Softbank wins Hollywood’s Legendary Entertainment away from China

Softbank is going to Hollywood. After days of rumors about a potential acquisition of DreamWorks, the Japanese telco has invested US$250 million into film studio Legendary Entertainment. That represents a 10 percent stake in the production company but the deal contains an option allowing Softbank to invest a further US$750 million over the next few years, according to 4Traders.

US$1 billion might seem steep, but Legendary Entertainment has essentially been printing money since its inception in 2005. According to data from Box Office Mojo, over the past nine years, its films have grossed nearly US$10 billion at the worldwide box office. It has steadily churned out a string of hits including Christopher Nolan’s Dark Knight Trilogy, the Hangover films, Pacific Rim, and this year’s Godzilla. Not even Pixar, home of Toy Story, The Incredibles, and Finding Nemo can match those ticket sales. The animation studio has been producing hits since 1995 but its international box office still does not exceed US$9 billion.

The acquisition marks an auspicious beginning for Nikesh Arora, Google’s former chief business officer, who joined Softbank this summer as the head of Softbank Internet and Media (SIMI). Teaming up Legendary Entertainment will give him a vast library of intellectual property to play with as Softbank ramps up its media strategy. He will have a front row seat at Legendary Entertainment as well. Deadline is reporting that Arora will be placed on the production firm’s board of directors as part of the deal.

The deal is somewhat surprising since Legendary Entertainment has spent a great deal of effort courting Chinese consumers and businesses. As part of a growing trend in Hollywood, Legendary focused on the Chinese market and made plans to produce several films there. Those movies have not materialized and now it appears that the company is moving on.

The film industry is rarely seen as a stable businesses but Legendary Entertainment stands out as an exception. That is good news for Softbank which will needs new and reliable revenue sources to support ambitious, risky projects like Pepper, the household robot.

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