Alibaba and Lionsgate Sign Deal to Stream Content in China

Lionsgate and Alibaba Group said today they will launch a video content streaming service for China that give users of Tmall.com’s TV set-top box Internet access to hit American TV shows and movies like “Mad Men” and “The Hunger Games.”

The subscription-based service, called Lionsgate Entertainment World, is scheduled to be available next month, giving the Canadian-American entertainment studio, owner of the hit vampire movie franchise “The Twilight Saga,” wider reach in China’s huge Internet television market and entrée to an audience hungry for Western fare.

Although some Lionsgate TV shows and movies are already individually licensed in China through partnerships with online video platforms, the subscription-service is different because Chinese consumers will have the opportunity to view behind-the-scenes footage and premium content not available anywhere else in China, said Jim Packer, Lionsgate President of Worldwide Television & Digital Distribution. Users will also be able to access VIP benefits such as screening invitations and special merchandise.

"It will build the Lionsgate brand beyond what they see now," Packers said. "This is going to be more of a window into Hollywood and into how these movies get made and how these TV shows get made."

China’s film box office is the world’s second largest after the U.S. Last year China’s movie market grew 27 percent to $3.6 billion with Hollywood movies taking about 40 percent of all box office receipts. 

The robust Hollywood receipts come despite a quota system China has in place that restricts the number of foreign films aired in the country, as well as a relative lack of movie screens. Increasingly, Chinese audiences consume content through the Internet--which last year prompted Alibaba Group, known primarily as an operator of China’s largest online-shopping marketplaces, to begin selling an Internet-enabled TV set-top box based on the company’s proprietary operating system.

The content agreement with Lionsgate broadens Alibaba’s strategy to branch out into digital entertainment. In April, Alibaba and a private equity firm agreed to buy an 18.5 percent stake in one of China’s leading online video firms, Youku Tudou, to boost its content offerings. In March Alibaba also agreed to pay $804 million for a controlling stake in content and media company, ChinaVision Media Group. In June, Alibaba bought of a football club to diversify its entertainment holdings.

The deal with Lionsgate “signals our ongoing commitment to advance our vision of making digital media entertainment available to our customers anywhere, anytime,” said Patrick Liu, president of Alibaba Group’s digital entertainment business unit in a joint press release.

American television shows have also become extremely popular in the PRC, drawing millions of viewers each week through online video sites that stream legitimate video content. Subtitled version of shows like “Desperate Housewives,” “Weeds” and “Dexter” have become household names in China. Earlier this year, the comedy series “The Big Bang Theory” became so popular that Chinese authorities banned online video sites from streaming the series.

To feed this demand for Western TV shows, the Lionsgate content streaming service will make numerous seasons of Emmy-Award winner “Mad Men” and “Weeds” available to Chinese consumers, while new shows like “The Royals” will receive their Chinese premieres on the Alibaba platform.

"Nowadays, people tend to binge watch (TV shows), so we are going to make sure we encourage that," Packer said.

Pricing details will be released when the subscription service is launched.