With the Chinese government’s clampdown on foreign investment on entertainment, Tencent’s investment into Skydance Media becomes a prominent deal. The conglomerate took a minority stake in the Western media brand, and the investment represents a broader strategic partnership that includes the opportunity for Tencent to co-finance films while marketing and distributing merchandise in China.
How Tencent Benefits
Although Tencent’s interest may be in growing the global reach of its film division, the company can also support TV, video game and VR projects with Skydance—like the brand’s Netflix exclusive, Altered Carbon, which premiered in February.
“Our strategy is to create content natively in one division that can cross over into one or both of the other divisions, giving fans multiple touchpoints in which to experience and interact with Skydance content,” Jesse Sisgold, president and COO for Skydance Media, told AListDaily.
Sisgold also said that Tencent will have the opportunity to partner on Skydance projects on a “first-look” basis, which may include the upcoming Mission Impossible: Fallout and the next Terminator film along with all-new projects.
Although the primary goal will be to develop content for global audiences, Sisgold said that Skydance is “very open-minded” in pursuing co-productions with Tencent that appeal mainly to the Chinese market. He added that a Chinese production would be the type of project where the “story and characters authentically call for production and key elements out of China.”
Newzoo market consultant Tom Wijman explains that Tencent benefits from the fact that Skydance owns the rights to popular franchises that include Star Trek, G.I. Joe, World War Z, Top Gun and others, contributing to nearly $5 billion in worldwide box office.
How Skydance Benefits
It’s not uncommon for popular Western franchises to have large followings in China, but Tencent’s marketing through its QQ and WeChat, the dominant Chinese social platforms, and its expertise of the market, may strengthen them even further.
“So much more is handled online in China than here,” said Sisgold, comparing the Chinese market with Western ones. “This allows an effective distributor in China to leverage large amounts of consumer data and habits, and as a result employ a more focused and efficient marketing conversation directly with the project’s likely consumer—versus the scorched earth approach that often occurs with billboards, TV commercials, etc., here.”
The partnership allows Skydance to leverage Tencent’s unmatched presence in the Asian market. Given Tencent’s online ticketing platforms, social messaging apps and online video platforms, the impact of its promotion “can be instant and massive,” according to Sisgold.
“If they really activate all relevant tools at their disposal, they can go beyond really anything we experience here for a fraction of the cost,” said Sisgold.
Affirming the importance of the Chinese market, Sisgold also said it’s important to have a local partner to be effective.
“Their well-established network and massive reach among online consumers combined with their fan base around game publishing and social media responds well to our tentpole, sci-fi adventure productions,” said Sisgold. “In addition, it has valuable know-how to publish, market, and distribute films in the Chinese market.”
In exchange for its distribution strength, Tencent is complemented by Skydance’s experience producing and financing feature films, according to Sisgold. But the relationship has the potential to extend past movies, since Skydance also produces video game and VR content, with a zombie-themed World War Z game expected to release later this year. The company released Archangel, its first entry into VR, last summer.
Given Tencent’s extensive investments in the gaming space, which is documented in the Discovery Channel’s film Game Vision, Skydance’s interactive titles could benefit greatly from the partnership. At the same time, Tencent can license IPs from Skydance for its upcoming games.
“Backing from Tencent means that any Skydance product is guaranteed to be featured on QQ and/or WeChat,” Wijman explained. “Any interactive game Skydance might publish definitely has the potential to be featured there as well.”