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Alibaba to Spend in Hollywood Films, Not Studios, Says Insider

| Nov 10, 2014 04:25 AM EST

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Instead of movie studios, e-commerce company Alibaba Group Holding Ltd. prefers to invest in Hollywood films because such choice offers significant expansion on content.

The industry insider said that the information is not to be announced in public yet, but the person confirmed that the Hangzhou-based company eyes becoming a distributor of content through customer shopping and viewing data schemes. Through this move, Alibaba will be able to predict what movies will hit with the Chinese audience.

Alibaba founder and chair Jack Ma, according to the source, recently visited Hollywood to scout for partners who will offer better entertainment products for 200 million Chinese middle class. The company is looking for movies and television shows for the said expansion.

As of the moment, Alibaba provides movies and TV shows via set-top boxes. It created the "Yu Le Bao" platform for people who want to invest in movies starting March.

Interested individuals can give a minimum of 100 yuan, and in return, gain 7 percent in profit. This exchange, the source said, can help Alibaba estimate box-office sales and foresee what movies would do well in cinemas.

"Iron Man 3," a foreign film by Walt Disney Co. and Marvel, became a hit in China last year because of the edited version that highlighted local talent and additional footage. With Beijing-based DMG Entertainment co-producing the film, investors gained higher investment after its release.

Further, "Transformers: Age of Extinction" also set a record in China with its biggest debut at $90 million and earning $301 million, as reported by Bloomberg Intelligence. China Movie Media Group made a deal with Paramount Pictures of Viacom Inc. for the said film.

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