% share and Discovery taking 49%.
- Universal Pictures will invest nearly US$2 billion to build a Hollywood theme park in Beijing slated to open in January 2018. It would be the third theme park in Asia with two in Singapore and Japan.
2. Censorship Comes to China’s Internet Video Sector
China’s Internet video sector has seen incredible growth over the past few years. In 2013, China online video revenue climbed to 12.81 billion Yuan, generating a yearly growth rate of 41.9%. The rapid growth is projected to be sustained for several years to come and is expected to see revenue of 36.6 billion Yuan in 2017, according to iResearch. This was also a sector, including the likes of as Sohu, Youku Tudou and Baidu, that Hollywood has very attractive (and very profitable) for the licensing of content – Netflix’s House of Cards, for instance, has been a hit here with even a top-ranking Chinese official claiming to have watched both seasons episodes.
But what had been an essentially censorship-free sector seems to be free no more. On March 21, SAPPRFT published the “Supplemental Notice on the Further Improvement of Internet Programs, Micro-Films and other Audio Visual Content Management.” According to the notice, China’s online video portals 1) will have to employ government-approved censors to vet content and obtain a censorship license, 2) need to verify the identities of the people or organizations who upload the video and audio programs to their websites. Additionally, purchased content will be treated the same as self-produced content, and punishment of up to a streaming bar of 5 years may be instituted again a video operator that streams un-approved content.
The notice can be found on the SAPPRFT website here (Chinese): [http://www.sarft.gov.cn/articles/2014/03/21/20140321102321530218.html]