Chinese Internet company Tencent Holdings has expanded its entertainment business by launching a film company, joining its major rivals Alibaba Group Holding and Baidu Inc in the fast-expanding domestic movie market.
Tencent Penguin Pictures was launched in Beijing on Friday. The new firm will focus on film and drama production as well as acting as an agent for entertainment personalities.
Penguin Pictures plans to invest in the production of 10 to 15 movies every year and produce eight Internet dramas, Sun Zhonghuai, vice president of Tencent, told a press conference on Friday.
One of the Internet dramas will be adopted from the popular novel The Adventures of Three Tomb Raiders, and the investment is expected to be 5 million yuan ($784,500) per episode.
Before the launch of Penguin Pictures, Tencent had invested in several movies beginning in 2014, including the blockbuster Monster Hunt.
Monster Hunt, a domestic live-action animation, became the new champion in China's film market with box-office revenue of 2.43 billion yuan, breaking the previous record set by Furious 7.
Tencent's main rivals such as Alibaba, Baidu-backed video site iQiyi and Internet television company Youku Tudou Inc have already launched film divisions.
Alibaba Pictures made its debut in Hollywood this year by investing in the latest episode of blockbuster series Mission Impossible: Rogue Nation.
The film generated box-office revenue of 418 million yuan in five days after hitting Chinese screens on Tuesday.
Analysts said the Internet giants aim to take a stake in the country's booming film industry.
China's box-office revenue exceeded 30 billion yuan as of September 5, hitting a record high and surpassing the figure of 29.64 billion yuan for the whole year of 2014, the Xinhua News Agency reported Saturday, citing data from the State Administration of Press, Publication, Radio, Film and Television.
"China's film industry is expected to grow 30 to 40 percent this year, far outpacing the rate of economic growth, as an increasing number of Chinese people go to the theater more frequently," Chen Shaofeng, deputy dean of the Institute for Cultural Industries at Peking University, told the Global Times Sunday.
The development of online sales channels run by e-commerce giants and group-buying websites has also boosted box-office sales, Fu Yalong, an analyst with entertainment consultancy EntGroup Inc, said in a report published on September 2.
Movie ticket sales through Internet channels accounted for 64 percent of the total ticket sales in China during the summer holidays, according to EntGroup.
Nomura Securities estimated Friday that China is likely to surpass the US to become the world's largest film market by 2017.
"Chinese Internet companies such as Tencent and Alibaba have abundant cash flows and large user bases," said Chen.
He noted that their participation in the film industry will promote the rapid development of the sector.
"Meanwhile, they will bring more competition to conventional film production firms," said the deputy dean.
