Chinese ecommerce giant Alibaba’s foray into sports has sent tongues wagging across the globe. The owner of Asia's largest marketplace has expressed interest in dominating multiple spheres of online industries, with sports being its latest conquest.
Investors are now wondering whether the company is biting too much too soon and whether its expansion will result in loss of consumer confidence in the quality of their services.
Alibaba’s announcement on Wednesday that they would be entering the sports business through a new company, Ali Sports, sent ripples across the business world. The new company has a diverse ownership with Alibaba owning 55 percent, Yufeng Capital and Sina each control 12.5 percent while the new company’s management wraps up the board with a 20 percent stake.
Jack Ma, Alibaba founder and chair, recently said the company sought to invest in happiness and health going forward. According to the billionaire, sports is where the two meet. Ma said the company aimed at transforming China’s sports industry via modern internet enabled technologies.
The company did not reveal in detail the specific sports business they would be following.
However, a statement by the company said, “Alibaba Sports Group expects to integrate e-commerce, media, marketing, video, home entertainment, cloud computing and other Internet-enabled technologies to form a sports platform that will participate in different aspects of the professional sports industry, including sports copyrights, sports media, events, ticketing, etc.”
Sports in China has been a major focus for a majority of sports clubs, personalities and companies. Something Alibaba may want to cash in on. The company owns 50 percent of Guangzhou Evergrande, one of mainland China’s largest soccer clubs. Alibaba also has signed partnerships with sports clubs Bayern Munich and Real Madrid where it sets up online stores for retailers. Last month, the company partnered with NBA star Kobe Bryant to distribute his feature length documentary “Kobe Bryant’s Muse” and also to market several branded products.
Alibaba has been in an aggressive investment mode that has seen the company develop more ventures under its wing beside sports. Only a few weeks ago the company launched its video streaming service a la Netflix while simultaneously taking up a stake in the latest “Mission Impossible” film.
Alibaba did so through a partnership with Paramount where the company will distribute the movie in China and supervise its online ticketing and promotional work. Investors are now wondering whether the NYSE listed company is taking in more than it can chew.
According to Bloomberg analyst Adam Minter, “For now, this is a China play. This is all part of the massive content grab that the big Chinese Internet companies are in the midst of."
Alibaba is growing leaps and bounds. Through venturing into China’s sports industry, the company seeks a share of the country’s growing sports market while netting in tidy revenues for the company. Investors may either reap big from the new venture or fall flat.