Alibaba is planning to launch a new online video streaming service in August this year in an attempt to cash in on the success seen by Netflix and HBO in the US.
The service will be available in China with the name TBO, or Tmall Box Office, and will show Chinese shows, content from other countries and shows made specifically for the service. Alibaba revealed earier this year that it was working in collaboration with one of China’s most popular directors and so has hinted at its plans to move into the video content creation market. In China, the video market is competitive and full. Billions of dollars are spent on securing fresh or exclusive media content to entice new viewers, such as House of Cards or the Walking Dead.
Patrick Liu, Alibaba head of digital entertainment, has said that the company’s mission is to redefine home entertainment, hoping to become as successful as HBO and Netflix are in the US. Alibaba currently makes around $4.2 billion in revenue, more than twice as much as Netflix which receives $1.57 billion.
Last year, Alibaba acquired a 16.5% stake of one of China’s most popular online streaming platforms, Youku Tudou Inc, and it isn’t yet known how the company’s own TBO service will fit in with this. TBO will offer only around 10% of its content for free, while the other 90% is paid for by monthly subscription or by allowing users to pay to watch shows individually. Many domestic rivals offer a different free vs paid subscription model, allowing much of their content to be watched for free on YouTube-like sites. These sites are supported by adverts, but deals with US distribution companies help to keep popular content available while attracting new viewers that will sit through advertisements.
Alibaba is primarly an online marketplace and is actually more profitable than Amazon. Amazon has aspirations to make it’s own streaming service, Amazon Prime Instant Video, a popular way to watch videos online and Alibaba is catching up to the plans.
The TBO service will be available through Alibaba’s set top boxes which currently stream content from film company Wasu Media. Wasu Media has an investor in the form of Alibaba’s founder Jack Ma. The company sold over 175,000 set top boxes on last year’s Singles Day alone and its thought that around 600 million households will have access to the TBO service through their set top boxes and smart TVs. Alibaba also operates in the areas of music and games, as well as owning a majority stake in Chinavision, a movie production company.
It has been said that Netflix is also thinking about trying to break into the Chinese market with its on demand video streaming service and has been in talks with Wasu Media about how this can be accomplished. Netflix has begun to secure global distribution rights for series and movies, and may move forward as a distributor rather than a streaming service company. The company has also hinted at possible launches in several more countries around the world but last year CEO Reed Hastings admitted that the company was finding it difficult to work out the details of a Chinese launch, saying “On China, we’re still learning about best to approach it, we’re not sure”.
There are around ten companies seriously vying to be the most popular streaming service in China, many of them offering new and popular movies to viewers for free. Some of the companies also offer subscription packages, but TBO may find it hard to compete in this market by offering content almost exclusivley to paid subscribers only.
Ma has always maintained that he wishes to build partnerships with businesses rather than rival them and recently visited the US to meet with US companies in a bid to help them break into the Chinese market through the Alibaba marketplace. However, the company will have its work cut out in launching the TBO streaming service as rivals such as ecommerce company Tencent Holdings and search engine Baidu are investing funds into their own Chinese video streaming efforts.
