New Chinese Online Platform Makes Bold Claim of Quota-Free China Releasing

2017/2/13 10:22:00 (Beijing Time)   Source:Variety (Exclusive)    By:Patrick Frater

A new Chinese tech startup is launching what it says will be a digital distribution hub that can feed foreign films and TV shows to non-theatrical outlets across China – without fear of import quotas – while offering an attractive revenue-sharing model to foreign content providers.

The company, MEIFine, boasts that it has government approval for its unusual approach, even though Chinese authorities have generally been cracking down on the volume and kind of online content allowed into the country. The company’s CEO, Zhao Jian, said that MEIFine “represents a paradigm shift in China.”

But some industry executives have expressed skepticism about MEIFine’s assertions. Others likened the company to a previous consortium that made similarly bold claims about finding a new way to operate on China’s notoriously difficult entertainment landscape, only for the initiative to collapse weeks after it was announced.

MEIFine says that, since it’s a digital platform, the rules governing imported content on cinema screens and free-to-air TV networks do not apply to it, especially the quota system restricting the number of foreign movies that can be released theatrically in China each year. MEIFine says its cloud-based hub will feed non-theatrical content to platforms, including IPTV, VOD, cable TV and OTT streaming companies, that have a combined 700 million users.

While it’s true that foreign titles can theoretically be shown on Chinese TV and online platforms, government regulators have increasingly imposed censorship and volume restrictions over the last couple of years. That has brought the booming streaming sector into a regulatory regime closer to that of the theatrical sector.

MEIFine says the company is 75% owned by “six veteran copyright operating professionals and financially well-endowed investors.” The other 25% belongs to Chengdu Audio & Visual Publishing, a state-owned firm headed by a senior Communist Party apparatchik and broadcast official in Chengdu, in central China.

MEIFine plans to source its international content from Los Angeles-based Worldwide Business Team (WBT), headed by Steve Wang, and Great Eastern Intl. (GEI), headed by Craig Santy, who operate in partnership. The two firms said that they would be buying at Sundance and the Berlinale and that they would aim to have acquired 100 titles for MEIFine by the end of February.

However, no acquisitions have been named, which the firms say is because of non-disclosure agreements. WBT and GEI have also not disclosed any of the companies that have licensed content to them.

MEIFine has also not outlined any potential revenue-sharing models for its foreign content providers, although Zhao, the CEO, said that “our real-time revenue sharing system offers U.S. and worldwide content providers unprecedented market access, accounting transparency and copyright protection.”

Several executives in the Chinese and international film industries told Variety that they had not heard of MEIFine. One executive said he could not see why Chinese regulators would open up a quota-free side door to foreign media firms via MEIFine while at the same time starting sensitive negotiations with Hollywood and independents on revising the quota and revenue-sharing rules.

More than one executive said MEIFine’s launch reminded them of what happened in March 2014, when a cluster of companies, including the Chinese government-backed China National Culture Group and Hong Kong-listed China Railsmedia, announced that they were expecting to become the second state-owned enterprise with a theatrical releasing license.

At a high-profile event in Hong Kong they announced more generous revenue-sharing terms than are currently available and competition between Chinese agencies for imported content. But the new initiative collapsed weeks later when Chinese authorities decided to maintain the status quo.

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