The Movie Studio $MVES Signs Deal to Enter China Movie Market

• The Movie Studio is extending its global presence across China to offset declining US sales.

• China is slated to outpace the US market in 2-3 years.

• MVES is strategically positioned to take advantage of the Chinese growth story.

The global entertainment sector is expected to see a lot of action this year. New formats of delivery have dealt a blow to traditional cinema viewing. The domestic US market is also showing signs of saturation. Movie studios are now exploring new options to deal with such scenarios. One noticeable trend in the last few years has been the move of Hollywood studios towards the East, particularly China.

The Movie Studio Inc. (OTCMKTS:MVES) grabbed a slice of the growing China market as it recently announced its new distribution deal with Wing Sight International Media of Beijing. The deal was carried out through Cinema Arts Entertainment and became effective on January 1, 2017 with an initial term of 5 years.

The deal is a major win for the company as it will allow The Movie Studio to access the huge, untapped Chinese market, which has emerged as one of the biggest and fastest growing markets for foreign movies. Despite its large size, the Chinese market comes with its own set of challenges.

The central regime in the country keeps tight reins over the media content distributed in China. However, with this new partnership The Movie Studio will be able to navigate through these issues in a smooth manner.

Various major studios such as Lionsgate and Paramount have entered into various such collaborations with Chinese companies in the recent past. The Movie Studio will be following their footsteps for gaining a bigger market for its movies.

While the US market still maintains its global lead, it is expected to face plateauing demand. It is expected that the Chinese market will overtake the US market in a matter of a year or two. Being an early entrant in the Chinese market will provide an edge to The Movie Studio.

The company initially plans to release four movies in China. The licensing arrangement will help the company in boosting its liquidity position which will further provide fillip to its stock price. The proceeds will also help the company in expanding its video library for fortifying its presence in the market.

The deal will help The Movie Studio in diversifying its portfolio. Opening up of a new market for its content will help the company in generating new revenue stream. It will also help in reducing its reliance on domestic market, which is showing signs of stagnation.

The company CEO and President Gordon Scott Venters said, “As we continue to establish worldwide distribution agreements leveraging our strategy of growth by acquisition of existing films and bundling of new or pre-existing films can increase shareholder equity and residual net asset value (NAV) while hedging negative NAV impact.”

In the past year, the studio saw a flurry of new licensing deals and acquisitions. The impact of these developments had been largely positive on the stock price as it gained nearly 22% value in the past 12 months.

Apart from China, it also entered into various licensing deals in New Zealand and Australia. The company is not only broadening its geographical reach but is also consolidating its position with various acquisition. One of its notable acquisition was of Rainbow Pictures LLC. The deal added 17 completed movies to The Movie Studio’s library.

These deals strengthen the business model of The Movie Studio which engages in various motion pictures segments ranging from production to distribution. This helps the company in providing synergies, controlling costs and boosting margins.
The Movie Studio is working in allied areas such as music videos. Its collaboration with recording artist Sade Serena last year provided the company with access to a video single of the artist. Such deals will help the company in diversifying as well as providing it with novel content for its movies.

The company also carried out capital restructuring to ensure the financial viability of the venture. It completed a reverse split of 1-100 which helped consolidating the market price of its stock, adding to the liquidity and transferability of the shares.

The Movie Studio is expected to fare better than major studios in the current market situation as it focuses on indie developed movies. The company is ramping up its distribution and promotional efforts for its content. It recently attended The National Association of Television Program Executives (NATPE) Convention, which is the industry’s largest convention of television programming, distributors, digital media and content providers. The convention provides a unique networking opportunity to further enhance the company’s presence in the circuit.

In the coming months, it would be interesting to see the studio’s performance in Chinese markets. The notoriously secretive yet massive market may prove to be a major asset for The Movie Studio. The enhanced revenue will bolster the financial position of the firm which will also help in carrying out new activities.

The company stock is currently trading close to the lower level of its 52 weeks price band, offering a good opportunity for initiating a mid-term position.

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