Recently, Alibaba Group (BABA) became Manchester United’s digital partner in China. The deal with the English soccer club could have a positive impact on Alibaba’s e-commerce portal, media streaming platform, and cloud division. Fans are using cloud technology to stream sports online. Even Amazon Prime is airing English Premier League matches in the United Kingdom. Amazon (AMZN) will also stream sports in the US. The company has partnered with the New York Yankees to broadcast baseball games on Prime Video.
Here’s a little trivia for soccer fans—Manchester United is a publicly listed stock in the NYSE under the symbol “MANU.”
Alibaba and Manchester United’s agreement
Manchester United fans in China have something to celebrate. According to a press release on the club’s official website, Alibaba just bagged the exclusive rights to host club content and broadcast club matches in China. Alibaba has an estimated 700 million Chinese viewers on its platform. Notably, the deal will target Manchester United’s immense fanbase in China. The announcement clarified that Alibaba’s content streaming portal would have the rights to broadcast certain first-team matches, match highlights, and dedicated content produced for the Chinese fanbase.
Youku, Alibaba’s online streaming platform, will broadcast the matches through a dedicated channel for the club’s fans. As a test run, Manchester United already streamed three games on the platform. The arrangement might create a Manchester United flagship store on Tmall. Tmall, earlier known as “Taobao,” is Alibaba’s B2C (business-to-consumer) framework, which allows companies to reach out directly to customers. Chinese soccer enthusiasts can access and purchase club merchandise from the portal.
Richard Arnold, the Manchester United’s group managing director, said, “We’re looking forward to working with Alibaba to further grow our fan base in China and building on other areas of the partnership in the near future.” He’s also the company director of Manchester United PLC.
Michael Evans, Alibaba’s president, was also glad about onboarding the club in the company’s ecosystem. According to Business Wire, Evans said, “We share the same goal, which is to provide fans with one-of-a-kind online content consumption and shopping that leverages the latest technology.”
Entertainment centers for fans in China
Manchester United, also called “The Red Devils,” has a worldwide fanbase. In January, the club partnered with a leading Chinese property developer—Harves. The club plans to build theme-based entertainment centers for its 100 million club followers in China. The centers will open in three cities—Beijing, Shanghai, and Shenyang—by the end of 2020. Partnering with Alibaba will mobilize fans on the digital platform. Even Alibaba cloud could generate significant revenues from online streaming subscriptions and ad revenues. Also, the e-commerce portal will likely see increased traffic from fans to buy club merchandise.
Comparing Alibaba and Amazon
Alibaba is the Chinese version of Amazon. The company is involved in diverse businesses like e-commerce, cloud services, and online video streaming. Alibaba is similar to Amazon, which has Amazon Web Services and Amazon Prime Videos.
Jeff Bezos and Jack Ma, Amazon and Alibaba’s founders, started their businesses two decades ago. Bezos started Amazon from his garage in the early 1990s. Meanwhile, Jack Ma built Alibaba from his modest apartment in Hangzhou. Amazon provides video streaming services like Amazon Prime Video. The company also owns the online game streaming platform, Twitch. Alibaba has its own version of digital media streaming services called “Youku.”
Amazon and Alibaba are venturing into the content broadcasting business. While Alibaba inked an exclusive deal, Amazon is also capitalizing on soccer enthusiasm in the United Kingdom. So far, Amazon broadcasted about ten games last week to its Amazon Prime Members in the United Kingdom. Overall, the test run was widely received. The company saw a surge in members signing up for a 30-day free trial. After the trial period, the Amazon Prime subscription will cost £7.99 (roughly over $10) per month. Amazon also reached an arrangement with the New York Yankees. As a result, Yankees games will air on Amazon Prime in the US.
In the cloud computing services market, Amazon Web Services is the undisputed leader. Meanwhile, Microsoft is the runner up in the segment based on market share. Other companies like Google Cloud, Alibaba Cloud, IBM, and Oracle make up the rest of the market share. A handful of companies dominate the cloud services segment. The businesses are very competitive when it comes to exploring new market opportunities. Usually, the cloud business includes services like IaaS (infrastructure-as-a-service), SaaS (software-as-a-service), PaaS (platform-as-a-service), and FaaS (function-as-a-service).
According to research released by Gartner in November, the total cloud revenues worldwide could cross $266 billion by 2020 and $350 billion in 2022. Gartner’s estimates suggest that SaaS could contribute over 40% to the total cloud revenues globally. Incidentally, SaaS plays a vital role when it comes to real-time content streaming on the cloud. Many content broadcasters are turning towards SaaS to transition from traditional broadcast systems to media streaming on the cloud. Service providers generate income from SaaS modules depending on the client’s usage. In other words, SaaS functions on the “pay as you go” model. During major events, broadcasters and SaaS service providers could mobilize fans worldwide and gain substantial revenues.
With two cloud industry leaders entering into sports streaming, it won’t be long before other market players follow their lead. However, venturing into European sports could be challenging. European regulators might impose a digital tax on tech companies. We’ll have to see how the tax could impact the sports streaming business.