UPDATED 23:55 EDT / JUNE 14 2015

NEWS

Alibaba to launch Netflix-style online video streaming service in China

Alibaba Group Holding Ltd. announced Sunday that it was planning to launch a Netflix-style online video streaming service in China.

According to reports, the new service will be called Tmall Box Office (TBO,) and like Netflix will feature a mix of original content, along with content for providers both within China and from abroad.

“Our mission, the mission of all of Alibaba, is to redefine home entertainment,” Alibaba’s Head of Digital Entertainment Patrick LiuLiu said. “Our goal is to become like HBO in the United States, to become like Netflix in the United States.”

Alibaba will enter a crowded market that already includes a number of local players, such as video services provided by Tencent Holdings Ltd., Baidu, Inc.’s iQiyi, Sohu.com, Inc., and Leshi Internet Information & Technology Corp. Beijing (LeTV.)

The move comes ahead of Netflix, Inc.’s expected entry into the Chinese market, although when Netflix might be coming to China is neither clear nor 100 percent certain; although Netflix’s Chief Content Officer Ted Sarandos said in March that the company was definitely looking into the Chinese market, he also noted that they wanted to do so without a local partner, meaning that it would have to acquire operating licenses in China, something not particularly easy for a foreign-owned firm operating by itself.

Markets and cross-promotion

The growth potential in online video in China is staggering, with hundreds of million of people entering the middle class for the first time, many of them keen consumers of online content.

A play in this space didn’t exactly need rocket science from Alibaba, and the company will have a strong chance of becoming a market leader in short shrift given its ability to use its existing properties, of which there are dozens, to promote the new service.

The one challenge though will be getting Chinese consumers to pay for the service, the same problem Netflix will encounter if and when it gets to China; according to reports TBO will be offered as a freemium model, with around 10 percent of content offered free and the rest paid for, but traditionally Chinese consumers have been reticent in paying for such offerings.

The new service is expected to be launched within the next two months.

Image credit: leighklotz/Flickr/CC by 2.0

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