China’s Perfect World to invest up to $450 million in Universal film slate

Beijing-based video game maker Perfect World has agreed to invest in Universal Pictures’ movies, marking the latest deal between a Hollywood studio and a Chinese company.

Perfect World Pictures, the gaming firm’s movie and television operation, has entered a five-year agreement to help finance 50 of Universal’s upcoming pictures starting this year, the companies said in a statement. Jeff Shell, chairman of Universal Filmed Entertainment Group, announced the deal Wednesday.

Universal’s new Chinese partner is expected to invest $250 million for equity in Universal films, according to people with knowledge of the matter who were not authorized to speak publicly. Additionally, Perfect World may raise $200 million in debt as part of the deal.

Perfect World Pictures, led by President Rong Chen, is expected to cover 25% of the production costs for many, but not all, of Universal’s films, helping the Comcast-owned studio spread some of the risks inherent in making theatrical movies. For Perfect World, which is setting up a Los Angeles office, the deal should help the company grow its film business and increase its reach outside its home country.

“It’s indicative of the new synergy that’s developing between China and Hollywood,” said Stanley Rosen, a political science professor at USC and an expert on China. “As with all of these deals, the importance to the Hollywood studio is the access to capital and the possibly increased access to the Chinese box office.”

Partnering with Perfect World could help to further Universal’s presence in China, where its movies “Jurassic World” and “Furious 7” were huge hits at the box office last year. Universal is releasing the upcoming Matt Damon science-fiction film “The Great Wall,” a co-production with Legendary Entertainment, the state-run China Film Group and Levision Pictures.

Chinese companies such as Perfect World have taken an interest in Hollywood lately as the world’s most populous country looks to expand its booming film business. China’s box office grew nearly 50% to $6.8 billion last year.

A digital animation studio backed by Chinese social networking company Tencent Holdings, for example, has launched an animation studio in Culver City run by former DreamWorks Animation executives.

Last month, Chinese conglomerate Dalian Wanda Group bought Burbank production company Legendary Entertainment for $3.5 billion.

Legendary, led by Thomas Tull, also has a deal to co-finance some Universal movies, including last year’s “Jurassic World.” The Perfect World-Universal partnership is not expected to have an effect on Legendary’s agreement.

Chinese companies have also helped fund American ventures such as Robert Simonds’ STX Entertainment and Jeff Robinov’s Studio 8.

And last year, “The Hunger Games” studio Lionsgate signed a co-financing deal with Hunan TV & Broadcast Intermediary Co., in which the Chinese company pledged $375 million over three years.

“Building out our film business and expanding into international markets are two of the most important initiatives for Perfect World,” Michael Chi, chairman of Perfect World, said in a statement.

Perfect World Pictures, which trades on the Shenzhen stock exchange, has produced TV shows and local-language films, and has marketed Hollywood movies such as “Ghost Rider 2” and “Ender’s Game” for audiences in China.

The companies did not disclose any titles that Perfect World would co-finance. Universal could eventually make movies based on Perfect World’s video games, analysts said.

[email protected]