The Alibaba Group Holding Ltd. (NYSE: BABA) share price traded up slightly this morning after the company announced it will launch its own video-streaming service in China. BABA shares climbed to $87.17 shortly after the opening bell.
The service will be known as Tmall Box Office or TBO. According to Reuters, it will offer a mix of in-house and third-party content, similar to Netflix Inc. (Nasdaq: NFLX).
The service will include content from China as well as foreign countries. TBO's launch is expected within the next two months.
"Our mission, the mission of all of Alibaba, is to redefine home entertainment," Alibaba's Patrick Liu told reporters. "Our goal is to become like HBO in the United States, to become like Netflix in the United States."
Roughly 90% of the content on the site will be purchased by users through a subscription service or on a show-by-show basis. The remaining 10% of content will be offered for free.
This week's announcement is the latest in a string of moves Alibaba has taken to enter the entertainment business.
Last week, Alibaba shares climbed to $91.60 after the company announced it would be raising new funding for its entertainment company, Alibaba Pictures. Before that, Alibaba officials announced they'd spent $200 million to acquire a 30% stake in China Business News, a financial television and newspaper company.
Both moves are part of Alibaba's larger vision of creating a global brand with influence in numerous industries.
During the IPO process, Founder Jack Ma told investors his plans to build a global powerhouse.
"We want to be bigger than Wal-Mart," Ma said the day of the IPO. "We hope in 15 years people say this is a company like Microsoft, IBM, Wal-Mart; they changed, shaped the world."
That strategy and attitude are just part of the reason why the BABA share price will climb for years to come...
Our BABA Share Price Predictions
The BABA share price has been volatile in 2015. It dipped below $80 in early May and has since climbed back above $86.
But Alibaba stock's short-term performance is of little importance. According to Money Morning Executive Editor Bill Patalon, BABA stock is one of the best long-term investments on the market.
"This company has market power, a visionary leader, and it's making smart decisions," he explained. "They're trying to build something special. A paradigm-shifting, rule-breaking company. They're trying to create new ways of doing things."
And while the company is growing globally, its home market of China is still a massive opportunity. That's a huge opportunity for Alibaba's new video-streaming service.
A recent study by the China Internet Network Information Center (CNNIC) determined the number of Internet users in the country will hit 800 million by 2016 or sooner. By comparison, the entire current population of the United States is just 319 million.
Tapping just 10% of the Chinese Internet population by 2016 would give Alibaba's new service an immediate user base of 80 million people. Right now, Netflix has a global subscriber list of just over 60 million people.
"Alibaba is gaining traction in its home market in China just as that country's people are truly joining the Internet revolution," Money Morning Defense and Tech Specialist Michael A. Robinson said. "And the development of easy-to-use mobile commerce is giving Alibaba a strong tailwind."
[epom key="ddec3ef33420ef7c9964a4695c349764" redirect="" sourceid="" imported="false"]
Robinson even says that BABA stock "could be the single-greatest wealth opportunity of our lifetime."
"What you have to look at is the long-term potential, which is still huge," Patalon said. "They still haven't even maxed out their own market. They're bringing in entertainment companies and new business-to-business ventures. They're going to keep expanding their offerings."
That's why Patalon urges investors to look past just the BABA share price today.
"This isn't just a stock to buy for 2015," he explained. "This is a great investment for years to come. If you invest money that you can afford to lose and hold onto the stock for several years, you'll end up being very surprised by how much you've made."
Follow me on Twitter @KyleAndersonMM.
Profit Alert: Since Money Morning Executive Editor Bill Patalon launched his Private Briefing program just a few short years ago, he's recommended 192 stocks that have either doubled or tripled in value. The service has completely revolutionized the way people invest. Keep reading to find out more about his extensive research and premium stock picks...
Related Articles: