Alibaba strikes entertainment deal in China

Internet giant Alibaba Group Holding Ltd., Chinese film company DMG Entertainment and China's Hunan Satellite Television are striking a deal to expand subscription-based internet, cable and mobile entertainment to Chinese consumers.



The three companies will first offer the service, which includes gaming, film and TV content, to Hunan TV's six million cable TV subscribers and will then expand it across China, according to a filing Wednesday to the Shenzhen Stock Exchange, where DMG and Hunan are listed. Additional fee-based gaming and educational content will also be rolled out, the statement said, without elaborating.



The deal marks the first bundled cable TV, mobile and Internet entertainment service in China, the filing said. The service will be offered through Alibaba's TMall e-commerce platform, the statement said. The filing didn't disclose financial details of the deal and didn't say when the companies plan to launch the new service.



Alibaba and Hunan TV didn't immediately respond to requests for comment. A spokesman for DMG confirmed the project but declined to disclose further details.



The move is part of a broader push by Alibaba to expand potentially lucrative entertainment services in China, the world's second-largest movie market by revenue, behind the US Alibaba, Internet rival Tencent Holdings Ltd and other technology companies are working more closely with film and entertainment companies as Chinese Internet users watch more movies and videos online.



Alibaba, which dominates China's e-commerce market, said last month that it plans to kick off a pay-to-watch video-subscription service called Tmall Box Office, or TBO, by September. That follows billions of dollars in investments in the entertainment industry over the past 18 months.



Alibaba already has a movie-ticketing website, a crowdfunding product for films and a film studio, Alibaba Pictures. It also owns an 18.5 per cent stake in Youku Tudou Inc., one of China's biggest video-streaming companies. Alibaba Executive Chairman Jack Ma and his investment firm hold a minority stake in Huayi Brothers Media Corp., a major Chinese film studio.



In recent years online-streaming sites, satellite broadcasters, set-top box providers and others have begun offering new avenues to reach Chinese audiences, which have big appetites for entertainment beyond their TV sets. Mobile TV watchers flood subway stations in big cities each day. Around $US3.3 billion of movie tickets were sold in the first six months of 2015, up 49 per cent from the same period a year earlier, according to figures from film industry consulting firm Artisan Gateway.



The deal between the three companies also benefits DMG, a Beijing-based film company that has been pushing to become a global entertainment power that can rival international giants such as Sony Pictures Entertainment. DMG, which co-produced with Disney the film "Iron Man 3" in 2013, will expand TV and film content for the new service, the filing said.



