Alibaba Pictures (01060)'s first financial report “report card” after the implementation of the barley acquisition project sent a strong signal of value to the outside world.
Recently, Alibaba Pictures revealed its 2023/24 results. According to financial reports, in the 2023/24 fiscal year, Alibaba Pictures achieved revenue of 5,036 billion yuan (RMB, same unit), a sharp increase of 44% over the previous year; adjusted EBITA achieved profit for 4 consecutive years, with a profit of about 504 million yuan, an increase of 61% over the previous year.
Core financial data has been drastically optimized. On the one hand, it certainly needs to be due to the high-quality recovery of the entertainment industry, and on the other hand, it also benefits from Alibaba Pictures's own diligent “internal skills” to continuously increase investment in high-quality content creation and technological innovation around the long-term direction of “content+technology.”
In addition to financial data with strong growth implications, it is also worth noting that in the fourth quarter of last year, Alibaba Pictures officially “took over” barley from Alibaba. According to the Zhitong Finance App, Alibaba Pictures's acquisition of Damai not only marks another big step in ecological construction. Alibaba Pictures's share in the live entertainment ticketing industry is expected to increase further in the future. At the same time, the company's profitability in the technology sector is also expected to grow by leaps and bounds, thereby stimulating the profit generation potential of the entire Alibaba Pictures industry.
Left-handed content right-handed technology, two-wheel leveraging new growth
Looking through the latest financial reports from Alibaba Pictures, the strong growth in the company's performance is inseparable from the cooperation of “Tianshi Geely.” Since 2023, domestic audience demand for entertainment consumption, which has been backlogged for a long time, has continued to be released, and the entire market has ushered in a recovery that exceeds expectations.
Financial reports show a strong recovery in the entertainment content industry during the reporting period. Take the film market as an example. The total box office of the national film market during the period was 55.6 billion yuan, an increase of about 23.8 billion yuan over the previous year, an increase of 75%; the number of movie viewers was 1.33 billion, an increase of 590 million over the previous year, an increase of 80%. Among them, the total box office of the 2023 summer film nationwide reached 20.6 billion yuan, setting the highest record for the same period in Chinese film history.
If the recovery of the industry environment has created favorable external conditions for Alibaba Pictures, then seizing the opportunity to “hit the mainstream” clearly depends on the company's own “internal skills.”
As an important member of Alibaba's entertainment sector, Alibaba Pictures has always been in the first tier of domestic film content creation. In the 2024 fiscal year, Alibaba Pictures had masterpieces that remained in the top 2 box office in all major periods, showing a clear lead in content.
Judging from the company's financial report, Alibaba Pictures continued to maintain a high level of performance in the field of theatrical movies in the 2023/24 fiscal year. In terms of quantity, Alibaba Pictures participated in the production and distribution of 60 films during the reporting period, including nearly 30 main promotion projects and 6 homemade and co-production projects.
In terms of quality, the film “The Girl Who Disappeared”, co-produced and promoted by Alibaba Pictures, grossed over 3.5 billion yuan, making it the 2023 Dragon Boat Festival box office winner and summer runner-up; the co-produced film “Give It All” grossed over 3.8 billion yuan, making it the summer box office winner of that year. Also, according to statistics, during the reporting period, a total of 15 of the company's films entered the top 20 of the box office during the same period. The cumulative box office accounted for more than 60% of the total box office, and the movie content revenue reached 30% of the total revenue.
In terms of the drama business, Alibaba Pictures performed equally well. During the reporting period, many high-quality works with emotion, warmth, and enthusiasm were broadcast, such as the legend of women in costume “Cherish Flowers”, the passionate inspirational racing car “Speeding to Love Your Life”, and the medical theme “Live Operation Room”.
Among them, “Flying Spike: Love for Life” and the Spring Festival film “Flying Spur Life 2”, which was produced by Alibaba Pictures, met with the audience at almost the same time. The two shared elements of the stadium, shared material libraries, and resonated at the promotion end, realized the commercial concept of the entire popular IP industry chain, provided a complete reference path for the cross-screen creation of movies and dramas, and was a successful experiment in Alibaba Pictures film and drama collaboration.
While increasing self-regulation, Alibaba Pictures is also making every effort to strengthen its primary advertising identity, enhance its core capabilities in investment and distribution services, and continue to consolidate its advertising advantages with a mature distribution team and perfect publicity system. On December 31, 2023, “Taylor Swift: Time Tour”, introduced by China Film and promoted with the help of Alibaba Pictures, was officially screened. The young audience sang for 3 hours in theaters, completely revolutionizing the definition of “watching a movie”; the movie “Get Rid of the Three Harms Everywhere” ignited the “Cool Off Period” in March with the popularity of discussions all over the internet and box office results far exceeding industry expectations; Miyazaki's new work “How You Want to Live”, which was introduced by China Film and promoted with the help of Alibaba Pictures, also had a good domestic box office harvest., won the 2024 Qingming Championship. It is easy to see that, starting from the audience, capturing the content value, genre value, emotional value, and topic value of films is becoming an important methodology for Alibaba Pictures's “value marketing, promotion in seconds”. While supporting good films to have a good market, it also brings viewers more diverse choices for watching movies.
High-quality content dominates the list. At the same time, under the hot trend of a strong recovery in the entertainment content industry, Alibaba Pictures is fully prepared for the future. Looking at the film projects that the company has prepared, it covers a wide variety of topics and covers a wide variety of topics. According to information, the company currently invests in more than 50 film production projects and more than 30 copyright and development projects. Many high-quality films such as “Fengshen Part 2,” “When the Stars Shine,” “No Regrets,” and “Dart Man: The Wind Rises in the Desert” will be screened one after another according to market conditions. In addition, Alibaba Pictures drama studios are currently developing 35 projects, and they will meet the audience one after another.
Technology is another important driver for Alibaba Pictures to achieve high-quality growth, and its backlash to the company's business was also concentrated during the reporting period. By the end of the reporting period, the number of “Taomai VIP” members had been rising steadily. High-frequency Black Diamond members exceeded 2 million, and members purchased tickets 2.5 times more frequently than non-members. The results of the optimization of the membership system were further demonstrated. At the same time, Yunzhi continues to firmly occupy its position with the highest number of ticketed cinemas and the highest number of ticketers, while actively expanding overseas business. During the fiscal year, it has signed cooperation agreements with cinemas in Macau, Southeast Asia and other regions of China to speed up the pace of going overseas.
If high-quality content is the “cornerstone” for Alibaba Pictures to grow into a leading player upstream in the industry chain, then cutting-edge technology represented by AIGC may be the “key” for the company to open doors to a new world.
During the reporting period, in line with the development trend of AI technology, Alibaba Pictures continued to increase the layout of AIGC. According to information, at present, the company has applied relevant AI technology in the production of posters and copywriting content in the film and television promotion process to reduce costs and increase efficiency. At the same time, the AI digital human “Li Li”, which was launched in 2022, and the new Lighthouse AI version launched in 2023 both exert greater energy in their respective fields. Subsequently, Alibaba Pictures will also invest in innovative fields such as virtual shooting to make new contributions to the promotion and application of AI and new technologies in the film and television industry, as well as cost reduction and efficiency.
Integrate the entire offline entertainment industry chain to stimulate growth momentum
Alibaba Pictures's latest financial report confirms that the company's fundamentals have returned strongly to an upward channel, and in addition to the financial data from Good News, Alibaba Pictures's latest financial report actually “predicts” the company's future growth momentum.
According to the Zhitong Finance App, for Alibaba Pictures, which is already in a leading position in entertainment consumption, buying barley may be equivalent to filling in a new important “puzzle” for the company. After that, Alibaba Pictures's competitive position will be further enhanced.
First, in terms of business layout and collaboration, Damai can be seen as the best entry point for Alibaba Pictures to expand offline entertainment. According to information, the barley business involves the entire live performance industry chain, including performance ticketing, live service, ticketing systems, and venue business, as well as hosting, investment, production, and promotion of performance content. It is currently a live performance ticketing platform with a significant market share in China.
After the acquisition is implemented, Alibaba Pictures will assemble a ticketing business product matrix composed of the online movie ticket sales platform Taobao, the cinema ticketing management platform Fenghuang Yunzhi, and the live performance ticketing platform Damai to form a complete ticketing service ecosystem.
Second, in terms of economic benefits, the acquisition of Damai is expected to greatly stimulate the profitability of Alibaba Pictures's technology sector and drive the company's overall performance to a new “level.”
Since 2023, along with the outbreak of concerts, China's offline entertainment market has picked up rapidly. Data show that in 2023, the overall economy of the national performance market reached 73.994 billion yuan, an increase of 29.30% over 2019, reaching a record high. Among them, large and medium-sized concerts and music festivals with more than 2,000 people earned box office revenue of 20.071 billion yuan, an increase of 373.60% over 2019.
Being in a hot industry environment, barley itself has also ushered in strong growth. Financial reports show that the total barley business transaction value (GMV) grew rapidly in the 2024 fiscal year, with a year-on-year increase of more than 500%. In particular, in the field of ticketing agencies, Damai still maintains a leading edge, and its coverage of leading concert projects such as Jay Chou, May Day, Xue Zhiqian, Lin Junjie, and Zhang Jie is close to 100%.
It should be pointed out that since Alibaba Pictures's acquisition of barley was not completed until November 30, 2023, Alibaba Pictures consolidated Damai's performance for only 4 months in the 2023/24 fiscal year. However, if Damai's performance is fully integrated into the entire fiscal year, then after summing up, Alibaba Pictures's adjusted EBITA profit for the whole year will reach 1,163 billion yuan, an increase of more than 700% over the previous year. The positive impact on Alibaba Pictures's performance can be seen.
As Alibaba Pictures completes its acquisition of Damai, it is easy to anticipate that Alibaba Pictures, which has further increased in breadth and depth in the entire entertainment sector, will usher in a rise in value. According to estimates by J.P. Morgan analysts, after the complete merger of Damai, the ranking of leading players in the Chinese entertainment industry will change. Alibaba Pictures will surpass Maoyan Entertainment to become the new king in terms of revenue and profit indicators. At the same time, more importantly, its potential for subsequent growth is also expected to be superior to that of Cat's Eye.
In a nutshell, as the “content+technology” two-wheel drive strategy progresses further in the future, Alibaba Pictures is expected to exert greater influence in a more dynamic entertainment market, and commercial efficiency will also accelerate.