Alibaba Group Holding Limited agreed last Friday to buy out Internet television company Youku Tudou Inc. for $3.7 billion in cash, at a premium price of $27.60 per share. Already holding 18.3 percent of Youku Tudou before the deal, Alibaba now has full ownership of Youku Tudou allowing it to expand in the digital entertainment market.
Youku Tudou became the largest online entertainment company in China when Youku Inc. and Tudou Holding Ltd. merged in 2012. The two video websites the company operates—Youku.com and Tudou.com—each received around 286 million users in August. The deal gives Alibaba access to that user base and the technology necessary to engage users on multiple screens— smartphones, tablets, and desktops.
According to China Internet Network Information Center, more than 461 million people in China stream videos online. Alibaba’s past expansion into the digital entertainment market includes setting up Alibaba Pictures Group Ltd. to invest in the latest Tom Cruise movie “Mission: Impossible-Rogue Nation” and launching Tmall Box Office, a video streaming service similar to Netflix Inc.