Alibaba Increases Stake in Tao Piao Piao, Gets Closer to Entertainment Ecosystem

Alibaba Pictures announced on Monday that it will increase its stake in Tao Piao Piao, an online ticketing platform, from 87.6 percent to 96.7 percent, for 1.3 billion yuan.

Zhonglian Shengshi, a wholly-owned subsidiary of Alibaba Pictures, will acquire about 9 percent equity interest in Hangzhou Aurora, which operates Tao Piao Piao, from six minority shareholders.

Alibaba said the deal would help realize its commitment to building “an entertainment ecosystem” and developing “new infrastructure” for the film industry.

“Being the platform that serves the most critical function of consumer reach for the new infrastructure,” said the company in the filing to the Hong Kong Stock Exchange, “Tao Piao Piao has successfully established a solid foundation in areas including film promotion, distribution and ticketing-services.”

Yu Yongfu, chairman of Alibaba Pictures, discussed the company’s “new infrastructure” strategy publicly last month, during the Shanghai International Film Festival. He said the company will strive to become a platform that serves content companies in production and distribution, but will not compete with them.

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Tao Piao Piao, which was called Taobao Movie when it was established in 2014, rising up from the fierce ticketing competition in the past three years, is now one of the three biggest online ticketing platforms in China.

According to a report by the data center of China Business Network in March, Tao Piao Piao ranked the second in the film ticketing market, with 30 percent market share, after Maoyan’s 33 percent and before Yu Piaoer’s 16 percent.

The success came at high costs: Alibaba Pictures lost nearly 1 billion last year, primarily due to the promotion of Tao Piao Piao.

It’s not clear whether the company will increase its investments in Tao Piao Piao after the deal, but in addition to the ticketing service, it will provide more contents and social media functions.

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Even before this deal, Tao Piao Piao has already started its business in film investment and distribution. Many of the hit films in the summer, such as “Wu Kong” and “Brotherhood of Blades II”, involved its work.

Both of its competitors, Maoyan and Yu Piaoer are also trying to expand their businesses into production and distribution, as the growth of the ticketing business has been slowing down.

Analysts expected competitions to become even more fierce in the next couple years, and the landscape in the business might change very quickly.