DreamWorks Animation SKG Inc reached an agreement letting the Chinese Internet-video company Youku.com Inc distribute its two "Kung Fu Panda" movies, marking the first time the computer-animation studio's films will be available online in China, the Wall Street Journal reported.

Youku in June announced a distribution agreement with Time Warner Inc's Warner Bros. Home Entertainment Group. Under the terms of that deal, Youku would add 400 to 500 Warner Bros. titles to its on-demand paid video service, including the "Harry Potter" and "Lord of the Rings" series.

Movie studios have long had difficulty establishing a legitimate home-entertainment market in China. The country limits the number of foreign films that can be distributed there each year. Bootleggers produce and disseminate large quantities of pirated material at inexpensive prices.

By building up online offerings, studios and Youku are hoping to provide affordable and convenient alternatives to piracy.

"As technology matures and Chinese internet users increasingly turn to the Web for entertainment, Youku has been able to expand on the traditional movie release roadmap through agreements for studio films such as Kung Fu Panda and Kung Fu Panda 2," said Youku Chief Executive Victor Koo.

Last month, Dreamworks Animation reported that "Kung Fu Panda 2" contributed $55.8 million to its second-quarter revenue, more than a quarter of its top line.

To date, the two movies have grossed over $1.25 billion at the world-wide box office. DreamWorks said the films have been particularly successful in China.

Beijing-based Youku allows users to upload and share video content similar to Google Inc's Youtube and also provides licensed video content such as television shows and movies. Earlier this month, the company reported its second-quarter revenue nearly tripled from a year earlier to 197.9 million Chinese yuan ($31 million), though it continued to operate at a loss.