Alibaba’s Next World to Conquer: Sports – Bloomberg View

Facing growth concerns among investors, the Chinese e-commerce giant Alibaba has announced a new push into sports. The company is partnering with the Web news and social media conglomerate Sina and Yunfeng Capital to form Alibaba Sports Group in a bid to “transform China’s sports industry,” according to a press release.

There aren’t too many details of what, exactly, Alibaba intends to do in sports. The company said it plans to leverage its e-commerce platform to move into the industry via copyrights, sports media, events and ticketing. The announcement comes as analysts warned Tuesday that third-quarter sales on the retailing side would fail to meet expectations.

The shift to sports isn’t completely out of the blue. Alibaba owns a 50-percent stake in Guangzhou Evergrande, one of China’s top soccer clubs. It also has partnerships with Bayern Munich and Real Madrid, setting up online stores on the company’s business-to-consumer retail platform, Tmall. Just last month, Alibaba announced it’s teaming up with Kobe Bryant’s new startup, Kobe Inc., to distribute the feature-length documentary “Kobe Bryant’s Muse” and to market a series of branded products.

Alibaba’s sports focus is part of a larger effort to diversify its brand to entertainment in general, and enter the wide world of content. As founder and chairman Jack Ma told reporters last year, when Alibaba bought Guangzhou, “We’re not investing in football, we’re investing in entertainment.” The company recently launched a video-streaming service a la Netflix, and invested in the latest “Mission Impossible” movie. As part of the agreement with Paramount, Alibaba will distribute the film throughout China and oversee its online ticketing and promotion. 

“For now, this is a China play,” Bloomberg View Asia correspondent Adam Minter e-mailed me about Alibaba Sports. “This is all part of the massive content grab that the big Chinese Internet companies are in the midst of.” That includes “buying movie studios, television production units, e-sports broadcasters … all in hope of being the streamer of choice.”

You can see why sports offers such an attractive road into the world of digital content, especially in emerging markets. According to Stacey Allaster, chairman and chief executive officer of the Women’s Tennis Association, 50 percent of sports fans in China, India and Russia consume their sports on mobile. Alibaba is actually trailing some other companies in the race to become China’s major players in digital sports. In January, Tencent inked a five-year deal with the NBA to distribute games, and in May, LeTV Sports struck a partnership with Major League Soccer to stream matches in mainland China. LeTV, based in Beijing, followed that up in July with an agreement with the Scottish Professional Football League.

Alibaba hasn’t presented a clear vision of its entry into sports distribution, and the rights deals are going for a premium. But the company does seem suited to dive right into the online ticketing and merchandise realms. According to AFP, Alibaba’s Taobao platform controls more than 90 percent of the consumer-to-consumer market in China, while Tmall comprises at least half of the business-to-consumer market. Alibaba shouldn’t have trouble setting up both fan-driven ticket exchanges and third-party re-sellers.

Alibaba may not be the early mover, but its size and revenue give it a real advantage in the race among China’s Internet companies to capitalize on the growth of digital media. 

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Kavitha A. Davidson at kdavidson19@bloomberg.net

To contact the editor responsible for this story:
Tobin Harshaw at tharshaw@bloomberg.net