In an obvious move to try out how it will work to release movies simultaneously across multiple platforms, News Corp. (NWS-A), billionaire Patrick McGovern and Hearst Corp. have teamed up to form a new venture in China to find out how it will work.
Not only are they looking making movies, but also selling DVDs and virtual reality and computer games in the Chinese market. The initial investment by the companies totals $50 million.
The major part of the strategy to battle the pirates is by releasing movies simultaneously at the theater, pay-per-view TV and on DVD.
Historically the problem has been the time between the release of the film and its release on DVD months afterward. The time in between is what created the black market.
The initiative is called the China New Media Fund, and has been seeded by the three major media companies.
"This is our pilot fund," said McGovern. "We'll probably do five or six films with that fund, and then we'll see about doing a second fund of around $150 million."
Patrick McGovern
The first thing I thought of in hearing this was what the cost of the DVDs and pay-per-view would be in contrast to the black market operators - a definite part of the overall problem. If that is dropped to the point of making it not worth pirates' while to produce the copies, it could really make a huge difference in the international market and profits.
The other question is whether these are going to be movies made by the Chinese, or are they going to be movies made in the U.S. and then exported to China? With only $50 million as seed money, it seems that they will probably be movies made in China specifically for the Chinese market.
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