Online streaming business Netflix has gone from strength to strength. The business has a significant amount of customer mindshare and in some corners of the world, people are starting to use the term "Netflix" meaning to stream video over the Internet, just as people are using the term "Google" meaning to search the world wide web. The Netflix service works by allowing paying customers to stream content to a number of platforms, including smartphones, tablets, gaming consoles and smart television sets, typically with a choice of three subscription options depending on what services and quality the customer wants. Netflix's success has not been without difficulties and it has worked hard to gain a foothold into the Chinese market, but so far with limited success. Things appear to be about to get even tougher as Chinese business, Alibaba, is planning to launch an online video streaming service later in the summer (rumored to be out in August). The new service will be called "TBO," short for "Tmall Box Office," and will contain both domestic (Chinese) and imported content, plus in-house productions.
TBO will launch into a competitive Chinese online video market where companies are spending billions of dollars to attract enough Chinese views to become the dominant force. Competitors include Tencent Holdings, Baidu's iQiyi, Sohu.com and Leshi Internet Information & Technology's LeTV service. TBO is planning to make ten percent of content available free and the remaining ninety percent will require payment, which will either be in the form of a monthly subscription or a pay-per-show or pay-per-view basis. We saw earlier in the year that Alibaba hinted at these plans when it announced it was making a movie with a popular director.
Patrick Liu, Alibaba's head of digital entertainment, said this on the matter: "Our mission, the mission of all of Alibaba, is to redefine home entertainment. Our goal is to become like HBO in the United States, to become like Netflix in the United States." Alibaba is a more profitable business than Amazon (and Amazon's Prime service includes movie streaming services). Should the new service gain traction with Chinese customers, this will make Netflix's planned attack on the Chinese market even tougher. Currently, the business is facing legal and regulatory difficulties attempting to break into the market – but their plans include a global expansion and greater investment into producing their own material.