ENTERTAINMENT: Wanda, Disney Spar Over Snow White

Bottom line: Wanda’s intellectual property clash with Disney is a minor glitch in its big theme park aspirations, but highlights the many difficulties the multibillion-dollar initiative will face.

Wanda, Disney tussle over IP infringement

After days of trash-talking global theme park giant Disney (NYSE: DIS), Chinese entertainment aspirant Wanda is suddenly on the defensive after a Disney character was spotted greeting visitors in its newly launched Wanda City mega-entertainment complex in the interior city of Nanchang. The bigger context to this story is that Wanda desperately wants to attract attention to its new plans to build more than a dozen theme parks, many costing more than $1 billion, in its bid to become China’s own homegrown Disney. But Wanda has discovered that publicizing its plans isn’t quite as easy as it thought, even as media feast on the grand opening in 2 weeks of China’s first Disneyland resort in Shanghai.

Wanda launched the first of several mega-entertainment complexes, called Wanda Cities, last weekend, drawing relatively strong coverage from financial media but far less interest from mainstream outlets that could publicize the venue to ordinary consumers. That’s not too surprising, since the complex itself carries a $3.2 billion price tag that financial junkies would love. But its lack of big-name attractions and focus on cultural tourism was probably less attractive to mainstream journalists and tourists.

It seems that someone at Wanda City was also aware of that shortfall, and instead decided to turn to Disney’s popular Snow White character to draw crowds. Photos of the costumed character walking alongside another Disney character, Captain America, at Wanda City appeared around the same time of the park’s opening. (English article; Chinese article)

That sparked a big cry of protest from Disney, which issued a statement saying it was prepared to take action to defend its intellectual property rights. In response, Wanda issued its own statement saying it conducted its own investigation that found the media reports were “seriously distorted.”

Wanda said its probe found that the costumed characters appeared outside a mall that is part of the entertainment complex but not actually inside the main theme parks. It said the characters were being used by some merchants in the mall for promotional purposes, and that those merchants had licenses from Disney for such use. It closed by stressing the importance it places on intellectual property protection.

Humorous Story

The whole story is quite humorous in my view, but does highlight a number of key points about doing business in China’s newly emerging theme park sector and doing business in China in general. Intellectual property rights has recently become a very sensitive area, as reflected by a steady series of scandals over the last year surrounding trafficking in pirated goods on e-commerce giant Alibaba’s (NYSE: BABA) popular Taobao C2C marketplace.

Wanda is also discovering that media attention can be a double-edged sword. On the one hand, the company was relatively successful at attracting major domestic and foreign financial media to report on its theme park dreams, which include plans to open 15 similar parks in China as it tries to capitalize on the millions of newly minted middle class Chinese. (previous post) But those same reporters also spotted the Snow White character and reported widely on it, sparking a minor crisis and publicity headache that sapped the festive atmosphere from the new park’s grand opening.

At the end of the day, this does look like a relatively minor matter and I do expect that it will quickly get settled and disappear from the headlines. But from a longer-term perspective, this slightly botched opening highlights the difficulty Wanda will have drawing attention to its big theme park initiative. Accordingly, I stand by my previous prediction that many of its parks will have difficulty due to their poor locations and limited attractions, and some may even end up shutting down.

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