Influential Chinese video platform Bilibili has taken a 9.9 percent stake in Huanxi Media, the rising film and TV studio that counts blockbuster directors Xu Zheng, Zhang Yimou and Ning Hao as major shareholders.
Bilibili agreed to invest $513 million Hong Kong dollars ($66 million) in Huanxi in exchange for almost 347 million shares in the studio, which is listed on the Hong Kong stock exchange. Bilibili, listed on the Nasdaq, saw its shares climb about 5 percent in pre-market trading on the news.
Under the deal, Huanxi and Bilibili have also signed a five-year cooperation agreement that involves the companies sharing the Chinese streaming rights for Huanxi’s tentpole films and high-end series. Huanxi already operates its own in-house startup streaming service, Huanxi Premium, which targets an upmarket white-collar subscriber base; but the company says that reaching Bilibili’s users, who are famously youthful and trendsetting, will supplement the reach and monetization of its content.
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Bilibili will launch a dedicated Huanxi channel on its platform, and the companies will share in the revenue generated from the subscription and transactional VOD sales attributable to Huanxi content. Huanxi will receive a 70 percent cut of that revenue, while Bilibili will take 30 percent, a Huanxi representative tells The Hollywood Reporter.
The first major series to be covered under the new partnership will be director Zhang Yibai’s youth drama Run for Young. The first tentpole film is expected to be Peter Chan’s volleyball biopic Leap, which opens theatrically in China over the lucrative National Day holiday on Oct. 1. The film stars Gong Li and Huang Bo and tells the story of China’s Olympic volleyball team over the past four decades. If local windowing practices hold, the film should unfurl online in November.
Monday’s deal also grants Bilibili first-look investment rights on forthcoming films and series from Huanxi. The streamer also gets to nominate a non-executive director to Huanxi’s board.
“It’s a good deal for both sides,” Huanxi’s CEO Steven Xiang tells THR. “It diversifies our institutional shareholder base and supplements our audience; and they get access to premium tentpole film content.”
Huanxi Media was founded in 2015 by Crouching Tiger, Hidden Dragon co-producer Dong Ping, director/actor Xu Zheng (Lost in Thailand, Dying to Survive) and filmmaker Ning Hao (Crazy Alien).
Veteran U.S.-China dealmaker Xiang joined the company soon after as CEO. Under Xiang, Huanxi has pursued a strategy of signing exclusive partnerships with China’s most influential filmmakers in exchange for equity in the company. Wong Kar Wai, Zhang Yimou and Peter Chan all have exclusive relationships and stakes in the studio, while other prominent directors — such as Jia Zhangke (Ash Is the Purest White), Manfred Wong (The Storm Riders) and others — are under contract. On the opposite end of the industry pipeline, Huanxi envisions its streaming service as something like a Chinese version of the old HBO, a destination for high-quality content.
Huanxi was among the exceedingly few Chinese film companies to make a splash during the height of China’s coronavirus outbreak near the start of the year. Shortly after Chinese cinemas shut down in late January, derailing the country’s usual Chinese New Year box office bonanza, Huanxi inked a $92 million deal with Chinese video powerhouse ByteDance, the company behind TikTok and its wildly popular Chinese counterparts, to jointly release Xu Zheng’s holiday tentpole Lost in Russia online for free, sharing the ad revenue. The deal, which included streaming rights to other Huanxi shows, was described as a six-month partnership that would be followed by a broader distribution tie-up at a later date. Instead, it appears Huanxi has pivoted to Bilibili as the partner to expand its online footprint.
Bilibili built its business as a video-sharing platform primarily for animation, gaming and live-streaming content, with a built-in innovation that allows users to overlay their commentary on the videos in real-time. As the service’s popularity exploded — making it a genuine rival to the big three streaming giants, Tencent Video, Alibaba’s Youku and Baidu’s iQiyi — it diversified into a range of other video content categories, including traditional film and TV series.
The company’s rising profile recently has attracted investment from more established tech giants. Sony took a $400 million stake in Bilibili in April, which followed Alibaba buying a 9 percent stake in the company last year.
“We are actively broadening and diversifying our content to appeal to a wider audience,” said Carly Lee, vice chairwoman and chief operating officer of Bilibili, about Monday’s deal. “We believe Huanxi’s library of high- quality content, as well as their relationships with China’s top directors, align with our strategy to continuously bring in rich new content, and open new opportunities to drive more and diverse demographics to our industry-leading entertainment platform.”
