Apple Has a Great Chinese Opportunity

By Michael Douglas Carlin

Wanda has emerged as the preeminent company building out a chain of movie theaters in China and acquiring AMC that operates a chain of movie theaters. They built their strategy on the old adage it is about butts in seats. Their success in leveraging their Chinese strategy into a brisk American strategy led them to acquire Legendary – a reliable producer of content. But Legendary isn't capable of producing all of the content required by the AMC/Wanda Pipeline. They still need outside relationships. But other Chinese companies are also rising to fill the gaps.

Independent producers and major studios constantly attract new investment into untested films to fuel the spirit of the entertainment industry in China and America. Franchise films with track records rarely need outside investment. There are lots of players in the world of film finance including government incentives, presales, equity investors and others. Chinese money has become one of the jewels in film finance. For every real investor there are hundreds of pretenders.

I have been sitting on the fringe of a Chinese deal in Hollywood for the past 2 ½ years. There have been contracts signed by multiple investors but the money never seems to move. I also sat with a former CEO of a major agency who arrogantly said to me that he had China wired. When it was time for his announced deal to actually fund there was a blow-up, the funds evaporated, and so did most of his agency. But Chinese deals are too lucrative to ignore so they still get pursued at great cost. What if there was a way to take the movement of funds as an issue off of the table?

Apple may be uniquely situated to facilitate investment funds moving out of China. Apple’s iTunes figures to play a key role in the future of digital platforms. Apple has a continued need for product to fuel this digital platform and they could acquire this product by facilitating investment funds flowing out of China. You see, Apple operates a brisk consumer business in China and they are sitting on lots of RMB at any given moment. That consumer business also is a customer base of screens that can view films - eyeballs on screens. Apple also operates a manufacturing operation in China and they ship billions of dollars every year to fund the production of their phones, tablets, computers, and devices.

Apple and Hollywood already enjoy a close relationship. There are many Apple ties into Pixar that was formerly an Apple affiliate. Apple already gets content from many studios and independent producers for their platform. Apple already has the relationship with the Chinese Government. They sit in a unique position to help facilitate investments flowing into Hollywood to develop and produce Hollywood content. But Apple also sits in a unique position to help China build out their movie industry. They have the strategic positioning and relationships to make this happen. The smart production company negotiating with investors in China would begin reaching out to Apple to forge an alliance. The right relationship with Apple takes the movement of money off of the table on announced deals that face delays and eventually fail to fund. As the business model shifts from butts in seats to eyeballs on screens Apple figures to play a key role. The only question is: Will Wanda get to Apple first?

UPDATE: A few days after this article appeared Apple was banned by the Chinese Government. Their movie and iBook apps have been removed from all of their devices in China. That means a tremendous opportunity for the company in China that gets Chinese Government approval to stream movies and partners with Apple. It will be interesting to watch the developing landscape of Chinese movies.

www.centurycityview.org
www.centurycitynews.com