'Warcraft' Secret Weapon Tencent May Hold the Real Keys to China's Movie Market

“Warcraft” may have been a box-office dud in the U.S., but it was one of the highest-grossing Hollywood movies ever to play in China. Some of that was the game‘s built-in fanbase — China has about half the world’s players — but there was another factor: the power of Tencent.

The Chinese media, entertainment and tech conglomerate recently made a major investment in Robert Simonds’ STX, part of a plan to expand the studio into fields such as digital content, mobile apps and virtual reality, giving its stars more avenues to make money in markets around the world.

It’s not STX’s first deal with a Chinese entertainment company — it inked an 18-film co-production deal with Huayi Brothers Media Corp last year — but it marks Tencent’s first equity investment in a Hollywood film studio.

Also Read: STX Gets Tencent Investment to Fund Digital, VR and Mobile Expansion

Sky Moore, a partner at Stroock & Stroock & Lavan who’s worked on multiple U.S.-China entertainment deals, said locking down Tencent as a partner is massive for STX’s Chinese ambitions.

“Tencent has big time clout in China, big time financial resources,” Moore told TheWrap. “A lot of credibility. And for marketing, WeChat is huge.”

While China’s Dalian Wanda Group has dominated the headlines this year as it shelled out $3.5 billion for “Jurassic World” production company Legendary Entertainment and scooped up cinema chains around the world, Tencent might actually be the most powerful entertainment company in China when it comes to getting people to the theater (that Wanda, by far the country’s largest exhibitor, likely owns.) And as Moore pointed out, Tencent owns WeChat, one of China’s most popular — and arguably, its most commercially important — mobile app.

Also Read: WME-IMG Expands in China with Sequoia, Tencent, FountainVest

WeChat is built around a messaging app, but also includes other features, like video games and a payment system denominated in Chinese currency that can be used to transfer funds to other users and pay at many physical and online stores in China. WeChat has become such a driver of commerce in China, it’s even having a material effect on the Hong Kong insurance market.

With its integrated movie ticket booking platform, WePiao, WeChat processes a significant share of tickets bought in China, where convenient — and subsidized — online tickets are the most popular way to go to a movie.

While “Warcraft” was produced by Wanda’s Legendary, and — with Wanda’s help — premiered at a higher share of the country’s theaters than any imported film ever had, Moore said “Warcraft” owes a huge part of its $220.8 million box office gross in China to Tencent’s marketing might.

Also Read: ESPN Seals Deal With Chinese Streaming Giant Tencent

“Tencent gave it a huge sales and marketing push,” Moore said. “That was all Tencent.”

Wanda, owned by China’s richest man, Wang Jianlin, has made the biggest splashes of any Chinese entertainment company, having acquired AMC Theaters in 2012 and Legendary earlier this year. Recently, Wanda has been taking its competition to the theme park arena as well. Wang recently spent time in a TV interview declaring war on Disney and pledging to make Shanghai Disneyland Park unprofitable within 20 years.

Wang’s bluster and big swings have made Wanda the symbol of China’s grandiose entertainment ambitions, but Tencent hasn’t exactly retreated into the shadows. In fact, while Wanda accumulates theater chains and builds large-scale projects like theme parks, Tencent has continued to bolster its mobile suite of services.

Also Read: STX Enters Virtual Reality With Purchase of Surreal, Inc.

Last year, Tencent signed a $700 million deal to stream the increasingly popular National Basketball Association in China, and in June, Tencent paid $8.6 billion for a majority stake in Finnish mobile game company Supercell.

Chinese audiences may see most of their films at Wanda theaters, but they all have Tencent in their pockets. That makes Tencent a quiet force in driving consumer behavior — and influencing which movies they want to see. Big-time clout in a small package.

Hollywood's 22 Biggest Box Office Champs in China (Photos)

Chinese moviegoers love to spend their hard-earned yuan on Hollywood blockbusters like "Captain America: Civil War," "Avatar" and "Star Wars: The Force Awakens." Comedies and dramas? Not so much. Read on to see which American hits have raked in the most money (according to BoxOfficeMojo) in that nation across the Pacific.
Disney/Marvel/Lucasfilm/Fox
"Furious 7" (2015)

$390.9 million

The Vin Diesel and Dwayne Johnson revved-up action flick is easily the highest-grossing Hollywood movie ever in China. The late Paul Walker remains among China's most beloved American actors.
Universal
"Transformers: Age of Extinction" (2014)

$320 million

Mark Wahlberg starred in the sci-fi movie based on the foldable toys, which was co-produced by two Chinese firms and was the first Hollywood movie to make more than $300 million in the Middle Kingdom.
Paramount
"Avengers: Age of Ultron" (2015)

$240.1 million

The superhero mashup is China's highest-grossing Marvel Cinematic Universe film, a franchise that's been embraced by the country's young-leaning moviegoers.
Marvel
"Zootopia" (2016)

$235.6 million

The buddy-cop comedy is the highest-grossing imported animated film in the history of the Chinese box office, and it played especially well in China's second- and third-tier cities.
Disney
"Jurassic World" (2015)

$228.7 million

Like "Furious 7," the dinosaur sci-fi adventure was produced by Legendary Entertainment, which was acquired by China's Dalian Wanda Group in January.
Universal
"Warcraft" (2016)

$220.8 million

Another Legendary film, this one inspired by a video game series, flopped in the U.S. but dominated the Chinese market, which is home to about half of the video game's players worldwide.
Universal
"Avatar" (2009)

$204.1 million

The worldwide smash hit also captivated Chinese audiences, even back in 2009, when the country's box office was a fraction of the size that it is today.
Fox
"Captain America: Civil War" (2016)

$190.4 million

The latest film in the Marvel Cinematic Universe -- with an ensemble cast that includes Robert Downey Jr., Chris Evans, Scarlett Johansson and Don Cheadle -- continued the iconic comic book company's momentum in China.
Marvel
"Transformers: Dark of the Moon" (2011)

$165.1 million

The prequel to this film, 2009's "Transformers: Revenge of the Fallen," made $65.8 million in China, setting the stage for "Dark of the Moon" to be the country's highest-grossing Hollywood film since "Avatar" at the time.
Paramount
"Kung Fu Panda 3" (2016)

$154.3 million

The Mandarin-language version of the movie starring Jack Black as a friendly fighting bear had the characters reanimated so their mouths moved naturally with the translated words.
DreamWorks
"The Jungle Book" (2016)

$150.1 million

The live-action/animation hybrid was a hit in several international markets, especially India, and it also played well throughout China.
Disney
"Mission: Impossible - Rogue Nation" (2015)

$135.7 million

China's Alibaba Pictures invested in "Rogue Nation," and star Tom Cruise visited several Chinese cities to promote the film, helping it open strong and stick around in theaters even though its China debut came more than a month after its U.S. premiere.
Paramount
"Star Wars: The Force Awakens" (2016)

$124.2 million

Despite China being one of the few markets that didn't catch "Star Wars" fever -- the movie put some people there to sleep -- Disney's promotional efforts helped it clear $100 million.
Lucasfilm
"Interstellar" (2014)

$122 million

The epic space adventure starring Matthew McConaughey, Anne Hathaway and Jessica Chastain connected with Chinese audiences, even though it wasn't in the 3D format that crowds there have grown used to.

Paramount
"The Hobbit: The Battle of the Five Armies" (2014)

$121.7 million

The third and final installment in Peter Jackson's "Hobbit" series was another movie that succeeded even though it was released in China well after its U.S. premiere.
Warner Bros.
"Iron Man 3" (2013)

$121.2 million

All three movies in the Robert Downey Jr. franchise have played in China, helping build brand awareness beyond just the bankable Marvel name.
Marvel
"X-Men: Apocalypse" (2016)

$12o.8 million

Disney bought Marvel Entertainment in 2009, but Fox acquired the film rights to Marvel's "X-Men" franchise before then. It doesn't seem to matter much in China, where anything Marvel often turns into a big hit.
Fox
"Captain America: The Winter Soldier" (2014)

$115.6 million

The predecessor to this year's "Civil War," "Winter Soldier" was a hit despite its fairly political content, which is usually a negative in Chinese theaters.
Marvel
"Terminator Genisys" (2015)

$113.2 million

The fifth "Terminator" film was the franchise's lowest-grossing since the 1984 original, but it was the first in the series to get a Chinese theatrical release.
Paramount
"Pacific Rim" (2013)

$111.9 million

The futuristic sci-fi adventure, in which humans battle sea monsters, is yet another fantasy action movie that Chinese audiences loved.
Warner Bros.
"Ant-Man" (2015)

$105.4 million

Yet another Marvel Cinematic Universe movie, "Ant-Man" made just $180.2 million at the domestic box office but was a much bigger hit in China.
Marvel
"San Andreas" (2015)

$103.2 million

China knows Dwayne Johnson from the "Fast and Furious" franchise, and the earthquake disaster film he headlined last year reverberated at the Chinese box office.
Warner Bros.

1 of 23

Chinese moviegoers can’t get enough of America’s big-budget action flicks

Chinese moviegoers love to spend their hard-earned yuan on Hollywood blockbusters like "Captain America: Civil War," "Avatar" and "Star Wars: The Force Awakens." Comedies and dramas? Not so much. Read on to see which American hits have raked in the most money (according to BoxOfficeMojo) in that nation across the Pacific.

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Hollywood's 22 Biggest Box Office Champs in China (Photos)

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