China and Hollywood ties have been strengthening, and now with Tencent’s strategic investment in Los Angeles studio STX Entertainment, the bond is certainly growing according to a recent report at Forbes.
China is showing its heft by backing U.S. film, TV and digital media business just as it already has by investing in Silicon Valley technology startups and luxury real estate primarily in California and New York.
The fact that it’s leading Chinese tech titan Tencent (with Hong Kong telecom leader PCCW) doing the latest deal in Hollywood underscores how meaningful and impactful this connection could be. Will Hollywood movies on Tencent’s popular WeChat social messaging be coming soon?
Besides the transaction with STX, Tencent forays in Los Angeles include the recent launch of a TV production joint venture with IM Global and backing of animation studio Original Force Animation. Tencent also joined with Sequoia Capital China to form a joint venture with talent agency WME-IMG.
View Silicon Dragon Video of this panel discussion with top Hollywood-China producers, distributors and dealmakers. Hear comments by STX Entertainment executive Tom McGrath (pictured above, right) in this video of his panel at Silicon Dragon’s LA 2015 event.
For U.S. studios, the attraction is China’s huge market for American-made movies and TV shows. For Chinese groups, the appeal is gaining Hollywood knowhow to improve their own productions. It’s the same factors driving U.S.-China tech transactions. Tencent’s acquisition of LA-based mobile gaming company Riot Games is just one more example.
Tencent is not the only group scouring deals in Southern California’s ripe entertainment market. China’s real estate and entertainment conglomerate Dalian Wanda Group bought the AMC Cinema chain in 2012 for $2.6 billion and Legendary Entertainment this year for $3.5 billion. Look for this trend to multiply just as it has in the San Francisco Bay Area.