By/Por Juan Rodriguez Flores, Executive Editor LWR
Jack Ma’s e-commerce giant Alibaba and Steven Spielberg’s Amblin Partners, formerly DreamWorks Studios, have formed a partnership that will lead to the production and distribution of films in Hollywood and China, according to Bloomberg.
The move aims to benefit Alibaba’s ambitious media strategy and the US film industry’s push into a highly regulated market while bridging a cultural gap between the two countries.
The deal is the most recent in a wave of Chinese conglomerates pouring into Hollywood.Most notably, Chinese real estate developer turned media giant Dalian Wanda Group bought Legendary Entertainment (creator of hit film Jurassic World) for $3.5 billion earlier this year, and AMC Entertainment (the world’s biggest chain of movie theaters) for $2.6 billion before that. Fosun Group and Huayi Brothers are other Chinese players investing in US media entertainment.
The recent deal benefits Alibaba’s aggressive video growth strategy in two ways:
It propels Alibaba’s ambition to build out its entertainment business. Executive chairman Jack Ma has made it clear that he wants his company to become “the world’s largest entertainment company.” The deal with Amblin Partners gives Ma and Alibaba another source of expansion in its entertainment arm to increase purchases on Alibaba’s online film-ticketing service, Taobao Movies.
And it enhances its subscription streaming service. The company rolled out its subscription-video-on-demand (SVOD) service, Tmall Box Office (TBO), just over a year ago and has already made deals with Lionsgate and Disney to bring some of their content to its service. Alibaba could potentially bring future projects from its recent partnership with Amblin to its SVOD platform to entice users to subscribe.
The deal also benefits Amblin and Hollywood as a whole in the following ways:
It provides an entrance into the world’s fastest growing movie market. China is currently the second largest movie market in the world (behind only the US), with a total of $6.8 billion in box office revenue, up a whopping 48% from 2014, according to consulting firm Artisan Gateway. In comparison, the US and Canada combined to increase only 7% during the same period. Moreover, PwC projects China’s box office to hit $8.9 billion in 2019, surpassing the US in the process.
It also allows Amblin access to a pool of valuable consumer data. As per the partnership, Amblin will gain access to Alibaba’s valuable consumer related data. Gaining access to this data will help Spielberg and his company obtain a better understanding of Chinese consumers, as Amblin continues its expansion into the fast growing, highly populated region.
However, Hollywood and media companies alike still face an uphill battle in their pursuit of the Chinese market. Foreign entertainment companies are heavily restricted from entering and maintaining a position in the market due to strict regulations. Netflix was the most recent company to voice concern: A China entry “doesn’t look good,” according to CEO Reed Hastings.