After Chinese capital "invades" Hollywood on a large scale, will all movies become "Made in China"?

With the booming Chinese film market, Chinese companies' investment in overseas film, television and pan-entertainment industries has grown rapidly. Since June this year alone, Wanda, Alibaba, Tencent and LeTV have announced new moves in Hollywood. Dalian Wanda announced the acquisition of Hollywood production company Dick Clark Productions, Tencent acquired production company STX Entertainment and established a joint venture TV production company in Hollywood; LeTV established its Hollywood headquarters and entered the US all-media content production... After overseas commercial real estate, Hollywood has become the latest area that Chinese giants focus on. There are two meanings for Chinese companies to enter Hollywood: first, to exchange China's huge market and financial advantages for Hollywood's technical methods, and ultimately prosper the domestic market; second, the film industry has always been one of the most core channels for the output of cultural soft power, and the intervention of Chinese capital will inevitably have a profound impact on the global film and television discourse.

Early November is the busiest time of year in Santa Monica. The annual American Film Market (AFM) attracts thousands of filmmakers from around the world to come and buy copyrights and select films, while the movie theaters in downtown Los Angeles, just a few kilometers away, have completely become the home of China.

"I am a screenwriter from New York. Last year, I wrote a script about Chinese basketball players and asked a friend to draw the first draft of the animation. It is very consistent with the IP concept of Chinese investment films. This time I came here specifically to meet with Chinese producers." 39-year-old Adam Willson told guests at the 3rd US-China Film and Television Industry Expo. Unlike previous sessions, as more and more Chinese companies enter the production process and even set up their own production teams in the United States, more young people with ideas appeared at the venue, looking forward to realizing their Hollywood dreams through cooperation with Chinese companies.

If the nearly 50% growth in Chinese movie box office in 2015 made the global film industry focus on the Chinese market, then the investment of Chinese companies in overseas film and television assets in 2016 made more people focus on Los Angeles.

Since June this year alone, Wanda, Alibaba, Tencent, and LeTV have all announced new moves in Hollywood. On November 3, Dalian Wanda announced a $1 billion acquisition of Hollywood production company Dick Clark Productions; previously, Tencent acquired production company STX Entertainment and established a joint venture TV production company in Hollywood; LeTV established its Hollywood headquarters and entered the US omni-media content production.

"In the past two years, it has become difficult for all Hollywood producers to ignore the existence of the Chinese market. Directors and producers have become accustomed to thinking about how to get their movies into the Chinese market. At the same time, Chinese companies coming to Hollywood have also become investment targets that major studios are vying for." Randy Greenburg, a former senior producer at MGM and Universal Studios with 20 years of Hollywood experience, told the 21st Century Business Herald reporter.

Since January 2016, China's total overseas acquisitions in the entertainment and leisure sector have reached US$7.57 billion, a fourfold increase from US$1.96 billion in the same period last year. Among them, the film and television industry took the lead with US$6.39 billion, a nearly 13-fold increase from US$413 million in the same period last year.

Wanda Film and Television's entire industry chain

On November 2, Hollywood's authoritative magazine The Hollywood Reporter launched its first special issue on "Chinese Entertainment Tycoons" since its founding in 1930. Wang Jianlin ranked first, followed by Jack Ma , Pony Ma , Li Ruigang and others. Wang Jianlin also appeared on the cover of the magazine.

The Hollywood Reporter has published a special feature on China and Wang Jianlin for the first time in its 86-year history, which not only represents China's rapid rise in the global entertainment industry, but also shows the irreplaceable influence of Wanda and Wang Jianlin in the global film and television industries. Following Wang Jianlin's trip to Hollywood in October, the publication of this special issue has once again set off a wave of international public opinion.

Wanda spent $2.6 billion to acquire AMC Cinemas in 2012, snapping up 5,048 screens in 347 theaters in the United States and Canada. Since then, Wanda has "planned and strategically" deployed entertainment positions in Hollywood to improve the film and television industry chain. AMC acquired the cinema chain Starplex Cinemas for $175 million, acquired Carmike Cinemas for $1.2 billion, and bid for the purchase of Europe's UCI & Odeon Cinema Group for $1.21 billion. This bid is awaiting approval from the European Commission.

The Hollywood Reporter, an authoritative Hollywood magazine, revealed that Wang Jianlin's ambitious plan is to take over the six major film companies. Most Hollywood blockbusters come from these film companies - Columbia, Paramount, 20th Century Fox, Universal, Warner Bros. and Walt Disney. This summer, Wang Jianlin tried to acquire a controlling stake in Paramount, which produced "Star Trek" and "Mission Impossible", but the plan was rejected by Paramount's parent company Viacom.

Now, Wang Jianlin has changed his strategy and set up an investment fund with billions of dollars to fully invest in the six companies. Analysts say this will establish Wanda's reputation and take a step into the future.

Wang Jianlin said it would be a good idea to start where we can, such as by investing in all six major film studios. “We will continue to work on potential acquisitions. But there is no harm in starting with what we can do. At this point, participating through investment seems to be a wise choice,” he said.

Wang Jianlin is full of confidence in the Chinese film market. Wang Jianlin said that China's film market will surpass North America in the next two years, "By 2026, China's box office will reach 30 billion US dollars, accounting for 40% to 50% of the global market share."

The Hollywood Reporter said that Wanda has a huge bargaining chip that the Japanese giants of that year did not have: a domestic market that will soon far surpass the North American market.

Wanda has not only entered the film production industry, but also the television production industry for the first time, and has occupied the world's most high-end resources from the beginning - just on November 3, Wanda announced the acquisition of 100% equity of Dick Clark Productions, Inc. (DCP Group) in the United States for approximately US$1 billion.

Founded in 1957, DCP Group is a well-known American television program production company with more than 20 famous IPs, including award ceremonies such as the Golden Globe Awards, American Music Awards, Billboard Music Awards, American Country Music Awards and super IPs and rights such as the New York New Year Countdown Party.

From marketing to content production

"In fact, the most noteworthy thing about China's investment in Hollywood this year is not Wanda's dominance, but that powerful investment companies all regard film and television as their investment assets, and the targets are getting closer and closer to the upstream." Bruce Tobey, media industry partner at Hollywood law firm O'Melveny & Myers LLP, told the 21st Century Business Herald reporter.

In recent years, a group of film companies represented by Wanda, LeTV and Bona have been expanding their territory in Hollywood through capital alliances, joint filming, joint promotion and distribution, etc.

Chinese capital flows to Hollywood because of the money-making potential of this golden signboard. All of the top 10 global box office films are from Hollywood film companies. After forming alliances with Hollywood film companies through investment, co-production, etc., Chinese film companies can directly share the box office revenue of the films with them according to a certain proportion.

But the situation is slightly different in 2016. According to information obtained by the 21st Century Business Herald reporter, Alibaba, Tencent, LeTV, Fosun, and China Media Capital have all invested more than one million US dollars in Hollywood this year, and all companies are directly involved in the field of content production.

On October 9, Alibaba Pictures announced in Beijing that it had reached a strategic partnership with Amblin Partners, an American film company whose predecessor was DreamWorks Pictures founded by Spielberg. Both parties said they would cooperate in various ways, including joint investment, joint production, Internet promotion and distribution, and derivative cooperation, and jointly invest in and produce movies in the future.

Bruce Tobey said that Chinese companies' entry into Hollywood has two meanings: first, it is the core industries of Europe and the United States, using China's huge market and financial advantages to exchange for Hollywood's technology and methods, and ultimately prosper the domestic market; the other meaning that is easily overlooked is that the film industry has always been one of the most core channels for the export of cultural soft power, and the intervention of Chinese capital will inevitably have a profound impact on the global film and television discourse.

Adam Goodman, president of LeEco Pictures, believes that Hollywood "has a mature production system and a formula for success. The Chinese market is important, but our goal is not just to make good movies, we want to make good movies that can be sold to audiences around the world."

Can it be profitable?

China is not the first country to build a film development path through funding. At the peak of Japan’s economic bubble in the 1980s, Japanese companies spent a lot of money in the United States. Sony bought Columbia Pictures for $3.4 billion, and Panasonic bought Universal for $6.6 billion.

The massive influx of funds is not without risks. "We believe that from the perspective of investment return, the investment and risk of movies are both very high, so our main cooperation model is copyright purchase," said iQiyi's vice president on the scene on November 4.

Take Legendary Pictures, which Wanda spent a lot of money to acquire, as an example. After two consecutive years of losses, Legendary only produced one "Warcraft" movie in the whole of 2016, which cost 160 million US dollars and took in 433 million US dollars at the global box office. This is not a good result.

Mike Medavoy, senior producer of 7 Oscar-winning films and more than 300 Hollywood films, said in an exclusive interview with a reporter from 21st Century Business Herald that the global film industry is currently facing multiple shocks: first, the impact of platforms, including the integration of content by online platforms such as Netflix, has given rise to the industry's demand for getting infinitely close to users, and has also indirectly encouraged telecommunications giant AT&T to initiate an acquisition of Time Warner; secondly, the upgrade of home visual experience technologies including AR/VR has also brought challenges to the traditional film industry.

"In fact, this provides new opportunities for Chinese investors, especially Chinese capital's pursuit of technology and control of platforms," ​​said Mike Medavoy.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.