VOD distributor Gravitas Ventures eyes China with new unit

Wed Dec 7, 2011 1:05pm EST

LOS ANGELES (TheWrap.com) - Video on demand supplier Gravitas Ventures is expanding its international operation with an eye toward Asia.

The El Segundo, Calif.-based company -- which packages independent films to major cable companies and streaming services -- has formed Gravitas Ventures International, a new division that will focus on a worldwide audience.

First out of the gate is a new pact with YOU On Demand that will allow the company to expand its slate of films in China.

Launched last year, YOU On Demand boasts an exclusive 20-year joint venture with CCTV-6's China Home Cinema (CHC), making it the first national pay-per-view and video on demand platform in China. YOU On Demand is the brainchild of Shane McMahon, the son of WWE chairman and CEO Vince McMahon.

In conjunction with Gravitas' expansion into the international arena, Gravitas executive VP Michael Murphy is being promoted to president and head of GVI, the company announced.

"Our deal with YOU On Demand comes within a sea change for film distribution," Murphy said in a statement. "Currently, we can put a film in 100 million homes on the same day. Our goal is to place that same film in one billion homes simultaneously. We're going to build GVI the same way we built Gravitas; by focusing on the fundamentals that will meaningfully impact filmmakers with an eye towards scalability."

By packaging independent films to major cable companies like Comcast and Time Warner Cable and streaming services such as Netflix and iTunes, Gravitas has become a fast growing and profitable enterprise since launching in 2006.

The company generated over $5 million in revenue in 2010 and expects to more than double that number this year.

Among the movies it currently offers on video-on-demand platforms are the Adrien Brody drama "A Matador's Mistress," the documentary "American: The Bill Hicks Story," and the Alec Baldwin vehicle "Brooklyn Rules." It expects to acquire VOD rights for and distribute over 1,000 titles next year.

Gravitas believes that international will be an increasingly important source of growth and anticipates making deals with other international distributors.

"Just as the box office is increasingly skewing international, so too will go VOD," Murphy told TheWrap.

With its massive population, China, even with its flexible respect for copyright laws, has enormous appeal for Gravitas and YOU On Demand.

McMahon said that YOU On Demand, which also has a distribution deal with Warner Bros., will launch in December and is expected to be in 11 million Chinese homes by the end of next year.

"We're pioneering the entire space in China," McMahon told TheWrap. "VOD is new in China, but a lot of Chinese internet sites are adopting a transactional model, so it's validating what we're doing."

McMahon said that VOD titles will be available to rent for between $1 to $3, compared with between $2 and $6.50 domestically. Unlike with theatrical releases, there is no cap on the number of foreign titles that can be offered on demand. Currently, China limits the number of foreign theatrical releases to roughly 20 a year.

As with other studios, there must be a role for the Chinese government. To that end, YOU On Demand will operate under the national government licenses obtained by CCTV-6 and CHC.

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