Initial investment in the venture is reported to be in the order of RMB5 billion ($810 million). Tencent and Baidu are to each own 15%, with Wanda controlling the 70% majority.
The deal is intended to bridge the real world with the virtual one, and it throws up a mass of entertainment industry implications.
Users of Tencent’s WeChat or its QQ messaging service and Baidu’s maps will find easier access to Wanda’s shopping malls, hotels and movie theatres. Significantly, the tie-up is also expected to help customers use their mobile apps to pay for physical goods.
Wanda is China’s largest privately-owned cinema group and this month opened its 100th IMAX-equipped complex. It recently announced plans to construct up to 200 small theme parks around the country.
Baidu, often compared with Google and with a market capitalization of $76 billion, is also the controlling shareholder in iQiyi, one of China’s top three online video groups.
The alliance of the three giant companies also creates a formidable potential competitor for Alibaba, the Chinese e-commerce giant that is rapidly expanding into film production, Internet TV and online video. Alibaba is currently readying an IPO on the New York Stock Exchange that could value it at $150 billion.
Details are expected to be announced in the next week, possibly as early as Friday.
At an event in Beijing’s National Convention Center, attended by Chinese superstar Fan Bingbing, the two companies launched ‘Star Alliance’ a platform that connects acting and music talent with their fans.
It will make massive use of Tencent’s social media resources and Huayi’s talent under management.
In a precursor to Star Alliance, the two companies began co-operation using Tencent’s QQ messaging service in December last year. Huayi co-chief Wang Zhongjun says the partnership is another step in the diversification of Huayi into a “total entertainment company,” which stretches from film and television production, through to fashion, games and theme parks.