China’s favorite video site Youku gets into the movie making business

Chinese video portal Youku (NYSE:YOKU) announced today the launch of Heyi Film, the company’s new wholly-owned film production subsidiary.

Youku says Heyi Films will produce films “to the tastes of the Chinese audience” and “improve film marketing and distribution.” It will also try to diversify how films monetize.

The movies Heyi makes won’t be limited to the web. Youku aims to both produce major box office movies and help existing online talent find an audience offline. Some of Heyi’s inaugural projects include Bad Sister starring Ivy Chen, Vacation in Paris starring Amber Kuo and Louis Koo, and The Master, coproduced with Beijing Century Partner Culture and Media. Five popular web series will be brought to the silver screen, including Yes Boss! and Miss Puff.

The move reflects the emerging trend of China’s internet giants and major video portals creating and buying up production studios to boost their original content offerings. LeTV acquired a Chinese production studio for US$260 million in October last year, Baidu-backed iQiyi launched an in-house film studio in July, and Alibaba took a US$804 million majority stake in Hong Kong-based ChinaVision Media Group. Alibaba sunk a US$1.22 billion investment into Youku in April.

Youku now has over 500 million active users. It hopes to leverage that number “to grow fan communities that can support films and new consumer monetization models.” Youku has marketed over 50 films in the past two years, and co-produced eight films prior to the launch of Heyi.

See: How Baidu, Alibaba, and Tencent will dominate China’s movie industry in 3 years