There is a new strategic partnership between Alibaba Group and Alibaba Pictures which is part of a newly formed media group that is the cash cow of the e-commerce giant in China. The partnership, announced on Tuesday by Alibaba Group, is seen as the company integrating its cultural and entertainment resources.
Alibaba Group consolidated some of its business and created in 2016 a new media group. The new cultural and entertainment group is composed of Alibaba Pictures, Youku-Tudou video sharing site, web browser UCWeb, Alibaba music and the literature, sports, gaming, digital and music businesses of Alibaba Group.
3-Year Agreement
It is a three-year agreement that comes when Alibaba Group is experiencing saturation at its core market and seeking to foray into new growth areas, Yu Yongfu, chief executive of Alibaba Pictures, said. The challenge comes from cord-cutting becoming popular in the U.S. and Amazon’s embrace of original content in a bigger way, Investopedia reported.
The group is the third-biggest revenue source for Alibaba Group after its e-commerce business and cloud computing. The new media group, according to the company’s fiscal Q2 2017 report released in November, tripled its revenue to 3.61 billion yuan compared to 12 months ago. It has the fastest growth among all the segments of Alibaba Group, China Film Insider reported.
Online Movie Production
With the strategic partnership, Alibaba Pictures, Youku-Tudou and Alibaba Literature will produce online movies. Heyi Pictures, owned by Youku-Tudou, would be integrated into Alibaba Pictures. Heyi, a film production company established in August 2014, has invested in around 40 movies since then.
Alibaba Pictures would gain an edge in content production and speed up the development of the entertainment unit of Alibaba Group with the tie-up with Heyi. The strategic partnership gives Alibaba Pictures the exclusive first rights for early content which Youku-Tudou owns and those owned by the literature and gaming units of Alibaba Group. In turn, Youku-Tudou would have exclusive distribution and investment rights to Alibaba Pictures’ copyrighted content.