Leading Chinese streaming company iQIYI has teamed with Hong Kong production outfit China 3D Digital Entertainment for a long-term strategic venture.

The two companies will share responsibilities. China 3D, which previously produced Cannes Market sensation “3-D Sex and Zen: Extreme Ecstasy,” will source content, produce and handle international sales. iQIYI will handle promotion and distribution in mainland China.

Revenues and fees are split according to their share of investment in each individual picture. The first movie to be greenlit under the deal is “Death Notify.” The production budget is set at US$12.5 million (RMB80 million). iQIYI will contribute 40%, while China 3D puts up 60%.

Online video has become a huge growth market in China, largely complementing the impressive rise of theatrical cinema. iQIYI now claims 219 million monthly users and to be the fourth most access Internet site in China, behind only Tencent’s WeChat and QQ and Alibaba’s Taobao. “Monthly total effective usage time of iQIYI has reached 1,816 million hours, behind only to WeChat and QQ,” it said in a statement.

In March, China 3D announced that it would pay US$52.6 million (HK$408) million to buy the Greater Chinese parts of music and DVD retailer HMV from venture capital firm AID Partners. When that deal is completed AID will become China 3D’s largest shareholder.

AID is headed by Kelvin Wu, who previously engineered the 2012 investment by Orange Sky Golden Harvest into Legendary Entertainment.