Alibaba CEO Jack Ma is soaking up the southern California sunshine this week as he meets with Hollywood executives in a bid to acquire more content for phones and tablets.
Ma is hunting for movies and television shows to help build out Alibaba’s streaming media offerings. He comes armed with $25 billion cash following Alibaba’s initial public offering in September and has a slate of meetings scheduled over this week with the likes of Lions Gate Entertainment (LGF), Walt Disney (DIS), Twenty-First Century Fox (FOXA) and others, reported Bloomberg News.
“I want to come here looking for partners,” Ma said Monday at the WSJDLive conference, adding that China will soon become the world’s largest movie market.
With the growing middle class in China, the theatrical business is booming and expanding. Streaming will grow along with that and could become a viable market there in about 3 to 5 years–and Alibaba is in a position to take advantage of that, said Christopher Spicer, an assistant professor at UCLA.
Alibaba has been investing in media ventures (among many other disparate businesses), including its first set-top box in collaboration with Wasu Media and a $1.22 billion investment in online video site Youku Tudou. The company also paid $804 million in March for a 60% stake in ChinaVision Media Group, which was renamed Alibaba Pictures Group.
Since March, Alibaba (BABA) has committed more than $3 billion toward its entertainment initiatives. That number could continue to grow as Ma and a team of advisors meet with studio execs this week.
“It could be huge for them for a number of reasons,” Spicer told Bloomberg West. “Primarily, they have a huge online platform, and they’re looking to grow that platform. The primary way they can do that is to acquire content, and international content is located here in Hollywood.”
While streaming could become a strong market, it faces governmental challenges in the near term. Over recent months Chinese officials have tried to control foreign-media content. In April, they ordered 4 U.S. shows off video-streaming sites, and then in September, officials limited the number of foreign TV shows to no more than 30% of total content on Chinese streaming services.
A tie-up could be very beneficial for studios, which have struggled to get movies and TV shows distributed due to these governmental restrictions.
Alibaba has already inked distribution deals with some media companies. Disney signed on with Youku Tudou to market “Captian America: The Winter Soldier” locally, and Lions Gate signed a deal in July to launch a streaming service in China.
“It’s easier to get a film distributed in China now than it was three years ago,” said Spicer. “But, it’s still challenging, and it’s important to have key strategic relationships if you want to be in China and grow your business in the second largest market in the world.”
The billionaire Alibaba CEO believes China needs Hollywood’s top-rated cultural products, and Hollywood has proved a source of constant inspiration for him. In addition, Ma believes that entertainment might help teach skills needed to develop talent. For instance, Ma credited Whitney Houston’s performance in The Bodyguard as providing him implicit lessons on how to give a speech.
“I learn a lot of things from movies,” he said. “We worry about people with deep pockets but shallow minds, so movies are the best way to change Chinese young people’s behavior.”