Disney is poised to benefit from a possible thaw in China-US relations, according to a Wall Street analyst

Disney is likely to be the entertainment industry’s biggest beneficiary of a potential improvement in US-China relations, according to a veteran Wall Street analyst.

During talks between China’s Xi Jinping and President Biden in California this week, Macquarie’s Tim Nollen pointed out that Disney, ad tech company The Trade Desk and video game software maker Unity could benefit most from diplomacy. China has recently become more isolationist and less democratic in most ways, and the Biden administration has made it a priority to improve relations after predecessor Donald Trump waged a trade war against China and engaged in other saber-rattling.

Disney’s “long history” of doing business in China makes it “a truly global brand compared to other traditional U.S. media companies,” Nollen wrote in a letter to clients. Disney began licensing its products and characters for use in China in the early 1980s, he noted. The company then built two theme parks in collaboration with the Chinese government and achieved box office success with huge tentpoles. Lately, however, film releases have become “strained,” Nollen noted, although it’s worth noting that media rivals like Netflix don’t have a presence in China and have no plans to enter the market.

In addition to diplomatic talks that could potentially restore some vitality to mainland China’s box office and retail sectors, Nollen argued for reciprocity and not just a one-sided relationship. The defining moment in modern relations between the two world powers, Nollen recalled, occurred more than half a century ago when an international table tennis tournament was played in 1971 between players from the United States and China. The resulting so-called “ping-pong diplomacy” took place during Richard Nixon’s presidency and greatly eased tensions between countries. The progress made during this time “underscores the importance of cultural acceptance as a first step in diplomatic engagement,” Nollen wrote.

Today, he continued, “we see the potential for the entertainment industry to renew the cultural goodwill between the estranged giants.” We see numerous ways to achieve this – some of which are already in the works, such as the upcoming one Netflix 3 body problem, a highly anticipated sci-fi series coming next year based on the internationally acclaimed Chinese trilogy. This $200 million series is just one example of the power of entertainment to bridge two worlds and create more productive dialogues.”

Together with Chinese representatives such as 3 body problemNollen said he sees a huge opportunity for Chinese entertainment programs in the United States. According to the analysts, they can “bring their relative affordability into the living rooms of the American consumer, whose discretionary income is currently burdened by above-average inflation rates across household budgets.”