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China Buys A Piece Of Hollywood – Content And Studio Included
The giant Chinese real estate and investment conglomerate, Dalian Wanda Group, acquired Legendary Entertainment – a Hollywood studio run by Thomas Tull that is famous for its blockbuster hits such as Jurassic World, Godzilla and Pacific Rim – for $3.5 billion. This acquisition has reportedly made Wanda the highest revenue-generating film company in the world.
In this blog post we look at why a Chinese investment firm would want to purchase a Hollywood production studio, and what it means for the future of Hollywood.
Wanda and Legendary
Wanda has purchased 100% of Legendary’s equity and is reincorporating the production studio to align with both Chinese and U.S. tax structure requirements. This is not an easy feat to do in China, where corporations must have government banking sign off for dollars that leave the country.
With the film box office in China expected to outperform those in the U.S. by the end of 2017, it makes sense for Wanda to seek a partnership with a production studio whose content already performs well in China. Legendary’s productions have been doing extremely well within the Chinese market; Godzilla grossed more than $77 million in China, while Pacific Rim made almost $112 million ($10 millon MORE than it earned in the US), as reported by Hollywood Reporter.
Who Is Wanda
Chairman Wang Jianlin of Wanda has said that he seeks to “make Wanda a brand like Wal-Mart or IBM or Google, a brand known by everyone in the world.”
Here’s a snapshot of what Wanda has done in the past:
An Important Loophole To Making Money In China For Movies
China’s theatrical market is expected to surpass North America as the world’s largest by 2017. This is serious money – as no other country currently comes close to the US Box Office. That means that films produced in the US that are distributed in China have the chance to MASSIVELY impact box office. But wait – there is more!
China ONLY ALLOWS 34 “foreign” films to be shown at theaters every year. And the government closely chooses which films meet their criteria – or don’t. That has studios clamouring for ‘ins’ so that they can get the added coveted Chinese box office movie figures.
But there is a BIG loophole.
A film is not considered a “foreign” film if it is in fact ALSO co-produced by a Chinese production company. The government allows the film in to the country, collects its taxes and everyone makes money on both sides of the ocean.
Benefits of Purchasing Legendary Entertainment
Legendary is considered a good fit by Wanda as they already produce film content that is world-renown, and more importantly, popular in China. They will be able to continue to produce movies designed for the global stage.
Other benefits for the two now include:
Legendary Entertainment & Their History In China Deals
The Future for Wanda and Legendary
We will all see what the future holds for the two companies as they work through their reorganizations. But in the near term, Legendary already has films in the works that are sure to benefit from this partnership, including:
Photo Credit: Universal Pictures
Partnerships That Extend From Hollywood To China
Today, more and more brands (in China especially) and global brands are looking for ways to engage audiences through Hollywood to create integrated branding in content that transcends location and language, like The Simpsons recently being added to Sohu Video, China's top SVOD service. Product Placement is one of the best ways to become front and center and directly engage those consumers.
Is Product Placement right for your brand? Watch this video to learn more about how this marketing practice works, what brand categories it works for, and the results brand marketers see!
Stacy Jones, Hollywood Branded's founder and CEO, has over twenty six years of leadership experience building global entertainment branding campaigns for top Fortune 500 companies and hundreds of brands. Her career started after receiving her BFA in Theater Production & Scenic Design from the University of Arizona. Acknowledged as an expert in the field, she has appeared on CNN and MSNBC; spoken at conferences around the globe from Germany to Beijing; and has been featured in Forbes, The Wall Street Journal, The Hollywood Reporter, Financial Times, The Economist, Brandweek, Advertising Age, Variety, B&C and Mediaweek amongst others. Originally from Texas, you will still hear her ya’ll as she gathers the team for strategy planning sessions. Like all true entrepreneurs, Stacy is an adventurer at her core – having sky dived, hang glided off bi-planes, swam with crocs while rafting the Zambezi in Africa, photographed grizzly bears in Alaska, trekked Mayan ruins in Belize, explored the ocean as an avid scuba diver, and who loves owning an advertising agency where she swims with a different type of Hollywood shark on a daily basis.