Alibaba Doubles Down on Entertainment With $1.5 Billion Fund

  • Yu Yongfu, of UCWeb, will become CEO of new group under Zhang
  • Breaking out media assets is part of transparency efforts

Alibaba Forms New Media Group, $1.5B Fund

Alibaba Group Holding Ltd. is stepping up investments in the entertainment industry with the formation of a new media group along with a fund of more than 10 billion yuan ($1.48 billion) for new projects.

The change consolidates the Chinese e-commerce giant’s media empire into the Alibaba Digital Media and Entertainment Group, which will include video website Youku Tudou, web browser UCWeb, Alibaba Pictures Group Ltd. and the company’s gaming, literature, music and digital business units. Yu Yongfu, the former chief executive officer of UCWeb, will become chairman and CEO of the new group and report directly to Alibaba CEO Daniel Zhang. Victor Koo will step down as the chairman and CEO of Youku Tudou to lead the new fund.

Breaking out the company’s media assets is part of Alibaba’s efforts to be more transparent in its earnings reports. Last quarter the company reported for the first time four segments: the core e-commerce business, cloud computing, digital media and entertainment and other innovation initiatives.

The new fund comes as Alibaba has been doubling down in entertainment, spending billions of dollars on media assets like Youku Tudou, to generate new growth in the face of China’s slowing domestic economy. Alibaba has been establishing itself in Hollywood, backing movies like the latest "Mission Impossible" film. Earlier this month, Alibaba Pictures Group bought a stake in Amblin Partners, the new production outfit backed by Steven Spielberg to work together on production, marketing and distribution globally and in China.

E-commerce giants like Alibaba and Amazon.com Inc. have been muscling into the entertainment industry as they look for more ways to hook shoppers onto their platforms. Amazon has started bundling access to TV shows, movies, music and books into its Prime membership package. Alibaba has been combining its entertainment features, like live streaming and videos, into its mobile shopping apps.

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