China Herald: Does Alibaba's merchandise deal with Pokemon makes sense?

Shaun Rein

Alibaba Pictures has expanded its merchandise market with a new deal for the successful Japanese Pokemon. But experts differ on the question such a more makes sense for Alibaba Pictures. A diversion from its core business, says business analyst Shaun Rein. But Beidu business professor Jeffrey Towson lauds the effort for a comprehensive approach of the total value chain, he tells the 6th Tone.

The Sixth Tone:

Alibaba Pictures estimated that the total sales of licensed Pokémon products on Tmall will surpass 20 million yuan ($2.9 million) in 2017.

However, the move might be “dangerous” for Pokémon because collaborating with Alibaba means they will give away the power over quality control in China, Rein said. If manufacturers produce poor-quality products, consumers will naturally associate the bad quality with Pokémon, he added.

Whether the strategy will bode well for Alibaba Pictures’ overall business development also remains a question. The deal is the film company’s latest expansion into licensing after suffering economic losses amounting to 976 million yuan last year. Alibaba Pictures has established partnerships with several foreign companies such as the classic arcade game “Pac-Man” and the American animated television series “The Powerpuff Girls” to sell licensed merchandise on its e-commerce platforms.

Jeffrey Towson

For a company whose core business is movie production and distribution, tapping into licensing might prove distracting, Rein said.

But Jeffrey Towson, a professor of investment at Peking University, regards the move as part of Alibaba’s strategy to build an integrated online and offline marketing capability across the entire entertainment value chain.

“They have Tmall, [e-commerce platform] Taobao, [video-platform] Youku, and so on, and they can push not just movies, but also merchandise, online streaming, and other derivative products,” Towson told Sixth Tone. The movie arm “is becoming a data-driven movie studio with a unique suite of integrated marketing capabilities,” he added. “It’s basically what you would get if Amazon and Walt Disney had a baby.”

With all the data collected from consumers across Alibaba’s myriad online services, the e-commerce giant is becoming the “must-have partner” to content companies in China and around the world who hope to succeed in the Chinese entertainment industry, said Towson.

More at the Sixth Tone.

Shaun Rein and Jeffrey Towson are speakers at the China Speakers Bureau. Do you need them at your meeting or conference? Do get in touch or fill in our speakers' request form.

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