Alibaba Pictures Group, the movies division of Chinese e-commerce giant Alibaba, has agreed to invest $154 million (RMB1 billion) in convertible bonds issued by Dadi Cinema Construction. The move is the first by APG into theater circuits.
The two companies also struck side deals covering movie promotion, e-commerce and other film-related businesses.
The financial terms of the deal and details of the convertibility of the bonds were not disclosed. Dadi is China’s second largest cinema investment and management company. It had attendance over 71.6 million, and box office which grew in line with national trends, at 47%, to reach $339 million (RMB2.2 billion) in 2015. At the end of April 2016, Dadi Cinema owned 313 cinemas with a total of 1,662 screens, covering 28 provinces and 150 cities nationwide. It also has more than 310 contracted cinemas set to open.
"Through collaborating with Dadi Cinema, Alibaba Pictures will 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,” APG said in a statement.
"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,” said Zhang Qiang, CEO of Alibaba Pictures.
In 2015, APG focused its expansion on building an integrated entertainment platform for the film industry. It made acquisitions including Yueke Software Engineering, Taobao Movie and Yulebao, and participated in the buyout of Bona Film Group from its public trading on NASDAQ. APG now incorporates film financing and investment, content sourcing and production, intellectual property nurturing, Internet-based promotion and distribution, and cinema services.
"As the Chinese film industry is constantly innovating and achieving breakthroughs, such collaboration on a capital level will enhance the synergies of both parties in aspects such as film distribution, movie marketing, joint membership management and the establishment of big data,” said Yu Xin, GM of Dadi Cinema.
APG now has a production investment slate that includes “Ferry Man,” “Three Lives Three Worlds Ten Miles of Peach Blossom” and “Ao Jiao Yu Pian Jian.” In 2015, APG also invested in Mission: Impossible – Rogue Nation; and in REAL, a Korean production starring popular Korean actor Kim Soo Hyun which is expected to release in 2017.