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What’s the Motive behind Alibaba’s Acquisition of 8% in Bilibili?

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Nov. 20 2020, Updated 3:36 p.m. ET

Bilibili acquisition

On February 14, Alibaba (BABA) bought a stake in China’s top online video sharing platform Bilibili (BILI), according to the Xinhua News Agency. Alibaba acquired 8% in Bilibili through its retail e-commerce unit Taobao, which will now hold 24 million shares in Bilibili.

Alibaba’s Taobao unit already partnered with Bilibili in December to connect its users with its content creators and merchandise. After Alibaba, Tencent is the second-largest shareholder of Bilibili.

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Alibaba’s digital media and entertainment business

The Bilibili acquisition is expected to give Alibaba exposure to one of China’s fastest-growing online video services and could help the company expand its presence in the entertainment space. Alibaba’s digital media and entertainment business generated $944 million in revenue in the quarter that ended in December.

Alibaba already has an online video service, Youku, which is more like Alphabet’s YouTube. In 2018, Alibaba also took control of Alibaba Pictures, a Hong Kong–listed film production company.

User base

Bilibili had ~92.7 million monthly active users and 3.5 million paying subscribers at the end of September. It faces competition from iQiyi (IQ), which had ~80 million paying subscribers at the end of September. iQiyi was a unit of Baidu (BIDU) before it went public last year. Alibaba’s peer Amazon (AMZN) also provides free digital video and music entertainment for its Prime customers for an annual fee of $119.

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