Thursday, December 29, 2016

Alibaba entertainment affiliate to invest $7.32B over next 3 years

A recent announcement made by Chinese entertainment group, Alibaba Digital Media and Entertainment Group, which is an affiliate of Alibaba Group Holding Ltd., has expressed plans to invest over $7.2 billion (50 billion yuan) in China’s entertainment business over the next three years.

Alibaba CEO Yu Yongfu has pledged that the company will invest and focus more in the sector, and said in an internal email that “he didn’t come to play.”


Alibaba has planned to strengthen the company’s entertainment foothold in China where they have around 700 million internet users.

The Alibaba Digital Media and Entertainment, is the entertainment subsidiary of Alibaba which was created last October, so that the e-commerce giant will have a team with focused agenda in improving its market presence.

Alibaba has since then doubled down their investments in the area, which fused Alibaba’s video website Youku Tudou, mobile internet company UCWeb, Alibaba Pictures Group, Ali Music Group and Alibaba’s multiple gaming, literature and other digital assets.


Although, it is not yet specified whether the 50 billion yuan to be invested was part of the previously reported 10 billion yuan that Alibaba will fund for its new projects in the unit.

Various entertainment groups have already tried establishing their position in the wide market in China.

Netflix has tried and failed on its plan of streaming into the region. The online streaming company has reported last October to its shareholders, its failure to expand their market presence in China.

According to Netflix, it was quite challenging to secure foreign digital content services in the region. The process to secure all the necessary government permission in order to distribute content to a large market through the internet proved to be too tedious for the entertainment company.

Amazon Prime has launched its Prime membership feature to customers in China, which includes free, cross-border shipping and no minimum free domestic shipping. However, the launch did not have any digital content, such as online video and music services to strengthen its foothold in the market.

Alibaba has release their revenue for the third quarter earnings from November which gained a 302% year-over-year. The impressive growth was helped mostly by the consolidation of Youku and an improvement of their revenue in their mobile services provided by UCWeb.

Alibaba shares have declined by 0.7% to $87.48 per share in the Wednesday trading.


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