China’s New Fo­cus on Hol­ly­wood

Trillions - - In This Issue -

After its rise to eco­nomic su­per­power, China be­com­ing a leader in geopol­i­tics, trade and mul­ti­lat­eral bank­ing was no big sur­prise.

One area where the Chi­nese sleep­ing gi­ant has sur­prised most ev­ery­one is in its moves – both rapid and deep – into tak­ing on the in­ter­na­tional-film in­dus­try.

The coun­try’s film in­dus­try, once known for Jackie Chan ac­tion come­dies and mar­tial arts dra­mas, has in re­cent years branched out in many ways.

Dalian Wanda Group

For North Amer­i­can film­go­ers, one of the most dra­matic moves in re­cent times was when the Dalian Wanda Group, al­ready a ma­jor player in the main­land China en­ter­tain­ment in­dus­try, bought AMC En­ter­tain­ment Hold­ings in May 2012 for $2.6 bil­lion. At that time, AMC En­ter­tain­ment was al­ready the largest cinema chain in the United States and Canada, with 347 theaters in North Amer­ica. Since that ac­qui­si­tion, Dalian Wanda Group has lever­aged AMC fur­ther by ac­quir­ing Odeon, UCI and Carmike Cine­mas in the United States and other ac­qui­si­tions in Europe to be­come the largest movie the­ater chain in the world. It cur­rently has over 2,200 ad­di­tional screens in 244 theaters in Europe. World­wide, the chain now covers a to­tal of 8,200 screens in 661 theaters.

Be­sides the mas­sive con­trol of what movies get shown where that goes with that, Dalian Wanda has also made in­vest­ments in the film in­dus­try in re­cent years. One of the big­ger ones hap­pened in Jan­uary 2016 when it bought Leg­endary En­ter­tain­ment for $3.5 bil­lion. That com­pany, orig­i­nally founded in 2000, has pro­duced such ma­jor fran­chise of­fer­ings as The Dark Knight (Bat­man series), Man of Steel and the Hang­over film tril­ogy.

Lo­cally, Dalian Wanda also has an ar­range­ment with China Film Co., the largest film com­pany in China, to co-pro­duce movies.

China Me­dia Cap­i­tal

Al­though Dalian Wanda cer­tainly has made ma­jor moves, China Me­dia Cap­i­tal has been chart­ing its own course in get­ting in­volved in the en­ter­tain­ment in­dus­try. Just a lit­tle over a year ago, in March 2016, it pur­chased a mi­nor­ity in­ter­est in Brian

Grazer and Ron Howard’s Imag­ine En­ter­tain­ment for an undis­closed sum.

Ten­cent

Ten­cent, the Chi­nese so­cial me­dia gi­ant be­hind the widely, glob­ally used Wechat and QQ mes­sag­ing ser­vices and on­line video games, is ex­pand­ing into movies and tele­vi­sion en­ter­tain­ment.

One means of do­ing that is via Ten­cent Movie Plus, a di­vi­sion of Ten­cent that is find­ing ways to cre­ate movies based on Ten­cent’s video game fran­chises. A first ma­jor en­try into the field that was based on one of those games, Roco King­dom, pulled in $24.4 mil­lion at the box of­fice in 2013.

Ten­cent also signed an ex­clu­sive ar­range­ment to stream HBO’S ex­clu­sive TV dra­mas and made-for­ca­ble movies on­line in China. Even more re­cently, it also landed rights to stream some of the Star Wars movies.

Baidu

The search en­gine gi­ant Baidu has also en­tered the in­ter­na­tional-film mar­ket. Like Google with Youtube, Baidu owns iqiyi, cur­rently the largest on­line video site in China. Us­ing that as the foun­da­tion and brand­ing for its new of­fer­ings, Baidu plans to make 7+ Chi­nese films and at least one Hol­ly­wood in­ter­na­tional film ev­ery year.

Alibaba Pic­tures

Last in this cov­er­age of what could in­clude far more film en­ter­tain­ment en­ter­prises is Alibaba Pic­tures, a wholly-owned part of China’s Alibaba Group Hold­ing Lim­ited. Alibaba Group is the par­ent of China’s e-com­merce pow­er­house Alibaba.com and has a to­tal mar­ket cap­i­tal­iza­tion world­wide of over $200 bil­lion.

Alibaba Pic­tures is rel­a­tively young as a film en­ter­tain­ment of­fer­ing. It launched via the ac­qui­si­tion of small film­maker player China Vi­sion Me­dia for $805 mil­lion in March 2014. Once under Alibaba Group, it was first re­struc­tured as an in­house of­fer­ing. In 2015 it moved out from under its cor­po­rate par­ent as a stand-alone en­tity via a cap­i­tal raise of ~$1.6 bil­lion in cash to back its op­er­a­tions.

Since that time, it has made sev­eral tac­ti­cal and strate­gic moves as it feels out the best long-term strat­egy for the en­ter­prise.

One role it has played is as a co-in­vestor and Chi­nese dis­trib­u­tor in suc­cess­ful films such as Tom Cruise’s Mis­sion: Im­pos­si­ble – Rogue Na­tion (2015), Teenage Mu­tant Ninja Tur­tles: Out of the Shad­ows (2016) and Star Trek Be­yond (2016). In all, it has backed over 20 movies and one tele­vi­sion series so far.

It has moved into on­line stream­ing in an in­trigu­ing way by part­ner­ing with Lion­s­gate Pic­tures to cre­ate Lion­s­gate En­ter­tain­ment World, an on­line stream­ing ser­vice. That ser­vice is avail­able ex­clu­sively on Alibaba’s set top boxes for ca­ble tele­vi­sion dis­tri­bu­tion.

In 2016 the com­pany also bought a mi­nor­ity share in Steven Spiel­berg’s block­buster movie and tele­vi­sion pro­duc­tion com­pany, Am­blin En­ter­tain­ment. The amount was not dis­closed, but the terms are in­ter­est­ing: They in­clude the rights to dis­trib­ute Am­blin’s movies within China and the abil­ity to in­vest in fu­ture films pro­duced by Am­blin.

Alibaba Pic­tures has also es­tab­lished a for­mal pres­ence in South­ern Cal­i­for­nia, the head­quar­ters for the U.S. film in­dus­try. It is cur­rently leas­ing space on Pasadena’s Colorado Boule­vard, a lo­ca­tion it is ex­pected to ex­pand from for ev­ery­thing from in­vest­ment deal mak­ing to pos­si­ble film pro­duc­tion.

The Implications

Even if it were just hav­ing the largest movie the­ater chain in the world that was under Chi­nese cor­po­rate di­rec­tion, China’s abil­ity to in­flu­ence the in­ter­na­tional-film in­dus­try and au­di­ences would al­ready be well in hand. But with the added im­pact of all of the above play­ers to con­trol movie pro­duc­tion, dis­tri­bu­tion and on­line video stream­ing, China now has a power plat­form to cause po­ten­tially ma­jor long-term shake­ups in the world of movie and TV en­ter­tain­ment and spread Chi­nese cul­ture and soft-power.

Photo by Su­san Ser­mon­eta, CC

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