Shanghai: China's Alibaba Pictures Shifts Focus, Offers Big Data Services to Rivals

Yu Yongfu - Getty - H 2016
Bloomberg/Getty Images

CEO Yu Yongfu, who has reset strategy at the loss-making fledgling studio, touted the parent company's enormous technological advantages and access to the data of hundreds of millions of monthly active users.

China's Alibaba Pictures is shifting its focus to become the technological backbone of the Chinese movie industry, according to the fledgling studio's recently installed CEO. 

"We are not your competition, we are your partners," Yu Yongfu, CEO of Alibaba Pictures and Alibaba Digital Entertainment, told a gathering of industry figures Saturday at a forum at the Shanghai International Film Festival. 

Yu outlined how the studio, founded in 2014 and a subsidiary of the e-commerce giant Alibaba, was focusing on becoming a tech-led company providing infrastructure services to rivals and the industry in general, tapping into the parent company's technology and big data capabilities.

Suggesting, offhandedly, how the company should be called "Alibaba Pictures Infrastructure" going forward, Yu's shift in strategy is another sign of the reset in thinking and purpose at Alibaba's movie division, which underwent a major overhaul in October. Alongside the hiring of Yu, a tech industry veteran, the film unit and the digital entertainment business were consolidated into one. 

Yu has moved fast to right the ship at Alibaba Pictures, which has had mixed success and lost $139 million in 2016. In December, Yu pledged to invest  RMB50 billion ($7.2 billion) in media and entertainment over the next three years. The company will still seek to procure IP and incubate acting and directing talent as well as produce the "unconventional films" it has become known for, but the focus is being heavily placed on services for other studios. 

Yu illustrated Alibaba's big data capabilities with the phenomenal success of A Dog's Purpose in the Middle Kingdom. The film, the first fruit of Alibaba's partnership with Amblin, was, according to Yu, initially projected to make $7 million to $12 million in China. He said the company was aware they had a good movie on their hands despite the relatively small budget and lack of locally relevant stars. Alibaba utilized its enormous e-commerce data on pet owners and people who had purchased pet products as well as young women and young families and targeted marketing and promotion toward them. A Dog's Purpose went on to make $88 million in China, well above its North American haul of $64.3 million. 

Alibaba Pictures' pitch to be the infrastructure platform for targeted marketing campaigns from other studios is bolstered by sheer numbers, says Yu. Alibaba's e-commerce business has over 500 million monthly active users in China and the streaming, entertainment and gaming side of the company — including video site Youku and mobile ticketing company Tao Piao Piao — also has 500 million monthly active users, with little overlap between the two, giving a combined total of 1 billion users according to Yu.