DreamWorks Animation SKG has signed an agreement with Inc. that will make both Kung Fu Panda movies available through an online platform in China. This is first time DreamWorks Animation has authorized streaming distribution for its films in that country.

The Internet television company will make both movies available for on-demand viewing on Youku Premium, then will move them to Youku’s Hollywood Movie Channel after the paid viewing window closes.

Kung Fu Panda has enjoyed considerable success in China already, with the first title becoming the number one animated film of 2008 and the second breaking the record for the fastest film in history to surpass RMB 100 million (about 15.7 million) at the box office – in just two days. 

Kung Fu Panda 2 recently reached $637.6 million worldwide, making it the highest-grossing film ever directed by a woman – Jennifer Yuh Nelson, for whom this was her directorial debut. The movie is also among the top five box-office hits of all time in China, at $91.5 million.

“Youku is an innovative company with extraordinary reach in China and we are thrilled that the Kung Fu Panda features will now be offered through their platform, which presents high-quality content to consumers online,” said Kelley Avery, head of Worldwide Franchise Strategy and Distribution for DreamWorks Animation. “It is particularly satisfying that Chinese audiences have responded so enthusiastically to the cultural references within our franchise and we look forward to making both Kung Fu Panda movies available to more and more consumers in China through Youku.”

Warner Bros. became the first Hollywood studio to reach an agreement with Youku two months ago, authorizing 450 of it movies for the streaming service. Among them are the Harry Potter and Lord of the Rings franchises.

To compete against the piracy that remains rampant in China, Youku prices its content at less than $1.50, making it less expensive to watch the legitimate service than it is to purchase a bootlegged DVD.  According to the Motley Fool, all but $1.2 million of Youku’s revenue this past quarter came from display advertising rather than sales of premium video, making it important for Youku to offer top quality movies in order to grow.

“We’re excited to add both of DreamWorks Animation’s KungFu Panda movies to our online channels,” said Victor Koo, chairman and CEO of Youku. “As technology matures and Chinese internet users increasingly turn to the web for entertainment, Youku has been able to expand on the traditional movie release roadmap through agreements for studio films such as Kung Fu Panda and Kung Fu Panda 2. Both titles have a proven track record of success with Chinese audiences, and we look forward to expanding our alignment with Hollywood studios in the future to offer even more compelling content.”

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