HuaHua Pulls out of Paramount Deal – A Pattern Emerges

December 2, 2017
In January, it appeared as though Paramount Pictures scored a significant deal. Bejing’s Huahua Media had come to an agreement with the motion picture studio to invest $1bn in future productions, the latest in a series of moves which suggested that China would be the main international benefactor for Hollywood; in the short-term, at least.

However, that deal has now been scrapped after months of speculation. Paramount said that the co-financing agreement, which would have covered 25 percent of its production slate, was scrapped due to the Chinese government clamping down on foreign investment in a number of industries, including entertainment.

“image” (CC BY 2.0) by David Guo’s Master

The latest withdrawal

The move was a massive blow to the studio but also symbolic of a wider move away from Hollywood working with foreign investment— in particular, from China. China, which boasts the second largest film market in the world, has been a significant factor behind box office revenues and has played a vital role when it comes to offsetting the ever-increasing costs of movie making. In recent years, global investors have financed up to 35 percent of production budgets.

The retreat from China falls in line with a pattern of global investors, who, when pursuing their Hollywood investment ambitions, seem to hit a stumbling block. Japan’s Sony Corp, for example, has struggled when it comes to getting its TV and film division to work alongside its electronics company.

Online content is thriving

Capital for the TV and film business in the U.S. isn’t in short supply, however. Tech firms, such as Amazon, Apple, and Netflix, are overusing millions on shows and movies for their streaming services.

The success of on-demand services is part of another trend, and that is more and more entertainment finding its way online. That isn’t limited to shows and movies but more interactive entertainment, such as gaming and online casinos, the latter of which is causing quite the ripple of late. There are advantages to playing online and, with sites such as Bitcasino setting up a personalised experience for the VIPs, it’s easy to see why online casinos are going the same way as on-demand services.

So, while global investment in Hollywood may be in trouble, online content seems to be having no such problem, as Netflix reminds us.

Netflix to invest $8bn​​

“Netflix-Serials-List” (CC BY 2.0) by Cerillion

Netflix, in fact, is expected to invest $8bn in content in 2017, including both originals and licensed material, an increase from $6bn in 2017. The company is purchasing international rights to movies, which leaves fewer opportunities for foreign distributors to fund movies by buying distribution rights. Apple has also spoken of plans to spend £1bn in original movies and TV shows within the next year.

Hollywood not going broke just yet

Plenty of global money still circulates throughout Hollywood, in fact. Sovereign wealth funds have long had an interest in movie investment. Wealth funds, which include GIC and Temasek, recently backed talent agencies WME0UNG and CAA, respectively.

Billionaires representing other industries are still investing, but are seeing mixed results. A recent example would be Fred Smith, founder of FedEx, who backed Alcon Entertainment, which produced the Warner Brothers hit, The Blind Side, but also recently gambled on the costly disappointment, Blade Runner 2049.

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