Alibaba set for video-streaming launch

Updated: 2015-06-16 11:27

By Gao Yuan in Beijing and(China Daily USA)

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Alibaba will launch an online video-streaming service similar to products offered by Netflix and HBO.

The move is part of the e-commerce giant's ambitions to build a digital entertainment empire in China, where about a half-billion viewers are eager for new amusement channels.

Alibaba Pictures, a film affiliate of Alibaba Group Holding Ltd, said that the platform will be a subscription product, with 90 percent of content pay per view.

The company said the new platform, to be called Tmall Box Office (TBO), will start in about two months.

Patrick Liu, head of Alibaba's digital entertainment business, said on Sunday that the content for TBO would be bought from local producers and overseas markets. Alibaba will also produce its own programs.

The service will be offered through Alibaba's set-top boxes and smart televisions that run on Alibaba's operating system, he said during a press conference in Shanghai.

"Alibaba is aiming to redefine home entertainment," Liu said, adding that TBO's goal in China is to become the next HBO or Netflix.

Chinese viewers have been lured from television by Internet-based programs. The HBO fantasy drama Game of Thrones and Netflix's political satire House of Cards have been popular with young audiences.

TBO will launch into a competitive online video market in China, where companies are spending billions of dollars to buy media content to attract enough viewers to become dominant.

Dan Rayburn, a principal analyst with Frost & Sullivan, a global consulting firm, said: "It's not as if Alibaba is coming in as the first one to do this. But Alibaba obviously wants to compete. Who can afford to spend more money on licensing than Alibaba? Nobody. So they have a clear advantage purely from a cost standpoint."

"But we don't know what the service will look like," Rayburn told China Daily. "It takes time to build a service, and it takes times to get the applications on devices, but they certainly have the market power, the branding and the money to do it."

Huang Guofeng, an analyst at Internet consultancy Analysys International in Beijing, said running video-streaming services on its own platform could help Alibaba access first-hand data of user behavior - a treasured resource that Youku Tudou doesn't share with the company.

"By collecting viewer data, Alibaba can find out which part of a program attracted viewers the most, and subsequently make its own dramas that cater to different groups of consumers," Huang said.

Alibaba set for video-streaming launch

Liu did not say how the TBO service would fit in with Youku Tudou Inc, an online video provider in China in which Alibaba bought a 16.5 percent stake for $1.22 billion last year.

Alibaba already has a foot in the entertainment industry, with its film arm producing blockbusters and its online video sites winning market share.

Besides TBO, Alibaba has just set up a joint venture with a local cable provider to bring new movies to TVs that are connected to the Internet.

Alibaba's new service will go up against the likes of Tencent Holdings Ltd, Baidu Inc's iQiyi, Inc (SOHU.O) and Leshi Internet Information & Technology Corp Beijing's LeTV.

The online TV market in China is expected to nearly triple to 90 billion yuan ($14.5 billion) by 2018, according to Shanghai-based Internet consultancy iResearch.

There is going to be "a lot of competition" in the market for video streaming, according to Stephen Millward, chief editor of technology website TechInAsia.

Ma Si in Beijing contributed to this story.

Jack Freifelder in New York