Advertisement
Advertisement
Alibaba
Get more with myNEWS
A personalised news feed of stories that matter to you
Learn more
Yu Yongfu, Alibaba Pictures’ chairman and chief executive, said the company aims to build a ‘digital and intelligent promotion and distribution model’. Photo: Handout

Alibaba Pictures posts loss in 2016 on higher marketing expenses

Alibaba

Alibaba Pictures Group, the entertainment flagship of e-commerce giant Alibaba Group Holding, reported a widely anticipated net loss for last year, as it incurred higher marketing expenses to build up its share in China’s online ticketing market.

In its regulatory filing on Thursday, Alibaba Pictures posted a loss of 958.6 million yuan (US$139.1 million), compared with a 466 million yuan net profit in 2015, as selling and marketing costs soared to 1.1 billion yuan.

Revenue, however, jumped 243 per cent per cent to 904.6 million yuan, up from 263.7 million yuan a year earlier, on the back of its online ticketing, distribution and content production operations.

The company said its earnings for last year was primarily impacted by increased marketing expenses at Tao Piao Piao, its online ticketing platform, in line with efforts to get more moviegoers to use this business unit’s service.

Tao Piao Piao, a key operating asset in the internet-based promotion and distribution operations of Alibaba Pictures, had raised 1.7 billion yuan in fresh funding from a number of strategic investors in May last year. 

Alibaba Pictures estimated that nearly 80 per cent of all movie tickets sold in mainland China are being purchased through online movie ticketing platforms.

Yu Yongfu, who was appointed as Alibaba Pictures’ new chairman and chief executive in December, said the company aims “to gradually build a digital and intelligent promotion and distribution model for the purpose of enhancing ... efficiency, which will create greater value for the studios”.

Alibaba Pictures last year ramped up its investments across a range of strategic initiatives, including overseas movie projects, key technology, movie theatres and film companies.

In December, the company invested an undisclosed amount in the Irish cinema data analytics company Showtime Analytics to support the operations of Guangdong Yueke Software Engineering Company, its internet-based promotion and distribution business.

British producer David Heyman was named by Alibaba Pictures in November to make Warriors, the company’s new live-action tent-pole film for a global audience.

That same month, Alibaba Pictures bought a 30 per cent stake in Hehe Pictures Corp to make it the second-largest shareholder in the Shanghai-based film investment, distribution and management firm.

In October, the company said it acquired a minority stake in Amblin Partners, a US content creation and entertainment company led by famed Hollywood film director Steven Spielberg.

Alibaba Pictures shelled out a total 100 million yuan investment in August to obtain a controlling 80 per cent shareholding Hangzhou Xingji, which operates the Hangzhou Star Cinema in the same city where parent Alibaba is headquartered.

New York-listed Alibaba owns the South China Morning Post.

In May last year, Alibaba Pictures made its first foray into China’s booming cinema industry by subscribing to a 1 billion yuan tranche of convertible bonds issued by Guangdong Dadi Cinema Construction.

That investment gave it the right to turn the convertible bonds into a 4.8 per cent equity holding in Dadi Cinema – the mainland’s second-largest cinema investment and management company – behind property-based conglomerate Dalian Wanda.

Alibaba Pictures, through subsidiary Zhong Lian Sheng Shi, also forged side deals involving cooperation in film promotion and marketing, as well as for the development of e-commerce and other movie-related businesses.

Prior to its Hangzhou Xingji deal, Alibaba Pictures established in July a 2 billion yuan entertainment industry investment fund with Wuhu Gopher Asset Management. The fund will help finance companies along the supply chain of the movie and television entertainment industry.

In March last year, the company announced investments in Teenage Mutant Ninja Turtles: Out of the Shadows and Star Trek Beyond , both productions under Hollywood studio Paramount Pictures.

It also forged a deal to jointly make a film with famed Italian director Giuseppe Tornatore, who helmed Cinema Paradiso and The Legend of 1900, as its initial foray into the European film industry.

Earlier that same month, Alibaba Pictures and Hollywood film production company Skydance Media announced a deal to co-finance and produce The Flying Tigers. The film is based on the exploits of the first American volunteer group of the Chinese Air Force that flew combat missions between December 1941 and July 1942.

More than 450 new films were released on the mainland last year, according to data from the Ent Group. The number of cinemas across the country also grew 23 per cent year-on-year to 7,800.

The domestic box office, however, declined to US$6.6 billion last year from US$6.8 billion in 2015, according to the State Administration of Press, Publication, Radio, Film and Television.

The combined box office take in the United States and Canada, meanwhile, reached US$11.4 billion last year, according to the Motion Pictures Association of America.

Shares of Alibaba Pictures slipped 0.71 per cent to HK$1.40 at the close of trading on Thursday.

Post