Alibaba Pictures’ investment in online movie ticketing delivers huge rise in revenue

But ticket subsidies still push firm into 465.7 million yuan half-year loss

PUBLISHED : Sunday, 28 August, 2016, 7:03pm
UPDATED : Sunday, 28 August, 2016, 10:12pm

Alibaba Pictures Group, the entertainment arm of e-commerce juggernaut Alibaba Group Holding, has pledged to ramp up its film production both at home and abroad as well as strengthen its e-commerce merchandising sales after the purchase of an online ticketing firm boosted its first-half revenue by more than 1,000 per cent.

The company posted revenue of 257.3 million yuan, compared with 22.9 million yuan in the same period last year, which it attributed to the acquisition in June last year of Yueke Software Engineering, a Chinese cinema-ticketing firm.

“[Alibaba Pictures’] internet-based promotion and distribution business is well positioned to benefit from the overall box-office growth and the increasing adoption of online film ticketing in China,” the company said in its results announcement, estimating more than 70 per cent of all domestic film tickets were now sold on dedicated online platforms.

Despite the huge boost in revenue, Alibaba Pictures still recorded a net loss of 465.7 million yuan, three times higher than in the corresponding period last year, which it blamed on increased marketing expenses used in ticket subsidies for users of Tao Piao Piao, the company’s film ticket, in an attempt to gain market share.

“Using this strategy, Tao Piao Piao’s market share has grown sharply and is now one of China’s leading online film ticketing platforms,” Alibaba Pictures said, claiming Tao Piao Piao covered 95 per cent of the country’s box office.

Tao Piao Piao received 1.7 billion yuan in funding in May, led by investors including CDH Investments, Ant Financial Services Group and, in exchange for a 12.4 per cent stake.

Alibaba Pictures said it planned to leverage IP-centric merchandise to grow its entertainment e-commerce segment after setting up flagship stores on the e-commerce platform and license several products for sale.

Further collaboration is planned with Hollywood film studios to acquire the rights for certain merchandise.

The company said Ferry Man, a film produced by renowned Hong Kong filmmaker Wong Kar-wai and featuring Tony Leung Chiu-wai, had been completed and was slated for release later this year.

The filming of Three Lives Three Worlds Ten Miles of Peach Blossoms, an adaptation of the Chinese fantasy romance novel of the same name, has also been completed and the film is scheduled for release next year.

Overseas, the company has worked with US studio Paramount Pictures on the upcoming Star Trek Beyond film following co-operation on last year’s Mission Impossible: Rogue Nation and this year’s Teenage Mutant Ninja Turtles: Out of the Shadows.

Earlier this week, Alibaba Pictures announced it had spent 100 million yuan for an 80 per cent stake in cinema operator Hangzhou Xingji after a one billion yuan investment in convertible bonds issued by Dadi Cinema Construction in May.

Shares in Alibaba Pictures closed unchanged at HK$1.59 in Hong Kong on Friday ahead of the results announcement. The company’s share price has declined 18 per cent since the beginning of the year.

This article has been amended to refer to the company’s revenue, not earnings, in the first paragraph and correct its investment amount in the convertible bonds issued by Dadi Cinema Construction