Is China’s burgeoning movie industry about to enter the age of video game-as-film concept a la “Laura Croft: Tomb Raider”?

That possibility has taken a distinct step forward with the announcement yesterday that Huayi Brothers Media Corporation, China’s leading film and TV production house, is joining forces with Chinese online game developer Giant Interactive Group Inc.

The companies are in the process of forming a joint venture, Beijing Huayi Giant Information Technology Co., Ltd, with the aim developing 3D online games, according to a statement posted on Giant Interactive’s website (in Chinese). The statement says Huayi Brothers will eventually invest 70 million yuan, or roughly $10.5 million, in the new company for a 51% stake.

The joint venture company is already developing new content for Giant’s 3D online role playing game King of Kings III and has plans to develop new 3D games based on Huayi’s films and TV dramas in the second half of 2011, the statement said.

While there appear to be no specific plans to develop any of Giant’s games into a film as yet, Giant Group CEO Shi Yuzhu told local media that finding stories capable of being developed into both games and movies was one possible avenue of cooperation.

For now, however, it appears Huayi Brothers is concerned mostly with broadening its revenue stream by dipping into of one of China’s fastest growing entertainment sectors.

“The online game industry is the most profitable sector in the Internet economy right now, and it can be easily integrated into the company’s core business areas,” says Zhang Yanan, an analyst with Beijing-based investment firm Zero2IPO Group.

The move also has potential to help Giant with its current business, for instance by attaching ads for its games to Huayi Brothers’ films.

The pairing between Giant and Huayi is part of a general move by Chinese online game companies towards interactive entertainment platforms or service providers. Last year, a subsidiary of Nasdaq-listed Beijing Perfect World Co. Ltd., a leading online game developer, paid 33 million yuan for product placement in the Zhang Ziyi blockbuster Sophie’s Revenge, and in July this year Perfect World announced plants to acquire majority stakes in two domestic production companies. Meanwhile, game developer Shanda Interactive Entertainment Ltd. has set up a joint venture with the popular Hunan Satellite TV channel with the aim of producing movies.

Huayi Brothers currently generates the majority of revenues from film and TV production, a notoriously tough business in China. While elsewhere in the world film production studios typically take a majority share of box office receipts that declines steadily over time, in China the box office share is fixed, with cinemas claiming around 60% of the box-office take throughout. That arrangement puts added pressure on production houses, which already have to contend with significant up-front costs and season revenue swings.

Given all this, says Zero2IPO’s Zhang, it’s no wonder that Huayi is eager expand into other sectors of the entertainment industry.

In June, the company spent 149 million yuan to obtain shares in a Beijing-based mobile game company, one month after purchasing a majority stake in in Huayi Music from Hurray! Holding Co. Ltd., a subsidiary of Shanda Corp. In August, CEO Wang Zhongjun.announced plans to build some 50 movie theaters in three years’ time.

China’s film industry is enjoying a period of explosive growth. According to China’s State Administration of Radio, Film and Television, total box office receipts in China had topped 7.58 billion yuan by the end of September this year.