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Alibaba's Movie Business Dominates the Chinese Box Office

Alibaba's Movie Business Dominates the Chinese Box Office

Alibaba (NYSE:BABA) is mostly known for its Chinese e-commerce platforms. If you take time to get to know the company you'll realize just how far its arms extend in China, including into the country's skyrocketing movie market.

In 2014, Alibaba bought a 60% controlling stake in a Hong Kong-based movie and TV production company and renamed it Alibaba Pictures. If you didn't know about Alibaba Pictures, then you probably didn't know that the company recently released a short martial arts film called Gong Show Dao that actually stars Alibaba founder Jack Ma.

Most recently, Alibaba Pictures co-produced and financed Chinese drama Dying to Survive, which claimed the top spot at the Chinese box office for two straight weeks in July. That makes the movie business another thing Alibaba can add to its list of things it has dominated in Chi na.

Alibaba founder Jack Ma holds his hands up in victory on stage at an event.

Alibaba founder Jack Ma is going after the growing movie business in China. Image source: Alibaba.

"Dying to Survive" makes waves in China

Alibaba Pictures' Dying to Survive is based off a true story of a man who smuggled cheap, unapproved medications into China to sell to poor cancer patients. The film brought in $183.4 million during its four-day opening weekend at the beginning of July. In its second weekend, the film brought in an estimated $160.3 million, according to Ent Group.

It has become the third-highest grossing film in Chinese cinema history, bringing in more than $428 million since it opened on July 5 to beat out popular franchises that have come through China such as Avengers: Infinity War and Jurassic World. This could be a sig n of things to come considering that China's box office is expected to surpass the North American box office in annual movie ticket sales in 2020, according to Deloitte. Last year, the Chinese box office brought in $8.6 billion. Chinese government experts said they're expecting a 15% to 20% increase in movie sales in 2018.

It makes sense that Alibaba is making moves into the movie business given how fast the Chinese box office is growing. While China may need a few more years to beat the U.S. in annual ticket sales, it actually surpassed the U.S. in the first quarter of 2018. China's box office became the biggest in the word with $3.17 billion in sales in the first quarter, topping North America's $2.85 billion for the same period.

Alibaba's powerful movie-marketing tools

Alibaba Pictures attributes the success of Dying to Survive partly to its ticketing business and its ability to run ads on its many platforms that hav e millions of users.

For Dying to Survive, Alibaba Pictures' online ticketing business, Tao Piaopiao, launched a campaign that allowed users to earn ticket vouchers. To earn a voucher, users simply had to log into the app, watch trailers, leave reviews, or play interactive games. Tao Piaopiao has aided in marketing for a number of other hit movies, including Indian blockbuster Dangal and Christopher Nolan's Dunkirk. While Tao Piaopiao's revenue jumped 189% to $311 million in 2017, heavy investments and expenses related to it led to a loss of $55 million for the year.

Alibaba Pictures also noted that Dying to Survive performed well thanks to the promotions it ran across Alibaba's multiple platforms, including its digital Alipay wallet, its video-streaming site Youku, as well as its popular Chinese e-commerce sites Taobao and Tmall.

These marketing tools that helped to boost Dying to Survive ticket sales demonstrate the advantage that Alibaba has over other Chinese movie making companies -- while others typically spend huge sums on advertising, Alibaba has the platform built-in. As of last quarter, Alibaba is up to more than 500 million monthly active users. By broadcasting ads on its many apps and platforms, Alibaba is able to easily promote its movies to millions of potential viewers.

Alibaba is a huge company that tends to jump into any area it thinks will skyrocket in growth. That's why it's heavily investing in online retail, updated brick-and-mortar stores, and even movies.

Natalie Walters has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Source: Google News Movie

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