Blaming an ocean of red ink on increased marketing expenses, Alibaba Pictures Group reported that losses exceeded revenues in 2016.
The films division of Chinese e-commerce giant Alibaba, APG revealed calendar year revenues that increased from $38.1 million (RMB 263 million) to $131 million (RMB904 million.) Consolidated losses doubled from $71 million (RMB490 million) to $141 million (RMB979 million.)
Sales and marketing expenses for 2016 were RMB1.08 billion, compared with approximately RMB111.9 million in 2015, primarily due to the marketing expenses incurred attracting movie-goers to use Tao Piao Piao’s online ticketing platform. The company’s administrative costs also grew from RMB278 million to RMB720 million as its staff numbers swelled due to the acquisitions of Tao Piao Piao and film finance unit Yulebao. It said that Tao Piao Piao is now connected to 6,000 cinema complexes and that its its revenue base “expanded gradually” in the second half of 2016, as the business model matured.
Its content production business also saw losses increase, as unidentified projects fell below box office expectations. Chinese titles released in 2016 included “Soul Mate” and “Ferry Man,” while its Hollywood titles included “Teenage Mutant Ninja Turtles: Out of the Shadows” and “Star Trek Beyond.”
In the pipeline for 2017 are romantic comedy “Ao Jiao Yu Pian Jian” to be released in April, and “Once Upon a Time,” for release in summer. Other major projects in development include game adaptation “Gujian Qitan 2,”which will be made as a feature film and a TV series.
Following the arrival of Yu Yongfu as chairman and CEO in December, APG says it will increasingly focus on made for Internet content.
During the year APG invested a total of $507 million (RMB3.25 billion) buying convertible bonds and equity stakes in exhibition chain Dadi Cinema Group, producer and distributor Bona Film Group, film financier Hehe Film, and Steven Spielberg’s Amblin Partners and launching an investment fund.
The company issued a warning of its 2016 losses in February. Publication of the results had little impact on the share price which was unchanged at 11.30am Friday. At HK$1.40 per share the company has a market capitalization of US$5.11 billion (HK$35.3 billion.)