DreamWorks Animation announced plans to build Oriental DreamWorks, a studio in Shanghai, in what it billed as a landmark joint venture agreement with two state-owned Chinese media companies.
The creator of the "Shrek" movies said it was forming Oriental DreamWorks, a joint venture with China Media Capital and Shanghai Media Group in concert with Shanghai Alliance Investment -- an investment arm of the Shanghai municipal government -- to establish a family entertainment company in China.
With an initial investment of $330 million, the Shanghai studio would develop original Chinese animated and live-action movies, TV shows and other entertainment catering to the China market. The deal was among several business ventures announced in downtown Los Angeles during an economic forum attended by visiting Chinese Vice President Xi Jinping, who is widely expected to be the country's next leader.
"We share the same vision with DreamWorks Animation to build a world-class family entertainment company," Ruigang Li, chairman of China Media Capital said in a statement. "Oriental DreamWorks will be a unique position to create high-quality content and interactive entertainment products for China and international markets."
The new studio, which has been recruiting some staff in Hollywood, plans to begin operations later this year and could eventually surpass the size of DreamWorks' headquarters, which employs more than 2,000 people, Chief Executive Jeffrey Katzenberg said in an interview.
"Our objective is to build an animation studio that is competitive with what we're doing here," Katzenberg said. "We already have people working on over a half-dozen projects."
The studio eventually hopes to produce one animated feature film a year, with its first release set for 2016. Additional animators will be hired locally to accommodate the new China facility, Katzenberg added.
The joint venture is the latest push by Hollywood to mine the world's largest country. Last year, DreamWorks signed a deal with online video site Youku.com to distribute the studio's popular "Kung Fu Panda" movies in China. Beverly Hills-based RealD also has partnered with Beijing SAGA Luxury Cinema Management Co. to equip the Chinese theater chain with 3-D technology. Production companies Relativity and Legendary East also have unveiled new ventures to co-finance and release movies in China.
"When you look out five to seven years from now, China will be the No. 1 media market in the world," Katzenberg said. "It's a huge opportunity for us."
Major Hollywood studios have been frustrated, however, by rampant intellectual-property piracy in China, as well as restrictions the government places on the number of foreign films it allows into the country, and how much revenue foreign studios can share.
Talks between U.S. and Chinese officials to ease those restrictions have heated up this week, raising the possibility that an agreement could be reached during Xi's U.S. visit.