DreamWorksAnimation and Chinese partners announced plans Tuesday to co-produce the next"Kung Fu Panda" movie and develop an entertainment district inShanghai, expanding Hollywood's fast-growing ties to China.
Hollywood studios have announced a flurry of deals with local partners to gainaccess to Chinese financing and a government-controlled film market that isgrowing strongly at a time of weak ticket sales in the United States andEurope.
"Kung Fu Panda 3" will be produced in China and released in 2016,according to DreamWorks Animation SKG Ltd. and its state-owned local partners —China Media Capital, Shanghai Media Group and Shanghai Alliance Investment.
They said the movie will be produced by a new joint venture, Shanghai OrientalDreamWorks Film & Television Technology Co. DreamWorks will own 45 percentof the company and the Chinese partners will hold stakes totaling 55 percent.
Oriental DreamWorks plans to release one to three films per year and employ asmany as 2,000 production professionals, the partners said. They said it aims tobecome the largest animation production base in China and also will exploreopportunities in online games, musicals and consumer products.
The planned entertainment district in Shanghai's Xuhui area, with investment ofmore than 20 billion yuan ($3.2 billion), will include cinemas, theaters,restaurants and tourist attractions and is due to open in 2016, the partnerssaid.
They said the project is modeled on London's West End and Broadway in New YorkCity.
China Media Capital, whose owners include state-run China Development Bank,owns a controlling stake in News Corp.'s China television channels and otherassets. Shanghai Media Group operates television and radio broadcasters.Shanghai Alliance Investment is an arm of the Shanghai government.
Other studios including DreamWorks rival Walt Disney Co. have announcedco-production deals in China and are adding Chinese elements to films to appealto the growing local audience.
China's box office sales rose by one-third last year to $2 billion whilerevenue in North America, though still far larger at $10.2 billion, has fallenfor two straight years.
Disney said in April the third installment in its "Iron Man"franchise would be co-produced with Beijing-based DMG Entertainment. DMGco-produced the thriller "Looper," starring Joseph Gordon-Levitt,Bruce Willis and Emily Blunt. It includes scenes filmed in Shanghai.
China's communist leaders want to build a globally competitive film industryand hope their studios can learn from Hollywood partners. They are trying toattract foreign studios to form joint ventures by promising more market accessand a bigger share of ticket sales.
China has dozens of small, mostly anonymous companies that do animation workoutsourced by foreign film studios and video game companies. Beijing wants tocapture more of the profits by nurturing the growth of studios that can createtheir own popular characters and movie franchises.
The "Kung Fu Panda" movies, about a bumbling panda who becomes amartial arts hero, are hugely popular in China. They prompted debate about whya Hollywood studio was more successful than the country's own studios atcreating a successful movie based on Chinese themes.
A key complaint among Chinese filmmakers is extensive government censorship andefforts to influence the content of movies.
Last year, Legendary Entertainment, producer of hits including "The DarkKnight," formed Legendary East with Chinese studio Huayi Brothers MediaCorp. It plans one to two movies per year, mainly in English and based onChinese themes.
Another studio, Relativity Media, said last year it would make movies with twoChinese partners for global audiences and distribute movies in China.
Foreign studios hope partnering with local companies will increase their accessto China's tightly controlled film market.
For the past decade, China's state-run film distributors have allowed in only20 foreign films per year for national distribution. The foreign share ofticket sales is limited to a range of 13.5 to 17.5 percent.
In March, the government announced it will allow in an additional 14 foreignfilms if they are made in 3-D or for the big-screen Imax format. It raised theforeign share of ticket sales to 25 percent.