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Fox Plans to Bow Cheap DVDs in China

13 Nov, 2006 By: Erik Gruenwedel

Both spurred and anguished by China's market potential and rampant piracy, respectively, 20th Century Fox Home Entertainment (TCFHE) Nov. 13 announced it had opened a representative office in Beijing and entered into an exclusive agreement with the country's largest video distributor, Zoke Culture Group.

Under terms of the deal, Fox will shorten — by an undisclosed period — the release window between theatrical and home entertainment. Beginning this month, the studio will distribute DVD and VCD editions (Chinese optical disc) of Garfield: A Tale of Two Kitties, Ice Age: The Meltdown and X-Men: The Last Stand, among other titles.

The discs would reportedly retail for about $3 (25 yuan) despite the fact pirated editions sell for half that on the street.

With more than 100 million DVD players in Chinese households, sales of DVD and VCD discs were expected to top $1 billion in 2005. Numerous reports suggest upwards of 90% of all entertainment DVDs sold in China are pirated and obtained on the black market.

Several Chinese ministries and national departments, including the ministry of public security, state administration of press and publication, national copyright administration and ministry of culture recently concluded a “100 Day Campaign Against Piracy” to encourage a legitimate home entertainment business in China.

“China is a very important component of Fox's future business and our goal is to preserve the integrity of our movies, while offering Chinese consumers first-rate packaged entertainment that is authentic, affordable and quickly accessible,” said Mike Dunn, worldwide president, TCFHE. “Zoke's entrepreneurial spirit and unmatched distribution capability make them a perfect partner for us as we solidify our presence in this emerging marketplace.”

China had 16,665 chain stores at the end of 2005, an increase of 20.7% compared to 2004. The 30 largest chain stores accounted for 7.3% of total retail sales, worth $831 billion last year.

Last September, in an attempt to outmaneuver rampant piracy in the country — and to a lesser extent, Russia — Warner Home Video and Universal Pictures International agreed to distribute each other's DVDs in the two countries.

In March, Warner Bros. is reportedly planned to open 200 branded retail stores in China in the coming years, including the first in Shanghai.

U.S. Commerce Secretary Carlos Gutierrez, who witnessed the signing, said the distribution agreement between Fox and Zoke represented is an important symbol of the stake both China and the U.S. have in seeing intellectual property rights enforced in China.

“This partnership is a great example of the growing market for legitimate films in China and why American and Chinese products deserve IPR protection,” said Gutierrez. “The Chinese government has moved forward in a number of areas on protecting intellectual property rights, and we look forward to continuing to work together in making further progress on these challenges.”

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