Tmall Box Office (TBO), an online video service by Chinese ecommerce group Alibaba, has become available in a trial mode via Alibaba’s smart TVs and set-top-boxes after most recent software update. TBO is offering access to local and foreign content; it claims to have more than a thousand movies with hundreds of them being exclusive.
TBO is operating on a paid-for basis: subscription is the main business model, while some content is available on a transactional basis. There are three SVoD options available: monthly, 3-months and annual subscription plans. Current plans include a promotional discount for each subscription plan and movie vouchers, which can be used to purchase transactional movies. The promotional prices start at RMB39 (USD6.11) per month plus 2 movie vouchers; three month plan comes with 9 movie vouchers priced at RMB108 (USD16.93); while annual plan priced at RMB365 (USD57.21) with 48 movie vouchers. There is also promotional price for subscribers to continue their subscription at subsequent month at RMB33 (USD5.18). The standard monthly fee for TBO service is RMB60 (USD9.41).
Alibaba first announced its plan to enter the online video streaming industry during Shanghai International Film Festival in June 2015 (See more: https://technology.informa.com/533234/alibaba-joins-the-chinese-online-video-battle-by-offering-a-new-svod-service-in-summer-2015)
Chinese online video market has had a reputation of being reliant on free for users, advertising-based access to content. Most prominent players on the market are combining the free and paid content propositions - Youku Tudou, iQiyi, Sohu and LeTV – but the main focus, consumption and revenues remains with free content. Alibaba’s TBO is only offering content behind the paywall.
With huge ecommerce infrastructure backing TBO and investments to date, Alibaba will be attempting to make changes to the paying-averse market:
The competition on Chinese market is intensifying rapidly, even outside the advertising-based online video. Netflix has disclosed its plan to enter China in 2016, which might have pressured Alibaba to speed up its plans to launch its own streaming service and create a stronger base in China.
The Chinese market with its large population and number of internet users presents a significant growth market for online video companies. IHS forecasts that broadband penetration in China will be 42.7% in 2015, which is still lower than in Western markets, but it represents the room for growth.