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Business

Sony, Wanda team up in China movie business

Wanda owns cinemas with more than 2,000 screens in China.

DALIAN, China/TOKYO -- Sony is set to spread its Hollywood films across China through an alliance with the country's largest theater operator.

On Friday, U.S.-based Sony Pictures Entertainment and Chinese conglomerate Dalian Wanda Group announced an alliance in which the partners will collaborate on marketing "Spider-Man" and other Sony movies in the world's most populous country.

This is the first alliance between the two companies, according to Sony. Wanda will collect funds from Chinese companies wishing to have their products shown on-screen and pass the money along to Sony to cover production costs. The arrangement could also lead to roles for Chinese stars.

The deal does not include mutual equity purchases or a joint venture establishment.

Sony Pictures has not had a subsidiary in China, partly because of censorship and a labyrinth of regulations. Its films are now sold through two distributors, the China Film Group and Huaxia. Wanda will be a third distributor in addition to a mediator for product placement deals, showing Sony movies on its screens.

At Sony, which is involved in everything from electronics to games to finance, film is becoming more important in terms of revenue. The studio booked sales of 938 billion yen ($9.3 billion) through the year ended in March, up 6.8% on the year. It expects to see 7.7% growth in the current fiscal year.

The Sony representative did not provide a specific target figure or say how much Sony movies are currently earning in China, only that "we want to increase our film presence in the growing market." Featuring Chinese actors and products has proved a successful strategy for such rivals as Paramount Pictures, whose 2014 "Transformers" film shattered box-office records in China and helped boost sponsors' image and sales.

According to EntGroup, a Chinese entertainment industry researcher, total box office revenue of Chinese films in 2015 was estimated at $6.7 billion, a 31% rise from the previous year.

Wanda hopes to bank on its burgeoning home market to make acquisitions and become a global theater chain and filmmaker. It is already on that road. In 2012, it acquired AMC cinemas in the U.S. In 2015, it took over Australian cinema operator Hoyts. In 2016, it bought the U.S. studio Legendary Entertainment.

Through the alliance with Sony Pictures, Wanda gains rights to Sony's popular franchises and upcoming releases that it can use to fill its cinemas.

"As the global film industry continues to explode, Wanda will seek additional strategic alliances with content makers," a Wanda executive said in a press release on Friday. "Its track record and unparalleled assets in China make Wanda the key partner in the coveted Chinese marketplace."

The group now has more than 7,500 screens around the world.

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