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Why Steven Spielberg is joining forces with China's first Internet tycoon

Steven Spielberg is teaming up with Alibaba Group's Jack Ma, China's second richest man

One is the biggest name in Hollywood, responsible for Oscar winners such as "Saving Private Ryan," "Schindler's List" and "E.T.: the Extra-Terrestrial."

The other is a former English teacher whose Internet business made him one of China's richest men and launched the biggest initial public offering in the history of Wall Street.

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On the surface, Steven Spielberg and Alibaba Group founder Jack Ma may not appear to have much in common — but now they've teamed up to try to make a splash in the global film business.

Alibaba Pictures, the entertainment arm of Ma's e-commerce giant, last week announced a deal to co-produce and co-finance movies with Spielberg's entertainment company Amblin Partners. The idea, the executives said at a flashy celebration in Beijing, is to create films that will succeed in China's burgeoning cinema market and in countries around the world. Alibaba Pictures will also take a less-than 5% equity stake in Amblin Partners, formerly known as DreamWorks Studios. Financial details were not disclosed.

Both executives hope to take advantage of China's growing clout as the world's second-largest film market next to the U.S. and Canada. Spielberg wants to use Alibaba's massive marketing and distribution reach to promote his films in the world's most-populous nation — starting with the stateside disappointment "The BFG." Alibaba runs an online ticketing service called Taobao Movie, which is expected to serve as a powerful advantage for Amblin as it seeks Chinese moviegoers.

The new partnership is the clearest sign yet of Ma's ambitions in the film industry as China looks to become a bigger player in entertainment. Ma is betting the cultural cachet of Spielberg will lend prestige to his film strategy and result in the kind of premium content and merchandise he can sell to hundreds of millions of Chinese customers through his e-commerce platform, streaming video service and set-top boxes.

Though many of Spielberg's acclaimed films such as "Lincoln" and "Bridge of Spies" haven't been released in China — some contain content that censors there would find objectionable — Spielberg's name carries considerable cachet in China.

"There's no greater brand in the film industry than Steven Spielberg," said Marc Ganis, co-founder and managing director of Jiaflix Enterprises, which helps studios distribute movies in China. "It's a great connection for Alibaba Pictures — in many ways better than connecting with a studio."

Alibaba and Amblin executives were introduced by a mutual friend shortly after Spielberg formed Amblin partners last year. Amblin President and co-CEO Jeff Small said the company had been looking for a Chinese partner to join investors that already include India's Reliance, Canada's Entertainment One and Jeff Skoll's Participant Media.

With the pact all but finalized, Spielberg flew to Beijing to meet Ma over lunch earlier this month. They discussed their personal lives, business and films, including Spielberg's upcoming sci-fi project "Ready Player One," which the director had just finished shooting in Britain.

"It was a great meeting of the minds," said Small, who was also at the meeting. "They both have these limitless imaginations."

It was a great meeting of the minds. They both have these limitless imaginations.


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Ma, through a spokesman, declined to comment.

U.S. analysts and executives have long expected Ma to make a significant move in the movie and TV business, anticipation that was stoked when the billionaire toured studios and met with several Hollywood chiefs in fall 2014. But Alibaba's Hollywood plays have so far been limited to investing in individual movies, including Paramount Pictures' "Teenage Mutant Ninja Turtles" sequel, "Star Trek Beyond" and "Mission: Impossible — Rogue Nation."

Those efforts are considered modest compared with those of fellow mogul Wang Jianlin, whose media and commercial property conglomerate Dalian Wanda Group has spent billions of dollars scooping up American entertainment assets. Wanda, which already owns AMC Theatres, last month entered an agreement to invest in multiple Sony Pictures movies and is in talks to acquire Dick Clark Productions, the company behind the Golden Globe Awards broadcast.

Analysts view Ma as more selective and cautious than Wang, whose flurry of deals and ties to the Chinese government have drawn scrutiny from U.S. lawmakers worried about the China's influence on American media. Ma's low-key approach may help Alibaba avoid raising too many eyebrows among government regulators.

China's first Internet tycoon, Ma has built a loyal following thanks to his playful persona, striking English skills and penchant for promotional schtick. He's performed in front of thousands of his employees before dressed as a metal-studded rocker and boy band member. He's known as a film-lover, often citing "Forrest Gump" as an inspiration. He also counts "The Godfather" as a favorite and bonded with Kobe Bryant over the movie "The Bodyguard."

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"Jack Ma is seen as far more independent, more benign and very comfortable in English," said Stanley Rosen, a USC political science professor and China film expert.

Ma's rise is one of modern China's most stunning business stories. He first honed his English skills as a young boy asking visiting foreigners in his hometown to practice with him.

With no computing background, Ma launched his first website in 1995, a directory called China Pages. Though that venture failed, Ma recognized the potential of the Internet in a country that was still far behind the West in modernization.

Ma famously called 17 of his closest friends in 1999 to meet him in his apartment in the lakeside city of Hangzhou. He was launching a new website that would pair China's legion of manufacturers with buyers overseas. He called it Alibaba thinking the name would resonate globally.

Four years later, Alibaba launched an e-commerce site called Taobao to compete with EBay. The platform was a success, capturing China's burgeoning consumer class, and In 2014 Alibaba went public in New York, raising a record $21.8 billion.

"He's effectively the American dream set in China," said Duncan Clark, a former investment banker who first met Ma in 1999 and wrote the recent book "The House That Jack Ma Built."

Much of Alibaba's focus of late has been on digital content and cloud computing — similar to its American analogue, Amazon. Alibaba made inroads in the entertainment business in 2014 when it paid $805 million for a 60% stake in ChinaVision Media, a film and television production company that it soon renamed Alibaba Pictures. He tapped former Chinese TV host Zhang Wei — described by some as the would-be "Oprah of China" — as its president. In 2015, Alibaba opened an office in Pasadena.

Alibaba Pictures, which trades as a separate company on the Hong Kong stock exchange, is growing rapidly because of an expanding Internet movie ticketing business. However, it lost almost $70 million in the first six months of 2016 on revenue of $39 million, citing costs of ramping up and marketing the platform.

Spielberg's own business track record has been checkered, despite the number of acclaimed films he's made. He first launched DreamWorks with Jeffrey Katzenberg and David Geffen in 1994, aspiring to become the next major Hollywood studio. But the venture never reached those lofty goals. While DreamWorks and Amblin movies often attract the attention of Academy Awards voters, the company has produced multiple box-office flops and has bounced around various studios.  Spielberg last year relaunched the company as Amblin Partners and recently signed a distribution deal with Universal Pictures.

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Amblin and Alibaba hope to produce movies that will draw big audiences in China, the U.S. and elsewhere. That includes Chinese-American co-productions, which afford major advantages for U.S. producers trying to tap the China box office. The Chinese government only allows 34 foreign movies into the market annually as part of a revenue-sharing system, and movies that get in only collect 25% of the ticket sales for the studio. Co-productions skirt that system and give studios a larger percentage of the gross. Amblin and Alibaba have not said what movies they are developing together, but they are expected to produce both English and Chinese language films in a variety of genres.

Alibaba hopes partnering with someone like Spielberg will help them make better movies, said John Penotti, a film producer and president of Sidney Kimmel Entertainment and Ivanhoe Pictures, which does business in China.

"Smart people in China understand that better quality films they have access to, the more Chinese audiences will continue their voraciousness and continue devouring content," Penotti said.

Follow Ryan Faughnder on Twitter for more entertainment business coverage: @rfaughnder

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