Universal, Perfect World complete $500m deal

Universal Pictures and Perfect World Pictures Co Ltd announced on Wednesday that they will enter into a multiyear financing agreement worth $500 million.

The five-year partnership begins this year, and the Chinese company will co-finance 50 films from Universal, which had a successful 2015 in China thanks to major box office hits like Jurassic World and Furious 7.

The latter film was the highest-grossing film in China last year, taking in $390 million.

With the deal, Perfect World is "gaining exposure, business, as well as publicity," said Marc Ganis, president and co-founder of Jiaflix, which helps Hollywood studios distribute films in China.

"They're gaining exposure by aligning with one of the major studios."

Though terms of the deal were not disclosed, financing will be split between debt and equity contributions, and Perfect World will be getting 25 percent share of most Universal films, though it is expected that the Hollywood studio's biggest titles will be excluded from the deal, according to the Hollywood Reporter.

The deal was first reported at the end of January by Variety.

"We are delighted to be partnering with Perfect World and appreciate the confidence it has in our film slates going forward after a record-breaking 2015," Jeff Shell, chairman of Universal Filmed Entertainment, said in a statement. "With Perfect World's history of success in the Chinese market, we look forward to exploring other opportunities to work together."

The deal - one of the largest investments a Chinese company has made in an American film studio - now makes Perfect World a major investor in Hollywood, despite the company being previously best known for its television and video-game production and distribution.

"Building out our film business and expanding into international markets are two of the most important initiatives for Perfect World. Universal has had a stellar last few years, and with a slate that boasts many titles that we know will thrive in the marketplace, we are confident our partnership with them is a solid step in the right direction," said Michael Chi, chairman of Perfect World.

Another added benefit for Perfect World, according to Aynne Kokas, media studies professor at the University of Virginia, is that it will be able to diversify its investments outside of China.

"We're seeing a lot of this type of diversification as China's growth slows and markets remain tumultuous," she said.

Kokas said that Perfect World's strength in the gaming and technology space could eventually be used by Universal Pictures, especially because Universal is opening a theme park in Bejing in 2019, or if it decides to expand its collaboration into animation or gaming in China.

Perfect World also has experience with local film distribution, which could benefit Universal should the studio look into local productions, said Stanley Rosen, director of the East Asian Studios Center at the University of Southern California.

This investment comes two months after China's Dalian Wanda announced its acquisition of Legendary Entertainment for $3.5 billion. Legendary has a financing deal with certain Universal films already, and that deal will not change in light of the Perfect World agreement, the companies said.

amyhe@chinadailyusa.com