Alibaba unit buys Yueke to expand cinema reach

People walk at the headquarters of Alibaba in Hangzhou, Zhejiang province, April 23, 2014. [Photo/Agencies]

Alibaba Group Holding Ltd's cinema unit said on Tuesday that it has acquired a major cinema software service provider in China to further expand its presence in the nation's booming film market.

The Hong Kong-listed Alibaba Picture Group Ltd confirmed it has bought Guangdong Yueke Software Engineering Co for 830 million yuan ($134 million). The company, in which Alibaba owns a 60 percent stake, said when the deal is complete, Yueke will become its wholly owned subsidiary and offer better services to cinemas by taking advantage of its Internet resources.

Yueke, as a major software solution provider in China's film market, provides software support to more than 1,500 of 5,780 cinema theaters in China.

The acquisition is part of Alibaba's broad strategy to expand into the culture and entertainment sector. In March, the e-commerce giant acquired an 8.8 percent stake in TV content and film producer Beijing Enlight Media Co Ltd worth 2.4 billion yuan.

In April, Alibaba also merged its online movie ticketing and movie production crowdfunding businesses into Alibaba Picture to integrate its entertainment business.

Huang Guofeng, an analyst at Beijing-based Internet consultancy Analysys International, said the acquisition shows that Alibaba is now present across the whole movie industry chain in China.

"Yueke is deeply involved in all aspects of theater management systems, such as seat-booking and arranging cinema schedules. Yueke can help Alibaba lay down a technology infrastructure for its entertainment platform," Huang said.

"With the purchase of Yueke, Alibaba has also become the first Internet giant, compared with its major rivals Baidu Inc and Tencent Holdings Ltd, to expand into all movie-related businesses," Huang said, referring to the company's engagements in film production, movie distribution and ticket selling.

The intensified push by Alibaba to attract film buffs comes after China became the world's second-largest cinema market last year, second only to North America.

Figures from the State Administration of Press, Publication, Radio, Film and Television show that the total box office receipts in China reached 29.6 billion yuan in 2014.

Jane Zhang, an analyst at IT research firm Gartner Inc, said the move has an impact on Alibaba's cloud computing and big data services.

"Unlike retailing and other sectors whose information system is not that well developed, the movie industry boasts a high level of informatization, which allows software service providers like Yueke to collect huge transaction data," Zhang said.

Ma Si contributed to this story.