If you are worried about Alibaba Group Holding Limited’s (NYSE:BABA) stock price, here’s some good news: the company just launched its on-demand video streaming service, Tmall Box Office, which might become the next Netflix, Inc. (NASDAQ:NFLX).
On Tuesday, September 2nd, Alibaba updated its smart TV operating system with Tmall Box Office, or TBO. The service can be had for 39 yuan ($6.10) per month or 365 yuan ($57.30) per year.
It looks like the company’s plan went accordingly. In June, Alibaba told reporters in Shanghai that the company would launch an online streaming service in China in about two months.
Tmall Box Office: The New HBO or Netflix?
The company was quite ambitious about the new service. In June, Alibaba’s Digital Entertainment head Patrick Liu said that their mission was to “redefine home entertainment” and their goal “is to become like HBO in the United States, to become like Netflix in the United States.” (Source: Reuters, last accessed September 2, 2015.)
China’s on-demand video streaming industry represents a huge opportunity. According to iResearch, an internet consulting firm based in Shanghai, the Chinese online video streaming market is expected to grow to 90.0 billion yuan ($14.5 billion) by 2018. (Source: IResearch, last accessed September 2, 2015.)
Mind you, the industry is also extremely competitive. The big players in the Chinese internet industry all have their stake in it: Baidu, Inc. (NASDAQ:BIDU) has iQiYi; Tencent Holdings Limited has Tencent Movies; and before Alibaba’s new launch, it already had YouKu Tudou, one of the most popular video streaming sites.
The thing is; comparing Alibaba’s new service to the already existing online video streaming sites in China wouldn’t be fair. Most of the users on existing video streaming platforms in China have been non-paying users, so Alibaba is actually entering a new field.
The new field is choppy, to say the least. Many have tried to convert online viewers into paying subscribers, but few have succeeded: iQiYi and Youku Tudou, the two largest video streaming sites in China, only managed to convert one percent of their total viewers into paying subscribers. (Source: Variety.com, last accessed September 2, 2015.)
Since Tmall Box Office has just been released, and is only available to some users of Alibaba’s smart TV operating system, how the service would perform remains to be seen. One thing is for sure; Alibaba’s stock price could really use some good news. Trading at $65.54 a share, it has declined 36.9% since the beginning of this year.