Update | Alibaba Pictures invests 100 million yuan for 80pc of Hangzhou cinema operator

Alibaba Pictures, the entertainment arm of e-commerce juggernaut Alibaba, will spend 100 million yuan (US$15 million) for an 80 per cent stake in a Hangzhou cinema company as it looks to further expand its influence in China’s entertainment sector.

In a filing earlier this week, Alibaba Pictures said it will acquire almost 61 per cent of Hangzhou Xingji, which operates the Hangzhou Star Cinema, for 39 million yuan from its shareholder Hangzhou Kunwei. Alibaba Pictures will also invest a further 61 million yuan in Hangzhou Xingji, resulting in an overall 80 per cent equity interest once the deal is successful.

The deal is the latest by Alibaba Pictures as the company looks to expand its reach via investments in cinemas and movie production to sate the growing appetite of Chinese audiences for entertainment and movies. The company aims to build an integrated, online-to-offline (O2O) entertainment platform for the industry by combining its e-commerce capabilities with the traditionally offline entertainment and cinema circuit, enticing consumers to purchase movie tickets on their smartphones before heading to the cinema. Alibaba is the owner of the South China Morning Post.

In May, Alibaba Pictures invested 1 billion yuan in convertible bonds issued by Dadi Cinema Construction, China’s second largest cinema investment and management company behind property-based conglomerate Dalian Wanda.

The collaboration saw Alibaba Pictures extend its internet capabilities and industry services to Dadi, which owned over 300 cinemas across the country at the end of April this year.

Wilson Chow, TMT leader for PwC China and Hong Kong, believes that property developers and O2O players which enter the cinema market do so because China’s entertainment industry still has much potential to grow.