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Alibaba Pictures’ Boss Is Making Major Changes

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Youku makes major personnel changes

Alibaba (BABA) last year bought more shares in Hong-Kong-listed film studio firm Alibaba Pictures, raising its stake in the business to 51%. After Alibaba tightened its grip on Alibaba Pictures, it tapped its chief executive, Luyuan Fan, to double up as the head of its digital media and entertainment division.

According to a report from Caixin Global, Fan has started shaking up Alibaba’s media division. The report states that Fan is making major strategy and personnel changes at Youku, Alibaba’s YouTube-like online video service and a part of the media business. The changes include downsizing certain Youku teams and focusing the business more toward copyright-related operations. The changes are said to affect around 10% of Youku’s workforce with some employees expected to depart.

Media revenue rose 20%

Alibaba recorded $944 million in revenue from its media division in the third quarter, which ended in December, representing an increase of 20% YoY. Alibaba’s Chinese rivals in online video business iQiyi (IQ) and Tencent (TCEHY) reported a revenue increase of 55% and 28% YoY, respectively, in the December quarter. iQiyi is controlled by Baidu (BIDU), China’s top Internet search provider, and one of Alibaba’s fiercest competitors in the digital advertising market. Tencent is a backer of JD.com (JD), Alibaba’s top challenger in China’s e-commerce industry. Revenue rose 22% at JD in the December quarter.

Media business fits a strategic role at Alibaba

In addition to the direct revenues it makes from the business, running a media business is also of strategic importance to Alibaba. According to Alibaba, running both e-commerce and entertainment businesses allows it to deliver a superior experience for its customers, in turn supporting its customer retention efforts.

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