On Monday, China Literature Group (HKEX:0772), a.k.a. Yuewen.com, (a major online IP conglomerate owned by Tencent) and Disney (NYSE: DIS) China announced that they will launch a comprehensive content cooperation partnership focusing on Disney's "Star Wars".
The two companies will jointly launch the first ever Chinese Star Wars novel series, which will be originally created by both American and Chinese authors. At present, the project has entered the initial development stage.
In addition, 40+ Star Wars online novels in Chinese will gradually become accessible for China Literature's 214 million readers and be distributed through Tencent's multiple user channels. Disney China and China Literature will also cooperate in further promotion of the Star Wars movie sequels in 2020 and 2021.
On the same day, Tencent (HKEX: 00700) 's major competitor in China, i.e. Alibaba (NYSE: BABA), also announced a major milestone in terms of its global content partnership.
At the entertainment industry's annual MIPCOM conference in Cannes, Youku, which is one of the Top 3 streaming platforms in China and owned by Alibaba Group, signed a memorandum of understanding with VIMN, a division of Viacom Inc (NASDAQ: VIAB).
This partnership includes a multiyear franchise deal in producing, distributing and developing merchandise for an original animated series with the working title, "Little Luban." The show is based on the legend of master builder Lu Ban, who lived during the Zhou Dynasty in ancient China.
In the meantime, Youku also struck a deal with BBC Studios to distribute content from its kids' channel, CBeebies. Also, Youku announced its partnership with Genius Brands International to co-produce Stan Lee's "Superhero Kindergarten," an animated action-adventure series starring Arnold Schwarzenegger. Schwarzenegger, who plays the leading character, is one of the executive producers of the show. Fabian Nicieza, who co-created "Deadpool," will script the series.
With entertainment considered a core business by both Tencent and Alibaba, the two long-term gigantic Internet rivals have been going head to head in sectors such as video streaming, online ticket selling, and film/TV production.
In the core of this competition is the fight for better IPs, content, and active user growth. As world's largest online literature and novel distribution site, China Literature has become the hub of Tencent's IP driving engine and is currently valued at 27 billion HK$.
On the other hand, Alibaba completed its purchase of the video streaming platform Youku back in 2016, when Youku finished its privatization and delisted from NASDAQ.
Youku's revenue is grouped into Alibaba's digital media and entertainment division, which saw 20% year-over-year growth in revenue, to $944 million by the end of 2018. The company listed Youku subscriptions as one of the top three drivers for this segment's increase in revenue over 2018.
Apparently now after fierce competition for online traffic, and then for exclusive content, Tencent and Alibaba are now entering a third phase of competition, that is, competing for top-notch global IP content, with partnerships established with American players such as Disney and Viacom.