CHAIRMAN’S STATEMENT

Looking back at 2018, aggregate box office of films released in the PRC exceeded RMB60 billion. It is our humble opinion that as long as we can supply an adequate number of quality contents to the market while creating new scenarios and improving efficiency via infrastructure, we will be able to further our accomplishment through the creation of a pan-film market worth over RMB200 billion and the expansion of a single revenue stream of box office operations to diverse revenue streams by redefining business models adopted in the marketplace.

“Making it easy to do business anywhere” is not just an enduring mission for Alibaba Group Holding Limited (“AGH”) and its subsidiaries (collectively, “Alibaba Group”), it is also the mission and vision that they share with Alibaba Pictures. Driven by this conviction, we have built a business model for operations throughout the entire industry chain, covering the production, promotion and distribution, and commercialization of contents, as well as financial services. We are now engaged in three major business segments, namely content production, internet-based promotion and distribution and integrated development.

In terms of content production, we rely on our unique advantage in big data analysis, using data to drive and empower content development, which has in turn enabled us to be acutely aware of the changes in audience preference, and to develop productions that cater to current market needs. Alibaba Pictures was deeply involved in the success of several phenomenal films with outstanding critical acclaim and box office, including The Wandering Earth (流浪地球), Green Book (綠簿旅友 or 綠皮書 (the translated title in the PRC)), Dying to Survive (我不是藥神) and Hello Mr. Billionaire (西虹市首富). During the past financial year, films that we presented delivered box office of nearly RMB20 billion, making us one of the preferred partners for companies engaged in film and TV operations. In this spirit, film and TV content production will become one of our strategic focuses in the future.

We also launched the Jin Cheng Co-production Project (錦橙合製計劃) at the end of 2018. Under this project, we plan to support talented young directors by launching 20 high-quality co-produced films in the four major film seasons over the next five years as the lead investor, lead producer or lead promoter/distributor through collaboration with top-tier production companies. Low-budget films with major emotional appeals that promote positive values will therefore become our top priority for content production.

In terms of the construction of new infrastructure, Tao Piao Piao (the Group’s online ticketing platform) managed to further strengthen its position as a market leader. In addition to serving as our ticketing and review platform for consumers, Tao Piao Piao is also a foothold for our endeavor in digital promotion and distribution. More importantly, it is the portal through which we share resources with Alibaba Group’s ecosystem.

As our one-stop platform for promotional, distribution and marketing activities, Beacon collects data from multiple channels and provides data analysis services, supporting smart marketing campaigns and assisting in relevant performance review. As at the date of this report, we have served 171 film projects and 295 companies engaged in film-related operations, managing to help our customers save promotion and distribution budget.

By linking online services with offline experience, Yunzhi, our “new retail” marketing platform for cinemas, aims to help them reduce cost, enhance efficiency, grow revenue and increase empowerment. Yunzhi has already formed partnership with nearly 3,500 cinemas in the PRC, ranking first among peers in terms of the number of contracted cinemas.

In terms of our integrated development business, Alifish, our business for IP commercialization, has successfully established a unique trading platform for IPs by building on the economic fundamentals of its large fan base in the PRC. As at the date of this report, Alifish has been successfully connected to over 200 IPs, more than 100,000 merchants, and over 600 million consumers who identify themselves as fans of such IPs.

We established Yulebao to address the inhibition of long payback period in the film and TV industry. Yulebao has optimized relevant processes for box office payback, managing to shorten the time required for settlement from the conventional cycle of between three and twelve months to less than ten days. This has enhanced the turnover of capital within the film industry, while creating a settlement platform for film distributors and investors to gain equal and fast access to their shares of film box office receipts.

Furthermore, we also launched Yunshang, a production management system designed for film and TV production. By enabling the effective management of all procedures involved in film production, we aimed to digitize, bring online and smartize most of the current work involved in film and TV production. Following a development phase that lasted for over a year, we recently launched a beta version of this system and offered it to nearly 30 film crews from top producers.

Alibaba Pictures has become a consolidated subsidiary of AGH since March 5, 2019, a testimony to the faith that Alibaba Group has in the Company. Going forward, Alibaba Pictures will further expand its partnership with other media content and entertainment operations under Alibaba Group, including platforms such as Youku, Damai and Alibaba Literature, while leveraging on the strengths of Alibaba Group in big data and e-commerce to secure greater growth potential in the Chinese film industry.

Last but not least, on behalf of the board of directors of the Company, I would like to thank our staff for their diligent work and commitment over the past year. I would also like to take this opportunity to express our most sincere gratitude to our customers, business partners and shareholders for their unwavering support.