Netflix, Inc. (NASDAQ:NFLX) wants a significant slice of the big Chinese market of 1.36 billion people for itself. However Alibaba Group Holding Ltd (NYSE:BABA) may well be a formidable competitor. Alibaba, a huge Web firm famous for its e-commerce business has acknowledged recently that it is poised to introduce a service akin to Netflix in China.
Patrick Liu, Alibaba’s digital entertainment Chief informed reporters in Shanghai that the new service will be initiated in around two months. Christened Tmall Box Office (TBO) around 90% of the content will be on payment basis while the remaining 10% will be free. While Netflix is not yet present in China, TBO would compete with similar services offered by Baidu Inc (ADR) (NASDAQ:BIDU), Tencent Holdings, and others.
Liu stated that TBO is bidding to redefine home entertainment in the journey to becoming similar to what Netflix and HBO are in the United States. He added that Alibaba was endeavoring to deliver a whole new family entertainment experience. In the footsteps of Netflix, Alibaba would develop proprietary content for the service as well as acquire existing programs from producers in China and other parts of the world.
The Chinese consumer market is a potential goldmine for video service providers. Alibaba’s head start in China is not good news for Netflix CEO Reed Hastings and his team. However, Netflix’s global plans in the streaming video market are not likely to be much affected.
Alibaba, being a well-established Chinese firm is strategically positioned to foray into any online streaming enterprise. Taking a cue from Amazon.com, Inc. (NASDAQ:AMZN) it could bundle TBO service with miscellaneous services. Last month, California-based Netflix was in the midst of negotiations with a host of Chinese organizations to enter the $5.9 billion Chinese online video market.
Alibaba’s new service will be provided via its set-top box, and smart TV’s having it’s proprietary operating system. As per Shanghai-based Internet consultant IResearch the value of China’s online video market will surge three-fold to 90 billion yuan by 2018.
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