Hollywood-based company Universal Pictures and China's Perfect World Pictures have confirmed that they are working on a $500 million deal.

According to The Hollywood Reporter, the two companies will be signing a five-year contract and will will allow Chinese TV productions and video game companies to come on as co-financiers in the deal giving Universal a new source of funds for their future projects. 

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This deal also makes Perfect World Pictures the latest China-based company to sign with a Hollywood company. 

The first Chinese movie company to have a Hollywood deal was the Dalian Wanda Group, who recently closed a $3.5 billion deal with Legendary Entertainment. The deal was announced January 12, 2016.

China's Perfect World Pictures is reported to be giving Universal Pictures about 25 percent of the final revenue for most, but not all, Universal films. Excluded franchises in the deal include The Minions and future Fast and The Furious films as well as other movies produced by Illumination Entertainment. 

2015 was a very profitable year for Universal Pictures due to the release of a plethora of box office hits such as Jurassic World, Furious 7, which starred Vin Diesel and the late Paul Walker, and The Minions movie. All three films grossed an combined estimate of $1 Billion during their screenings.

Meanwhile, Perfect World Pictures also served as producer and distributor for the Zhang ZiYi film Sophie's Revenge that was released in 2009. They also more recently served as a co-distributor in China for films such as Divergent, Insurgent and Rush. 

TagsUniversal Pictures, China Entertainment, China's Perfect World