Alibaba Moves to Become Online Entertainment Powerhouse in China

Launch of an OTT Service, a New Net-Top Box and a Cloud Entertainment Service

Significance: China is the world’s second largest movie market, behind the US. Revenue from film is expected to grow by a third this year to reach $5.94 billion, according to some estimates. It has around 600 million Internet users, more and more of whom are watching video content online. The Chinese digital entertainment market is ripe for the picking, and the online and tech majors in the country are gearing up for the battle.

Online retailer Alibaba signaled this week that it’s ready to take over the living room in China, announcing a new suite of digital services and devices that signals the company is ready to become the OTT service and hardware powerhouse in China.

Alibaba, which is larger than Amazon and eBay combined, accounts for up to 80% of online commerce in China. It is currently working on launching an IPO this fall in the US, in what could be the largest tech IPO offering yet in the States. It has been pursuing content deals – and specifically online content deals – more aggressively over the last year. The company said it has an “ongoing commitment to advance our vision of making digital media entertainment available to our customers anywhere, anytime.”



Pic source: Alibaba Group

Earlier this year, Alibaba, along with the affiliated equity firm Yunfeng Capital, made a $1.22 billion investment in Chinese online video platform Youku Tudou, which gave Alibaba an 18.5% stake in the streaming service. Alibaba’s CEO Jonathan Lu (Lu Zhaoxi) now sits on the Youku Tudou board, as a result of the deal. Alibaba said the deal would help its online and digital entertainment service.

Alibaba took a 60% stake in ChinaVision Media Group, which makes TV shows, movies and video games. It then renamed the company “Alibaba Pictures.” It also invested in Wasu Media Holding, one of the first “Internet TV” companies in China. Alibaba has a streaming license deal with Wasu Media Holding for its content, and Wasu launched last year a NTB with Alibaba called Wasu Rainbow.

The New ‘Western’ OTT Service
Alibaba announced that it and Lionsgate will launch a video streaming service in mainland China. The service, called Lionsgate Entertainment World (LGEW) is slated to launch next month, and will give Alibaba an entire library of popular and exclusive Hollywood content to deliver to Chinese viewers. LGEW will be available for a monthly subscription fee on Alibaba’s net-top boxes, alongside the company’s other OTT offerings.

TV shows include “The Royals,” “Nashville,” and the recently aired “Rosemary’s Baby” miniseries, “Mad Men” and “Weeds.” Films to stream include the “Hunger Games” series, the “Twilight” series, and the first installment of the “Divergent” series.

The service will also give subscribers opportunities to see bonus footage of content from the Lionsgate library, and related merchandise. The service will deliver to subscribers “first run films, television shows and behind-the-scenes experiences that aren’t available anywhere else in China,” and said Alibaba’s knowledge of the market will give the OTT service a competitive advantage.

The streaming service will offer TV shows and films from Lionsgate only, and as the name indicates, no other content partners have been announced yet. However, Alibaba will likely continue to license content from other international producers to flesh out its online offerings. It wants to start commissioning and releasing its own content for the platform, too. Last month, it partnered with Shanghai Media Group’s Dragon TV to produce TV content such as “China’s Got Talent” and “Chinese Idol.”

Hardware for the Living Room
Alibaba has launched entertainment hardware before, and it renewed its efforts to dominate the living room this week, with a new iteration of its net-top box (NTB) with the announcement of Tmall Magic Box. The NTB combines pay TV, online video streaming, music, video games and other digital entertainment. The company said the box marks “an integrated household digital entertainment system.”

The box offers access to 6,000 movies and 15,000 hours of TV shows from Wasu Media that viewers can access online and on-demand; it offers video games from Electronic Arts, Gameloft and Glu Mobile; it also supports a Dolby Laboratories Digital Theater System. Alibaba said subscribers would also be able to enjoy UHD content, but didn’t elaborate.

The company said it will develop and launch more consumer devices for watching content. “In the future, with more partners, we will develop more terminal devices to provide families with access to this ecosystem,” Lu said.

The company also launched a “cloud home entertainment” service, called Alifun. The service will “enable family members to play online games, watch television programs and online videos as well as shop online at home via a cloud network that can work across any terminal device such as TV sets, mobile devices and set-top boxes,” the company said.

Last year, the company announced its smart TV operating system, with TV maker partners Skyworth, Haier and Changhong. It also has a smartphone and tablet operating system called Aliyun. The two platforms are different, but the company told The Next Web last year it hopes to create synergies between the two devices.

Obstacles for Alibaba
Alibaba will face …


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