A company with ties to both the Chinese government and to Hollywood said it is bringing a Netflix-like movie-streaming service to mainland China, with films from at least one major U.S. studio.
The as-yet-unnamed service is a joint venture between Jiaflix Enterprises and a subsidiary of the government-owned China Movie Channel. The new service will launch this fall with films from the library of Viacom Inc.’s VIAB +1.09% Paramount Pictures. Jiaflix executives said they are in talks with the other big Hollywood studios and expect to close another deal this summer.
The new streaming service resembles that of Netflix Inc., NFLX +1.04% which has identified expansion in Latin America and Europe as a central element of its growth strategy. Netflix has yet to enter the Chinese market, where online piracy has long served as a deterrent to Western entertainment companies.
China Movie Channel’s online subsidiary, M1905.com, already makes some Chinese movies available online. Founded in 2004, the site has more than 3 million registered users, the companies said. The new service being started with Jiaflix will make foreign movies, including U.S. studio releases, available to Chinese audiences.
Among Jiaflix’s founders is Sid Ganis, a movie producer and former president of the Academy of Motion Picture Arts and Sciences, the entity that presents the Oscars. His credits include “Deuce Bigalow, Male Gigolo” and “Pan Am,” the now-cancelled prime-time soap opera about the airline. His cousin Marc Ganis, president of the sports-business advisory firm Sportscorp. Ltd., is another cofounder. A third partner, Chinese entrepreneur Kenneth Huang, has been involved in American sports teams’ business dealings in China. The men said they funded the new venture themselves.
In addition to providing movie content on the Internet, the U.S.-China enterprise also has plans in the works for co-production and exporting Chinese movies abroad, according to Marc Ganis.
Among the challenges facing the new service: convincing Chinese to pay to watch films and television shows, when pirated versions of so many programs are pervasive in the country.
Jiaflix and M1905 said the two companies are developing “a program to combat Internet piracy in China.” The companies didn’t elaborate.
Sid Ganis said in an interview Thursday that by distributing movies online, his company would be able to circumvent the limits that the Chinese government places on the number of foreign films that can be released in theaters there.
“The Chinese government is welcoming the idea of the Internet becoming a source for film enthusiasts to access good movies legally,” he said. Restrictions on Internet content are “less cumbersome” than in theaters, he added.
China recently increased the number of foreign films that can be distributed in the nation’s theaters. But studios have had less access to online customers. Apple Inc. AAPL +1.90% launched its iTunes services in nine Asian nations earlier this week, but not in China.
Mr. Ganis said Jiaflix hasn’t yet set a price, but he said that it would be “affordable.”
Jiaflix also said it had reached what it described as a multi-year licensing deal with Paramount Pictures. The Ganises said the company is in discussions with other Hollywood studios. “Every single one has said they want to present us with content,” Marc Ganis said.
Asked what kind of money Paramount stands to make from the Jiaflix deal, Sid Ganis said the service offers exposure in China for the studio’s catalogue of new and old movies. “In the long run there’s money to be made on the Internet,” he said. “It’s a business deal that hopefully will become lucrative.”