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Alibaba’s Aggressive Expansion to Media and Entertainment [Updated]
Alibaba Group just announced its latest investment in China’s media and entertainment industry: an 8.8% stake in Beijing Enlight Media, one of the nation’s leading TV program and film producers, for RMB2.4 billion (around US$387m). The Chinese e-commerce giant has accelerated expansion into media and entertainment through investment or acquisition since 2014. Of these, the most interesting was its US$200 million investment in a Chinese soccer team, since renamed Guangzhou Evergrande Taobao Football Club.
Film, TV & Online Video
Box office returns reached RMB29.6 billion in 2014 (roughly US$4.8b), an 36% year-on-year increase driven by increasing numbers of new screens and movie goers, according to an report by market research firm Entgroup (report in Chinese). The online video market saw a 76% year-on-year growth in revenues, mainly from advertising, reaching RMB24 billion (roughly US$4bn) in 2014, according to research firm iResearch. It is expected the two sectors will continue fast growth.
Alibaba has invested more than US$2.4 billion in four Chinese companies, across movie, TV program and digital content since 2014.
It bought 59% stake in ChinaVision Media Group in the first half of 2014, renaming it Alibaba Pictures Group. Its businesses include movie and TV program production or investment, magazine publishing and ads. Alibaba helps it distribute content online or through other tech means. Alibaba Pictures Group claimed they signed two top Chinese directors and would expand internationally by cooperating with production companies in Hollywood.
In November Alibaba acquired 8.08% of movie production company Huayi Brothers for RMB1.53 billion (around US$247m), becoming the second largest shareholder. Alibaba Group chairman Jack Ma had been an investor in the company and served as a board director before Alibaba’s investment.
Alibaba has also begun cooperating with international companies. In July 2014 Lionsgate and Alibaba jointly announced Lionsgate Entertainment World (LGEW), which provides film and TV content from Lionsgate through Alibaba’s set-top box.
Alibaba acquired 20% stake in WASU, the state-backed digital content provider which holds one of the seven licenses granted by the Chinese government, for RMB6.5 billion (roughly US$1bn) in April 2014. Set-top box makers including Alibaba are required to hold a license or cooperate with a license holder.
In March 2014 Alibaba also announced Yulebao, a mutual fund for its users, encouraging ordinary Chinese to invest in films or other culture and entertainment works.
Several more Chinese internet companies entered the film and TV content production market in 2014. iQiyi, the online video site backed by search giant Baidu, announced the establishment of a movie company in July, and Youku-Tudou, in which Alibaba has a 16.5% stake, announced its own, Heyi Film Inc., in August. LeTV, which owns an online video site and smart TV manufacturing business, announced in October it had set up two branch offices in California for American video content.
What’s less well-known to the public is that Alibaba Group has invested in many local business and tech media, including 21st Century Media (business news) and Huxiu (business and tech news). (Update: the deal between Alibaba and 21st Century Media has fallen apart, according to a report by Lanmeih.com dated March 5th 2015. The causes may include the president and several employees were arrested, accused of selling news coverage, three months after the news about Alibaba’s investment broke, according to the report. (source in Chinese))
Alibaba also has a stake in the leading social media Weibo.com. Weibo has made it convenient for retailers on Alibaba’s marketplaces to post ads on its platform. Ad spend from those retailers has become a considerable revenue stream for Weibo.
Xiami.com, the leading music streaming service founded by former Alibaba employees, was acquired by Alibaba Group in early 2013. Xiami has developed custom features for Alibaba’s Taobao marketplace and is channelling users to sellers of music related products, such as instruments, on the marketplace.
Editing by Mike Cormack (@bucketoftongues)