China’s Perfect World Pictures will step up its involvement in the U.S. entertainment scene and has opened an office in Los Angeles. The new offshoot is headed by former company president Chen Rong, who has moved over from Perfect World’s headquarters in Beijing.
The Perfect World Pictures U.S. office will involve itself in film, TV dramas and games. It is intended as a moneymaking venture, a way of securing China rights to targeted productions, and also as a vehicle for technology transfer. It is intended to learn Hollywood-style development, storytelling and production organizational skills that can improve the Chinese skill set.
“Our slate financing deal with Universal is a relatively passive investment. This new office and Chen Rong’s transfer is our way of becoming actively involved in Hollywood,” Lian Jie, CEO of Perfect World Pictures, told Variety. “We don’t want to be seen as a big ATM. We want to be a content company.”
The move underlines a new, pragmatic business normality in China-Hollywood relations. It follows a three- or four-year period where conversation was dominated by galloping Chinese box office growth, and by Chinese corporations buying their way into Hollywood through headline-grabbing, sometimes over-priced acquisitions. Both trends came to an abrupt halt in the second half of 2016, though box office growth has now resumed at a more sustainable rate.
Perfect World has been among the Chinese companies hatching different kinds of relationships with Hollywood. In early 2016 it struck an agreement to co-finance some 50 films from Universal, over a period of five years. In June this year, it hatched Perfect Village Entertainment, a company focused on Chinese-language filmmaking, and counts Zhang Yimou’s “Shadow” among its first titles.
Perfect Village Entertainment, of which Lian is also chairman, is a three-way joint venture combining Perfect World’s local film production operations with Village Roadshow Prods. Asia, and a slice of capital from WME | IMG (now called Endeavor), in which Perfect World has the majority stake.
Perfect World is one of the world’s leading games companies and was previously listed on the NASDAQ stock market in New York. It subsequently spun off its film and TV production division, and listed that in China. It then delisted in the games company in the States and reversed it into the Chinese-listed company. Having achieved scale in games, the group’s plan is now to grow the film business.
“The Universal deal was the first step. Perfect Village Entertainment was stage 2.0,” said Lian. “The new U.S. venture will be participating in U.S. movies intended for global consumption. It could be involved in investment and production, work with studios or independents, companies like Imagine, and would look at (obtaining) the China distribution rights.”
Lian sees great potential for collaboration between the booming U.S. and Chinese TV production sectors. In both countries, the industry and audience habits are being transformed by streaming video platforms, which are driving up budgets and encouraging binge watching of multi-part shows. “We are already big as a TV drama producer. We would like borrow U.S. TV technology, screenwriting skills and bring those to China,” said Lian. He also foresees relationships that would allow Perfect World to create narrative games, such as those derived from “The Walking Dead” and “Game of Thrones.”
For all the potential, Lian says the company is not trying to pin down deals quickly. “This is a pilot. There is no specific budget allocation and there are no deals on the horizon,” he said. “And when there is something it will be scrutinized thoroughly. We have a high risk-control approach.”