Alibaba Pictures has posted a $140m (£112m/€132m) loss in 2016 after incurring significant marketing costs in relation to its mobile ticketing app, Tao Piao Piao.
The filmmaking arm of Jack-Ma’s e-commerce giant, Alibaba Group, issued a profit warning to the Hong Kong Stock Exchange late last week.
The company, which released its first film last year, reported its first full-year profit of RMB466m (€67m/$71.7m) in 2015, but costs mounted up the first half of 2016.
Describing Tao Piao Piao as “a key operating asset,” Alibaba Pictures said it “continued to utilise financial resources to implement marketing strategies in order to grow [Tao Piao Piao’s] business, and has further enhanced its user experience and strengthened its market position by the end of 2016.”
More than 70 per cent of all movie tickets are sold online in China, compared to an estimated 20 per cent in the US.
Leading internet services in China are spending heavily on discounts and other incentives, which has created a battle over market share, according to the Hollywood Reporter.
Analysts blamed the downturn at China’s box office last year on price distortions caused by the high volume of sales through mobile ticket platforms.