Alibaba profit warning over ticketing expenses

Alibaba Pictures has warned investors it expects to lose as much as ¥1 billion (US$145 million) in 2016, after sinking millions of dollars into marketing its new online ticketing platform, Tao Piao Piao.

Tao Piao Piao – formerly Taobao Dianying (‘Tabao Movie’) – was rebranded last May following the signing of a strategic partnership with China’s leading live entertainment ticket agency, Damai.cn, through which Alibaba it is expected to move beyond film ticketing into live events. Alibaba Pictures, a division of Alibaba Group, the world’s largest e-commerce company, handles ticketing for more than 5,000 cinemas in the People’s Republic of China – 95% of the country’s total box office  – and has latterly expanded into distribution and filmmaking in its own right.

In a letter to investors, Alibaba Pictures chairman and CEO Yu Yongfu says the board expects to record net loss in the range of ¥950m–¥1bn Chinese yuan in 2016, compared to a ¥466m profit the previous 12 months.

“The group’s bottom line was primarily impacted by the marketing expenses of Tao Piao Piao, which were incurred to increase its market share”

“The group’s overall bottom line result for 2016 was primarily impacted by the marketing expenses of Tao Piao Piao, which were incurred to increase its market share,” Yu writes. However, the CEO underlines that online ticketing is key to the company’s future growth, writing that Tao Piao Piao is “a key operating asset in the group’s internet-based promotion and distribution segment” and “has further enhanced its user experience and strengthened its market position by the end of 2016”.

Damai.cn’s parent company, Beijing Pony Media Culture Development Co., is not publicly traded and no financial figures are available; it is last known to have raised private capital in 2010, when SIG China invested $100m.

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