DreamWorks Animation's "Kung Fu Panda 3" has received co-production status in China, which guarantees greater access and a larger revenue share in the world's second biggest film market, a status that is highly sought after.
The news comes on a difficult day for DreamWorks Animation's stock, which was falling after the company announced layoffs and a smaller release slate late Thursday.
According to the State General Administration of Press, Publication, Radio, Film and Television (SAPPRFT) website, Dreamworks Animation, its Chinese unit Oriental Dreamworks and their Chinese partners, which include China Media Capital, Shanghai Media Group and Shanghai Alliance, acquired co-production status for the threequel on Jan. 15.
Overseas filmmakers want China co-production status because films granted the status are treated as domestic films and do not fall under China's notorious import quota. Films granted co-production status usually involve local investments in exchange for local distribution rights.
They also stand a much stronger chance of getting a mainland Chinese release, have immunity from blackout periods and will receive a larger (43 percent) share of revenue.
This is becoming increasingly important, after China's box office surged 36 percent to $4.76 billion last year.
Some movies, such as 2013's biggest selling overseas title "Iron Man 3", lobby hard for it but don't get it, and the issue often has proven divisive as both Hollywood and China try to cooperate more.
Late last year, DreamWorks Animation and partner 20th Century Fox said they were pushing back "Kung Fu Panda 3" from Dec. 23, 2015, to March 18, 2016, to avoid being overwhelmed by J.J. Abrams' Star Wars: The Force Awakens, which opens in theaters six days earlier, on Dec. 18.
The Chinese release date has yet to be decided.