Lionsgate Inks Deal for China Streaming Service

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Lions Gate Entertainment Corp. (NYSE:LGF) has inked a major deal with China e-commerce giant Alibaba in what represents another huge step in Hollywood’s attempts to move into the Chinese entertainment market. The deal, which will allow for Lionsgate’s film and television titles to be streamed in China, gives subscribers in China the opportunity to watch popular TV shows like Mad Men and Weeds, as well as popular films like Divergent and The Twilight Saga: Eclipse.

According to reports, Alibaba accounts for upwards of 80 percent of e-commerce in China and is currently working in a New York IPO that could become the biggest in history. Last year, Alibaba’s shopping sites were responsible for $248 billion in business and the company now has its sights set on aggressively pushing into the entertainment industry, which recently became the second-biggest movie market in the world. The company has registered a film unit, Alibaba Film Group, in Hong Kong while the company figures to continue investing heavily in the entertainment sector where year-over-year growth is expected to continue its explosive growth.

The deal between Lionsgate and Alibaba will allow for films and TV shows from the studio to be streamed via the Lionsgate Entertainment World (LGEW) service — a subscription streaming platform. Besides full HD streaming of Lionsgate content, the service will also provide exclusive behind-the-scenes footage and other content not available anywhere else in China. LGEW will be available exclusively through Alibaba’s latest generation of set-top boxes for an expected launch in August.

“The Lionsgate Entertainment World service will be distinguished not only by the breadth and depth of our content portfolio but our commitment to provide Chinese consumers with first-run films, television shows and behind-the-scenes experiences that aren’t available anywhere else in China,” explained Lionsgate co-chief operating officer Brian Goldsmith and president of worldwide television & digital distribution Jim Packer.

The president of Alibaba Group’s digital entertainment business unit, Patrick Liu, says, “We are committed to expanding our ecosystem where our users can meet, work and live, and this cooperation signals our ongoing commitment to advance our vision of making digital media entertainment available to our customers anywhere, anytime.”

But for Lionsgate, the deal is a revolutionary one in that the interchange between the U.S. and China is far more open that it has been before. While Lionsgate has been licensing content to China for years, the deal with Alibaba is the first time in which Lionsgate will be curating its own selections and exerting more creative control over their content in China. And according to a source at the WSJ, Lionsgate and Alibaba are also not planning on any capital tie-ups related to the deal.

The news comes at a time when Paramount’s Transformers: Age of Extinction continues to show Hollywood executives the tantalizing possibilities of pushing into the Chinese entertainment market. The Michael Bay-directed film has already become the highest-grossing film ever in the country at $280 million, and it is now expected to reach the $300 million mark, blowing past the previous highest-grossing film in the country, James Cameron’s Avatar, which earned $221 million in 2010.

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