Hollywood Execs Flock to Mtime's China Merchandising Expo (Exclusive)

From left: Mtime CEO, Kelvin Hou: DreamWorks Animation CEO, Jeffrey Katzenberg; Raman Hui; Alessandro Carloni, director of "Kung Fu Panda 3"; Zeng Maojun, president of Wanda Theater Group

DreamWorks' Jeffery Katzenberg pitches 'Kung Fu Panda 3' and Disney's Andy Bird touts 'Star Wars: The Force Awakens' to some 800 cinema-chain managers at an event devoted to China's surging movie merchandising sector.

The rapid emergence of movie merchandising in China — what many are calling the next great boom sector of the country's entertainment industry — was on full display in Sanya over the weekend, as DreamWorks Animation CEO Jeffery Katzenberg and executives from Disney and Legendary Pictures flocked to the southern Chinese resort town to pitch their latest pictures and related consumer goods directly to Chinese movie theater owners.

The occasion was the second edition of MCon, an annual film-industry convention hosted by digital media group Mtime, the company behind one of China's leading movie websites and mobile ticketing platforms. Founded by former Microsoft executive Kelvin Hou, Mtime has been described as Fandango, IMDb, Rotten Tomatoes and Entertainment Tonight all rolled into one.

As host of the two-day event, Mtime booked a sprawling Shangri-La luxury resort and flew in over 800 Chinese theater managers — collectively controlling a majority of the country's 31,000 movie screens — along with a roster of Hollywood power players, including Katzenberg, Walt Disney's international president Andy Bird, Legendary Pictures vp Jamie Kampel, and execs from Sony Pictures Entertainment, Mattel and the Motion Picture Association.

Over the past year, Mtime has made a bold bet that China's intellectual-property protection and consumer market have both reached the crucial stage where the country's moviegoing masses are ready to open their wallets for high-quality, licensed goods associated with their favorite film franchises.

In 2014, global retail sales of licensed merchandise hit $241.5 billion, with 44 percent of those sales coming from the character and entertainment category. But North America accounted for nearly 60 percent of the worldwide total, with Asia contributing under 10 percent — this, despite the tremendous gains of the Chinese box office, which is expected to surpass North America as the world's largest film market over the next three years.

"China has enjoyed explosive box office growth, but 80 to 90 percent of film revenue still comes from ticket sales," said William Feng, the Motion Picture Association's general manager in China, during opening remarks at MCom. "The industry is in its infancy, but I believe merchandise will be a key focus of China's movie market over the next several years."

Over the past 11 months, Mtime has launched 55 brick-and-mortar stores in cinemas in 10 cities, laying the groundwork for a cross-country online-to-offline merchandise service. On Thursday, the company released the final piece, Mtime PRO, a B-to-B mobile app that facilitates one-stop merchandising sales between Hollywood studios and Chinese movie theaters — made possible by an industrial chain of design, production, logistics and customer-service systems developed by Mtime over the past two and a half years. Mtime also has quietly signed a range of merchandise deals with all of the big six Hollywood studios. Mtime declined to share terms or details of its agreements, but it said some are ongoing and others are on a per-picture basis.

During MCon, the participating studios each gave an in-depth presentation on their latest tentpoles — including Star Wars: The Force Awakens, Kung Fu Panda 3 and World of Warcraft — along with an introduction to the myriad consumer products they have developed with Mtime for each title, which the cinema chain reps could then buy directly from the new Mtime PRO app.

Disney placed life-size stormtrooper figures throughout the venue, attracting constant crowds of selfie-snapping theater-chain staff. Katzenberg and Kung Fu Panda 3 director Alessandro Carloni made a surprise appearance at a banquet lunch to personally serve Chinese steamed buns, the preferred snack of Po, star of the Kung Fu Panda franchise.

DreamWorks Animation CEO Jeffrey Katzenberg serving dumplings to Chinese guests at Mcom. 

Opening Jan. 29 in North America and China, Kung Fu Panda 3 will be the first release from Oriental DreamWorks, the joint venture established by DreamWorks Animation, Shanghai Media Group and China Media Capital.

Introducing the film to a room full of several hundred theater-chain heads during the DreamWorks session, Katzenberg stressed the authentically Chinese elements of both the story and production process (Disney's Star Wars talks were closed to the press).

"For me personally, it is exciting to see how this movie is a big part of the journey of DreamWorks itself," Katzenberg said, adding: "The first film was made in Los Angeles and dubbed from English into Chinese. We were thrilled that it was embraced by the Chinese people ... but the third film is a truly Chinese movie on every level."

Kung Fu Panda 3 will be released in both English and Mandarin-language versions. Katzenberg said a Chinese team was consulted at each stage of the pic's production, ensuring that the Mandarin-language script's humor and slang were precisely calibrated to local sensibilities.

"This is the most technologically advanced film in the history of our studio," he said. "Never before has a film been animated in two languages," he added, explaining that not just the character's mouths but also their body language and facial expressions were created separately for the English and Mandarin-language versions of the film.

Oriental DreamWorks vp Kitty Xu later took the stage, saying, "We are confident that Kung Fu Panda 3 will surpass Monster Hunt to become the highest-grossing Chinese film ever."

She then launched into a detailed overview of the exhaustive range of Chinese products that Oriental DreamWorks has developed for Kung Fu Panda 3's rollout, spanning toys, house wears, footwear, jewelry, apparel, electronics and much more.

As is customary at industry conventions nowadays, at least a third of the assembled guests were looking down and thumbing smartphones. This time, however, many may have been placing merchandise orders on Mtime PRO.