Alibaba Expands Content Offering With Manchester United Deal

Alibaba Group Holding Limited (NYSE:BABA) is looking to strengthen foothold in the digital media and entertainment industry.

In this regard, the company recently announced that it has signed a partnership with Premier League soccer club, Manchester United Ltd. (NYSE:MANU) , thereby expanding its content offerings on Youku.

Per the deal, the Chinese e-commerce giant will provide club content on its video-streaming platform Youku. In addition, it will develop a Manchester United store on its business-to-consumer platform Tmall.com.

Though United’s live league matches will not be available on Youku, its other content including women's games, academy, and club tour matches will be presented and localised on multiple Alibaba platforms.

Alibaba’s latest partnership is in line with its strategic focus on digital entertainment. The company expects the latest move to expand user base and fend off competition.

Alibaba Group Holding Limited Price and Consensus

Increasing Focus on Media

Alibaba’s innovative initiatives will continue to uphold its position in the world of media and entertainment, particularly in China. This growing unit includes its video-streaming platform Youku and music-streaming service Xiami.

Lately, the company has been expanding presence in the world of sports. It streamed the entire 2018 FIFA World Cup through a partnership with China Central Television. The World Cup and its continued original content investment led to daily average subscriber growth of 200% for Youku.

Per the latest data from Statista, video-on-demand revenues in China are expected to grow to $2.56 billion in 2019 and the figure is anticipated to reach $2.97 billion by 2023 at a CAGR of 3.8%.

We believe that Alibaba is well poised to reap benefits from this rapidly growing market on the back of new strategies that include partnerships and acquisitions.

Looking Ahead

The Chinese e-commerce giant intends to expand presence beyond e-commerce and cloud computing to media.

In fiscal second-quarter 2020, revenues in the Digital Media and Entertainment were RMB7.3 billion (US$1.02 billion), reflecting a 23% increase on a year-over-year basis. The segment’s top-line growth was driven by consolidation of Alibaba Pictures.

Last December, Alibaba had increased its stake in Hong Kong- and Singapore-listed Alibaba Pictures to 51% from 49%, giving the company the control of the film unit's board.

The latest deal with Manchester United is in line with the Chinese Internet giant’s continued efforts to make a mark in online entertainment, as they seek to attract more users to its platforms. This in turn has driven Alibaba’s top-line growth.

Other tech companies, namely Netflix (NASDAQ:NFLX) Alphabet’s Google (NASDAQ:GOOGL) and Amazon (NASDAQ:AMZN) , among others, are also making efforts to expand in this space.

Per a report from Report Buyer, the global video streaming market is expected to hit $124.57 billion by 2025 at a CAGR of 19.6% over a period of 2019-2025.Therefore, the fight for a share in the streaming online market should be quite an interesting one.

Zacks Rank

Currently, Alibaba has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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