On June 6th, 2024, Digital Domain (00547.HK) announced that its wholly-owned subsidiary, Tower Talent, and the shareholders of Star China, signed a joint venture agreement to establish a joint venture. The issued share capital of the joint venture will be owned by Tower Talent (40%), Star China shareholders (40%) and the management team company (20%).
According to the announcement, the joint venture will mainly focus on the development and commercialization of AI-driven digital copyright libraries for the film, television and media entertainment industries. The joint venture will become the exclusive agent for the global digital content production and AIGC of Star China, as well as the global (excluding Greater China and the Middle East) digital content distribution business of Star China. The joint venture will also assist in digitizing and globally commercializing newly created and licensed IP. The digital content production services are expected to be mainly provided by the Group and will not be exclusively provided to the joint venture.
The announcement stated that the joint venture aims to bring together the strengths of the company and Star China to create greater value for their respective stakeholders. From the perspective of the Group, the Board of Directors believes that the terms of the joint venture can help the Group become the preferred digital content production service provider for the joint venture, thereby ensuring a source of income, as the joint venture will become the exclusive agent for the global digital content production and AIGC of Star China, as well as the global (excluding Greater China and the Middle East) digital content distribution business of Star China. The establishment of the joint venture is also expected to create more revenue channels for the Group's digital copyright library, and may potentially share resources for training AI database models, using AIGC technology to create complex and advanced databases. With Star China's ability to create IP (specifically, to create and/or manage celebrity IP), the joint venture targets film and television companies, concert companies, and artist management companies as its target customers. This will help the Group increase its exposure to different customer groups.
In addition, the introduction of the management team company (initially owned equally by the company and Star China's respective chairmen) shows that not only the company and Star China, but also their chairmen are committed to improving the business performance of the joint venture. The future distribution of shares of the management team company to the employees of the joint venture will align their interests with those of the joint venture shareholders, thereby creating greater shareholder value for the joint venture.