Filmart: China's Pearl Studio Execs Talk Plans Post-DreamWorks, New Netflix Partnership

Pearl Studio CEO Frank Zhu and chief creative officer Peilin Chou - H 2018
Pearl Studio

The Jeffrey Katzenberg-founded Shanghai animation studio is now fully backed by Beijing investment group CMC Capital Partners and plans to produce one to two features for global consumption per year.

Founded by Jefferey Katzenberg in 2012, the Chinese animation company formerly known as Oriental DreamWorks is now starting a second life as Pearl Studio.

NBCUniversal inherited a 45 percent stake in the Shanghai-based studio when it acquired Katzenberg's DreamWorks Animation for $3.8 billion in 2016. For a time, it was unclear what would become of the Chinese company, since NBCUniversal already had a solid film team of its own in Beijing, not to mention the daunting task of integrating or running DWA and Illumination Entertainment side-by-side stateside.

CMC Capital Partners, DWA's founding partner in the joint venture, provided an answer in February when it announced that it had bought out NBCUniversal to take full ownership of the studio, which it would be rebranding as Pearl Studio.

Pearl Studio continues to collaborate with Universal and DWA on its first major feature, Everest, which is set for a worldwide rollout in fall 2019. Directed by Jill Culton, the film follows a group of misfits who meet a young Yeti named Everest and embark on an epic quest to reunite the magical creature with his family at the highest point on Earth. Universal will distribute the comedy adventure worldwide outside of China, while Pearl will handle the release within the Middle Kingdom.

Shortly after CMC's takeover, Pearl announced that its next feature would be the musical adventure Over the Moon, directed by legendary animator Glen Keane and distributed by Netflix in all territories outside of China. Keane — a Disney mainstay who trained under Walt Disney’s Nine Old Men — was lead animator on classics like The Little Mermaid, Beauty and the Beast and Aladdin, and most recently he directed the Academy Award-winning animated short film Dear Basketball, written and narrated by Kobe Bryant. Described as a modern-day retelling of a Chinese myth, the film follows a girl who builds a rocket ship and blasts off to the moon in hopes of meeting a legendary Moon Goddess. Over the Moon is written by Audrey Wells (A Dog's Purpose, Under the Tuscan Sun).

Although Pearl no longer will benefit from the direct support of DWA's deep industry expertise, the company has a powerful local backer in CMC. The Beijing investment group, headed by consummate dealmaker Li Ruigang, also holds major stakes in Warner Bros.' Chinese film studio Flagship Entertainment, CAA China and Brian Grazer and Ron Howard's Imagine Entertainment, as well as a plethora of Chinese entertainment and media holdings.

Holding the reins at the newly independent Pearl Studio are CEO Frank Zhu and chief creative officer Peilin Chou. Zhu spent five years at The Walt Disney Co. as one of the studio's first China-based executives before joining Oriental DreamWorks under Katzenberg as a member of the company's founding executive team. He was named CEO in May 2016. Chou, also a Disney alum, previously served as a creative executive at Walt Disney Feature Animation and Touchstone Pictures, where she worked in development and oversaw the production of numerous features, such as Mulan, Toy Story 2 and Hercules.  

Pearl unveiled a five-film development and production slate in September. It included an untitled intergenerational comedy project, conceived and executive produced by Master of None's Alan Yang, and an animated cat comedy written by Jenny Bicks (The Greatest Showman, HBO's Divorce and Sony’s live-action Barbie movie). The company's one major release to date was Kung Fu Panda 3 ($521 million worldwide), which was produced and released as an official U.S.-China co-production with the former DWA parent company.

The Hollywood Reporter spoke with Zhu and Chou in advance of Filmart to discuss Pearl's motivations behind the split with Universal, its approach to Chinese-themed filmmaking for the world and why its recent partnership with Netflix is a "genius combination."

What can you tell us about why CMC decided to part ways with Universal Filmed Entertainment and go its own way with the company as Pearl Studio?

Zhu: The deal itself is between our shareholders and they haven't disclosed any specific terms. But I can share my interpretation. We know that our Chinese shareholder CMC has very strong confidence in our company after five years of operations. We demonstrated our capability of making a movie independently, and we believe that we've learned a lot from our Hollywood partners. And we've built a team very successfully over the past five years. From the beginning of this venture, CMC had a vision that they wanted the company to grow and independently develop into a world-class animation studio. And now they feel it's the right time. They want to bring the company to that next level.  

Why did Universal want to step back from the venture?

Zhu: I can't speak for them, but I think "step back" is not the right interpretation. We still hold a very close relationship with Universal from multiple perspectives. We just announced the global distribution with Universal for Everest. We're also exploring other strategic partnerships, so I would say we're still very close with Universal.

How will the continuing collaboration with Universal on Everest work?

Zhu: They will be the global distributor for Everest outside of China, and DreamWorks Animation is still involved in the production. Also, we're exploring other Everest-related business; for example, consumer products and other ancillary business possibilities. It's definitely a comprehensive partnership.

Chou: In terms of their investment of creative personnel, a specific percentage of DreamWorks is involved in making this film. Chris DeFaria, their CEO, is integrally involved on a day-to-day basis, in terms of working in partnership with us on driving the creative direction of the film. So it's something we're very much doing in collaboration with them, from a practical and creative perspective.

Is the film expected to be an official U.S.-China co-production, as Kung Fu Panda 3 was?

Zhu: We are actually in still in the process of communicating with SARFT and submitting the application. It's still too early to give a specific answer to that question.  

As Pearl studio embarks on this new chapter, are you going to be targeting the global marketplace, or will your films be more geared towards the domestic Chinese audience?

Chou: Our focus is definitely global films but with a hyper appeal within the China market. The reason for that, apart from our identity as a Chinese company, is that our films are guaranteed to play in China. We want to ensure that our films are successful in a market where we know they're going to play, and it helps that this market is currently the second-largest, soon to be the largest theatrical market in the world. But all of our films are really intended to be global.

One of the ways that we try to ensure that our films can have that hyper-appeal in China is by having the films have authentic Chinese elements in them, similar to the way that Kung Fu Panda really resonated with the Chinese audience. We have about a dozen films in development in addition to the five titles we've already announced, and most of those projects do have some sort of Chinese element. We call it an element because it's not necessarily based on Chinese history or mythology. Sometimes it can be a Chinese character, a Chinese theme or a Chinese point of view. There's so much universality in animation, in the way that stories can be told; we don't feel that these elements are limiting in any way in terms of global appeal. Coco was a great example of a film that was very culturally specific but resonated with audiences all over the world. That's similar to what we're trying to achieve.

The industry is really waiting for some exemplary projects to hold up, since there just haven't been many films that have emerged from China and been successful on a global basis.  

Chou: Well, we hope to fill that slot. The other characteristic that I would use to describe the types of films that we're making is that our target is world-class filmmaking. Doing a film with Glenn Keane, for example, really speaks to the level we are aspiring to.

In terms of language, are you going to be using the same model that Kung Fu Panda 3 employed, where the characters' mouths and gestures were animated in both Chinese and English versions from the start?

Chou: Whether we do the actual lip-synch in both languages is something we're still looking at. It was a wonderful thing to do for Kung Fu Panda 3, but it's interesting — a lot of Chinese fans intentionally went to see Kung Fu Panda 3 in English even though it was in both languages. They're so used to seeing films from Hollywood these days. There was a hunger to see the film in Mandarin, and that version helped it reach a wider audience than it would have otherwise. But there also was a hunger for authenticity for how the film was made, for the director's vision and for the star voice cast in English. So we haven't made final decisions on this issue, but our films will certainly be a localized experience for the Chinese audience in every other way.

From the slate you've unveiled so far, it seems a lot of your projects are being written or executive produced by Americans. How do you negotiate the localization process during development, since success in the China market is paramount?

Chou: It is a challenging path. But of course we feel we've cracked the magic formula here at Pearl Studio. (Laughs.) The way we do it is that we have a development team that is half native Chinese and half Chinese-America or American, and we work very closely together to examine the creative criteria and direction of our films. The ideas for about half of our slate were internally generated. With all of our different cultural backgrounds, we work together to produce a one-sheet outlining the characters, theme and general story. This process can take months before we get to a position where we're comfortable with it. If the film we give birth to appeals to all of the members of our diverse team, we feel that's a microcosm, in a way, of the different backgrounds of the world.

Oriental DreamWorks was founded in 2012, but so far the only film to emerge from the studio was Kung Fu Panda 3, and Everest is set for 2019. Some might have thought that we would have seen more product by now. Is that fair?

Zhu: Like every new startup company, it takes some time to learn and set up a team entirely from scratch. I have a lucky experience here because I joined the company from the very beginning and I've witnessed our growth from scratch. It's an unforgettable venture. I understand what you're saying, though — I've read a lot of news based on rumors about what's happening at the studio, and I'm surprised at the creativity that went into some of that reporting. (Laughs.) The real story is a lot more boring. I would say that five years to develop a world-class animation studio, to develop a creative hub model, is earlier than I expected. It's not an easy thing to do. I should also mention that we're not just copying the DreamWorks Animation system here. We're actually creating our own system, but with the creative expertise and technological power that they were willing to share with us. So it's really been an entrepreneurial venture, rather than setting up a branch or copying a studio from the U.S. to China. From that perspective, I think five years is actually quite good. Now we really have a strong pipeline and set of systems in place that enables us to output content in a more consistent and diversified way. So the next five years will be even more exciting.

What kind of output are you targeting?

Zhu: For global animation movies, we are looking at at least one to two per year. We have one announced for 2019 and one for 2020. After that, it will be at least one or two per year.

For Over the Moon, does your Netflix partnership entail creative collaboration or did they just pick it up for international distribution over their platform?

Chou: They are very much our partners in the film in all ways. They are invested and part of the creative decision-making. We're the lead producer, but they are very involved.

The release model is compelling — theatrical in China and Netflix for the rest of the world.

Zhu: Absolutely. China is the fastest-growing theatrical market in the world now, and Pearl Studio has a very strong presence here thanks to our shareholder CMC, which owns one of the biggest theater chains, has its own distribution team and is invested in multiple media platforms for movie marketing. Netflix is not in China yet, but outside of China they are blowing everyone else away. So it's a genius combination.

Is this a model you would like to extend beyond Over the Moon? Or do you aspire for other films aside from Everest to get theatrical distribution overseas?

Chou: We're looking at it on a film-by-film basis. We would love to partner with Netflix again. Different films are best served in different ways. One of the things that's exciting about our new makeup as a company is that we obviously are no longer exclusive to Universal, so we're obviously able to pursue any partnership that we feel best serves the film.

During this transition phase of separating from Universal and DWA, there was talk in the Chinese industry that you were shedding staff.

Zhu: We have had improvement in the structure of our team over the past 12 months. As I mentioned, we used to have our own internal theatrical distribution team, but after discussing with CMC and taking stock of their great position in theatrical distribution in China, we didn't think we needed to build internal capabilities in the way we used to. We can leverage CMC's capacity there. So we have wanted to improve our structure and move towards greater efficiency.

Chou: It was similar from a production standpoint. We were originally working from the view that everything needs to be handled in-house. Now we are going much more towards a creative hub model similar to Illumination, where we find production partners and thereby require less resources internally. So the adjustments that were made in personnel were all part of a more efficient and streamlining strategy. And those were things that were happening prior to the situation evolving with Universal. It was a strategy for the company that they were on board with also, prior to this new phase. Now we feel we're rightly sized for our goals.

Now that you're operating without the direct partnership of DWA and Universal, how are you cultivating the relationships you need in Hollywood to bring established industry talent onboard as collaborators?

Chou: We have an office in L.A., which is the front-end hub of Over the Moon and the whole Everest production. We have executives in New York who are in L.A. at least once a month, and I'm constantly on an airplane, too. We're also trying to really maximize our unique perspective of having a strong presence in New York. So much of the finest playwriting and songwriting talent really resides in New York City. We're developing a number of musicals and have been able to connect with that talent. We're also discovering that a lot of screenwriters are more than happy to leave L.A. to come write in New York. But this industry is a global community, and some days I spend half the day on video conference with different countries every hour. If you're talented, we'll connect with you, no matter where you live.