The WSJ reports,"Chinese e-commerce giant Alibaba Group Holding Ltd. is making a major push into entertainment to capture a share of what it thinks will be the next boom market in Chinese consumption online.
Although Alibaba has shared only parts of its vision publicly, interviews with roughly two dozen people who have been approached by the company or are familiar with its strategy say that its plans span from taking stakes in Chinese film studios and commissioning original material to acquiring the rights to TV shows or films from inside and outside the country.
On Tuesday, Alibaba is expected to announce a deal with U.S. production studio Lions Gate Entertainment Corp. to make available on Alibaba set-top boxes offerings such as the "Twilight" hit vampire movie series and the TV show "Mad Men." The partnership beefs up Alibaba's entertainment menu as China's Internet-savvy consumers are increasingly going online to watch TV shows, videos and movies.
"Alibaba is a tremendously successful and dominant partner to have in China," said Jim Packer, Lions Gate's president of world-wide television and digital distribution. "They touch millions of consumers now."
The entertainment industry is a logical next battleground for Alibaba, whose online shopping sites handled $248 billion of business last year, and which is preparing for a U.S. listing that could be one of the largest in history, analysts say. Alibaba and other Chinese rivals such as Internet giant Tencent are trying to find new avenues to get Chinese consumers to open up their wallets.
Alibaba has already made a few important steps toward its goals, paying more than $800 million in June for a majority stake in Chinese film and production studio ChinaVision Media Group Ltd. , which it subsequently renamed Alibaba Pictures Group. In April, Alibaba announced a tie-up with Internet TV operator and license holder Wasu Digital TV Media Group. Last year, Wasu and Alibaba jointly launched a television set-top box using an operating system developed by Alibaba. Alibaba also has Tmall-branded set-top boxes.
"This is a real knockdown, drag-out type battle in terms of Internet supremacy—trying to capture the hearts and the pocketbooks of Chinese consumers," said Peter Schloss, a Beijing-based media-industry veteran and investor.
In 2012, China became the world's second-biggest movie market, behind the U.S. Revenue from China's film market, including box-office receipts, is expected to grow 33% this year to $5.94 billion, six times more than in 2009, according to market research firm EntGroup.
At the same time, China's more than 600 million Internet users are increasingly watching videos online, especially on smartphones. The number of people who watched or downloaded videos on their mobile phones last year rose 84% to 247 million, according to a January report from the China Internet Network Information Center. The figure is expected to grow as Chinese mobile carriers adopt faster fourth-generation networks that are more suitable for video viewing.
One challenge for Alibaba will be showing investors that it has sizable growth opportunities outside China's e-commerce industry, where it is the dominant player, according to David Wolf, managing director of the global China practice for Allison + Partners LLC, a marketing and consulting firm.
In recent days, Alibaba has approached film studios in China about creating or acquiring films and TV shows it can stream online, according to people familiar with Alibaba's plans. Alibaba is also looking to stream international film and video, other people familiar with Alibaba's plans said.
The e-commerce giant has also approached film studios in China with proposals to invest in them. In exchange for stakes in those studios, Alibaba, in some cases, offered them both cash and a stake in Alibaba Pictures Group, according to one person familiar with the discussions.
Executives representing Alibaba in those discussions included the head of Alibaba's investment arm, according to the person. Alibaba told some studios that it could help fund their film projects, as well as distribute and promote them, this person said. Alibaba could sell and promote movie tickets on Taobao, its online bazaar of 7 million merchants, the person recalls being told.
Source: Reuters
Source: Reuters
