US-based digital media services company Crest Digital announced a joint venture in April with China Film Group – the country's largest state-owned media company – to deliver home entertainment and technology software content in China through multiple digital platforms. President Ron Stein talks to Amy Cheung of The China Perspective about the future of digital entertainment in China.

The China Perspective: What does your recently announced JV with China Film Group mean? Do you expect the partnership to expand to cover other business areas as well?
Ron Stein:
The recently announced joint venture between China Film Group and Crest Digital will provide both the United States and overseas content owners with a powerful new capability and a new channel, allowing them to legally sell and monetize their DVD movies and software content into China, a growing and voracious consumer marketplace. Companies who own and create content want to increase their profits, and one way of doing this is to expand their sales into China. The partnership will also serve to focus on the development of new digital technologies, such as anti-piracy technology (”TRAC” or Traceable Authentic Content), distribution of entertainment content via cell phones, IPTV, and video on demand (VOD).

TCP: How would the JV contribute to the company’s overall performance/ position?
The Crest Digital and China Film Group joint venture will allow Crest Digital to better service China’s massive consumer marketplace, while validating the increasing globalization of the entertainment industry. Crest Digital and China Film Group will help create a bridge to the Hollywood community as well as the rest of the world in order to elevate China Film Group to a world class entertainment and media technology company.

TCP: Does Crest Digital have plans to cooperate with other mainland media firms in the near future?
Crest Digital is looking at other joint ventures both in film production and various cell phone applications.

TCP: Do you consider China’s piracy issues to be an obstacle for your company’s expansion into the country?
China's piracy issue makes it a challenge to distribute legal product in the country. With the introduction of our new TRAC technology, major global content owners, both entertainment and software, will be very motivated to drive new sales and earn new profits from new legal products, DVD entertainment and Rom software.
The new anti-counterfeiting technology TRAC, jointly developed by Crest Digital and Philips, will provide law enforcement agencies with the ability to positively identify counterfeit versus authentic DVDs and CDs when they are discovered outside of the approved supply chain channels. There is a human readable Watermark, visible on the information side of the disc, so any one can visually see and identify the real disc from the counterfeit. The introduction of TRAC into China is a major step to begin to address issues with piracy by developing a powerful new tool for authorities to remove pirated product.

TCP: What is China’s attraction as a market for an entertainment and media firm?
The potential market in China is probably four times greater than the United States.  China has never been known as a “major player” in the entertainment industry, but the country is trying to change that perception.  This partnership shows the steps China is taking and the doors they are opening to work more closely with the Hollywood community.

TCP: What are your future plans for China?
Our future plans for China include the following. First, to increase China’s level of expertise when it comes to manufacturing and distribution of content, entertainment and software. Second, we want to give Chinese consumers an opportunity to have better access to legal, high quality content directly from content owners and not illegal pirates. Moreover, we aim to introduce new technologies into China, paving the way for the advancement in distribution and anti-piracy techniques. Last but not least, we want to help make China a “major player” in the entertainment industry.

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