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Disney Inks Content License Deal With Chinese IM Giant

9 Sep, 2013 By: Erik Gruenwedel

Pact for digital rights to select Disney, Marvel and Pixar movies underscores the lengths media giant will go in support of Disney Shanghai while ignoring piracy past

The Walt Disney Co. has reportedly signed a content license agreement with Chinese instant message provider Tencent for its transactional video-on-demand and subscription streaming service, dubbed “Hollywood VIP.”

Under terms of the deal, Hollywood VIP will have access to about 1,500 Disney, Pixar and Marvel movies, including The Avengers, Toy Story 3 and Pirates of the Caribbean, among others. The platform reportedly has content agreements with Warner Bros., Lionsgate, Miramax and Universal.

Indeed, recent studio releases such as Universal’s Oblivion and Kick-Ass 2: Balls to the Wall, and Warner's We're the Millers and The Conjuring are available on transactional VOD basis at Hollywood VIP.

New Disney releases would also be available on transactional VOD, the same day as their packaged media street date. SVOD access is limited largely to catalog content.

"With its extensive user base and wide range of platforms and content, Tencent is ideally placed to drive the growth of the Chinese digital distribution market and meet increasing consumer demand, supported by some of Hollywood's biggest studios,” Sun Zhong Huai, VP of Tencent, said in a statement.

While the deal pales in comparison to Disney’s pay-TV agreement with Netflix, it underscores the lengths the media giant will go to support its pending Disney Shanghai amusement park, in addition to casting Chinese nationals and altering scenes in Iron Man 3 for the communist country’s theatrical market — the second largest following the United States.

The agreement also underlines changing attitudes among studios regarding China’s long history as ground zero for intellectual piracy. In the mid-2000s, it was estimated that 90% of the movies, music and software sold in China was pirated.

As the home entertainment market transitions from physical to digital, a content license agreement with Tencent is considered a strategic defense against piracy due in part to the company’s massive market penetration with instant messaging.

Tencent’s WeChat IM platform has more than 800 million registered users, and in the past year launched apps for smartphones and related connected devices featuring conduits to gaming and online advertising, according to the company most recent fiscal statements.

Tencent generated income of more than $595 million on revenue of $2.3 billion for the second quarter (ended June 30).

“We will continue to increase our investment in mobile apps in order to reinforce our position in China, and to extend our presence to international markets through WeChat,” CEO Ma Huateng said in a statement.



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