Studios cast net in China

H'wood logs Internet distrib deals

HONG KONG — Six Hollywood studios are poised to see their movies distributed in China via the Internet.

BestTV, the Internet Protocol TV unit of Shanghai Media Group, is expected to sign deals with Warner, Buena Vista, Sony, Fox, Paramount and Universal, according to agency and local reports Saturday.

Service, skedded to launch in the first quarter of 2007, is expected to follow a video-on-demand model. Details about the download or streaming nature of the venture and the extent of the library titles provided by the studios have not been announced.

Service will provide the rights owners with multiple revenue streams, including royalties, a share of the fees for every user request and a cut of the advertising embedded in the movies, according to Shanghai Securities News.

Deal would significantly boost Hollywood’s ability to make money in China, where the studios’ movies are popular but have only limited legal distribution. IPTV model potentially offers a convenient alternative to illegally distributed discs and a way around the quota system that allows only 20 foreign movies per year to see wide, revenue-sharing theatrical distribution. Movies will still have to pass the censors.

“We haven’t signed official deals yet, and we will comply with the regulation of bureaus such as the State Administration of Radio, Film and Television,” BestTV said in a statement to the Shanghai Daily.

“What this all tells you is that the likes of Time Warner, Disney, etc., are comfortable enough with the technology and encryption that the downloads won’t be piratable,” said Ramiz Chelat, media analyst with Macquarie Securities. “They wouldn’t have made this deal if antipiracy technology wasn’t a condition.”

IPTV has a limited but fast-growing base in China, with SMG one of the leading exponents. Live broadcasts, VOD and information channels are bundled with Shanghai Telecom’s broadband services. This year in China, IPTV is expected to reach 5.7 million homes — triple last year’s level, according to iResearch, a Shanghai-based IT research firm. It forecast that number will climb to 16.5 million in 2008.

BestTV has also struck deals with Hong Kong broadcaster TVB and Chinese search engine giant to provide more content and services.

Separately, SMG has signed an agreement with EMI Group to cooperate on wireless music and digital music publishing.

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