Alibaba Pictures has announced plans to invest $154m (RMB1bn) in convertible bonds issued by Chinese exhibitor Guangdong Dadi Cinema Construction.
Based on the subscription agreement, Alibaba Pictures has the right to convert the bonds into equity shares of Dadi Cinema. One of China’s leading exhibitors, Dadi owned 313 cinemas with a total of 1,662 screens as of April 2016. The company also has more than 310 contracted cinemas set to open.
In addition to the capital investment, Alibaba Pictures and Dadi Cinema also agreed to cooperate on movie promotion and marketing, development of e-commerce and other movie-related businesses.
Alibaba is building a vertically integrated content business through a string of acquisitions, which also include Yueke Software Engineering, Taobao Movie and crowdfunding platform Yulebao, along with a share in Beijing-based studio Bona Film Group.
In a statement, Alibaba said the deal with Dadi would extend its internet capabilities and basic industry services to cinemas, “giving them direct access to millions of e-commerce users in Alibaba’s e-commerce ecosystem, and bringing new revenue streams and a new business model to cinemas.”
Alibaba Pictures CEO Zhang Qiang added: “Cinemas will play an integral part in Alibaba Pictures’ operations, as the company aims to build an integrated entertainment platform for the film industry. It will not only serve as an important consumption context within the entertainment industry, but also become a core application of internet in the film industry.”
In 2015, Dadi Cinema ranked second among Chinese cinema investment and management companies, with attendance exceeding 71.58 million and box office including tax increasing 47% year-on-year to reach $338m (RMB2.2bn).
Alibaba Pictures has also invested in and produced a slate of Chinese movies including Ferry Man, produced by Wong Kar Wai, Three Lives Three Worlds Ten Miles Of Peach Blossom and Ao Jiao Yu Pian Jian. The company’s international investments include Korean production REAL, Second World War drama Flying Tigers and Paramount titles Mission: Impossible – Rogue Nation, Teenage Mutant Ninja Turtles: Out Of The Shadows and Star Trek Beyond.