Hollywood film studios have pretty much failed to overcome piracy in China, missing out on hundreds of millions in sales as pirates sell copies of brand new films on DVD or online. Some of the bigger studios are now working with Tencent, one of China’s largest internet groups, on a Netflix-style streaming service that aims to beat piracy by delivering new films to homes across China just two weeks after their US release in theaters.
Tencent operates a social media, ecommerce and gaming platform used by more than 500 million people a month. More than 100 million pay to play its social games or use WeChat, its mobile messaging app, notes a Financial Times story.
Warner Brothers has a minority stake in Tencent’s Hollywood VIP service, which streams older films from several studios on a subscription basis but also makes new titles available to rent online for as little as $1. Hollywood VIP launched at the end of 2012 and has attracted “a few hundred thousand” subscribers, according to Tencent and Warner Bros.
“However, this is the first time they are making new films available. The service has hundreds of titles, showing a mix of Chinese films and Hollywood titles: Disney recently began licensing its films to the service, joining Universal Pictures, Miramax and Lions Gate Entertainment,” said the FT story.
The aim was to transform a market where digital film piracy is rife by giving consumers a legitimate way to watch new films, Ron Sanders, president of Warner Bros worldwide home entertainment distribution told FT: “How can we truly say we are frustrated with China not buying our content if we won’t make it available in the time appropriate for the consumer market place? We have a long way to go but this new model could be applicable for other markets.”
“In the western world movies go through a very clear windowing process,” said James Mitchell, chief strategy officer at Tencent. “They appear in theatres and then a few months later they move to DVD, then later they move to online distribution services. In China, windowing hasn’t really developed so we thought there was an opportunity to get movies [to audiences] in a way that was more timely. In China historically there hasn’t been the training of paying for in-home entertainment in the same way [as the US]. “We’re about people who were not paying for movies and the benefit is they get a better experience.”
See the full Financial Times story here.
RBR-TVBR observation: As with most lucrative deals in the China market, it’s best done by partnering with a China-based company for access to the consumers. This is a no-brainer: beat the pirates to the punch by offering the new movies faster than they can get them out. Tencent/Hollywood VIP will help promote the new releases and create demand in this partnership.
