By James Hirsen, Special for USDR
China’s e-commerce giant Alibaba enjoyed a record-breaking debut on Wall Street last week, which shook the financial world. Now the massive firm has its sights set on Hollywood.
Other digital concerns, including Amazon, Netflix, Hulu Plus, Crackle, and YouTube, have been making executives in the industry nervous with their incursions into the entertainment world.
Amazon recently intruded into entertainment biz territory with its funding of original programming designed to stream on its Prime Instant Video service and containing content intended to compete with television cable and broadcast networks. Amazon released 14 television pilots last year that included “Alpha House,” a series in which a group of senators live together in the nation’s capital. The online marketer earlier this year approved six new series, including a new program called “The After” from “The X-Files” creator Chris Carter and a dramedy titled “Transparent.”
Netflix has been producing original content for years, having started with the highly successful politically charged “House of Cards.” Other series such as former Fox sitcom “Arrested Development,” “Lilyhammer,” “Hemlock Grove,” and “Orange Is the New Black” have made Netflix a bona fide player in Hollywood. Adding to the company’s prestige is the fact that its programs have won a basket load of coveted Emmy awards.
Alibaba’s massive reservoir of cash, competitive advantages in China, and newfound status of being the globe’s largest stock market listing make it a digital company that has the potential to generate an even greater degree of anxiety in the entertainment business than those previously mentioned.
If the Chinese e-commerce giant heads to Tinseltown, it could make Amazon and Neflix look like minor inconveniences to the Hollywood business infrastructure. Japan’s SoftBank, an entity that owns more than 30% of Alibaba, is reportedly already talking to DreamWorks, Relativity, Lionsgate, and Legendary Entertainment about forging ahead with some entertainment deals.
Jack Ma, who created and leads Alibaba, is a film buff who reportedly plans to make inroads into the entertainment industry. This year Ma telegraphed his interest in entertainment as an objective in Alibaba’s future when the company acquired a half-interest in a Chinese soccer team for $192 million.
“We’re not investing in [soccer], we’re investing in entertainment,” Ma said. “Alibaba’s future strategies are health and entertainment.”
This year the digital goliath has been pursuing entertainment interests at a breakneck pace. In April 2014, Alibaba purchased nearly 20 percent of a Chinese online video company, Youku Tudou.
“Alibaba has made some investments already in the entertainment industry, including a stake in Youku Tudou,” e-commerce analyst Li Chengdong told The Hollywood Reporter. “After the IPO, Alibaba will be so deep-pocketed that it is able to lay out the whole industry chain and make forays into all sorts of businesses.”
In June 2014, the company acquired a 60 percent interest in ChinaVision Media Group for $804 million. It promptly changed the name of the enterprise to Alibaba Pictures Group Ltd. The company plans to finance ten movies and ten internet dramas annually. Action star Jet Li, a friend of Ma, is on the board.
In July 2014, Alibaba entered into a strategic collaboration agreement with Lionsgate to expand the studio’s output in China via movie presentations such as “The Twilight Saga: Eclipse” and “Divergent,” and with television programming that includes “Mad Men,” “Weeds,” and “The Royals.”
The company has initiated Yuebao, a crowdfunding film investment vehicle that promises to add additional financial resources to its entertainment money arsenal.
With China’s box office about to hit $5 billion this year, the influence Alibaba has with the Chinese government and the foothold it enjoys in the marketplace will give it an immense storehouse of clout to wield in its upcoming Hollywood business dealings.