Alibaba Group Holding Ltd (BABA), RAYVISION Partner To Provide Digital Effects Services

Alibaba Group Holding Ltd (BABA), Rayvision Partner To Provide Digital Effects Services Alibaba strengthens its influence in China’s entertainment business with the Aliyun-Rayvision pact

BABA By: TROY KUHN Published: Apr 29, 2015 at 8:24 am EST E-commerce giant, Alibaba Group Holding Ltd (NYSE:BABA) announced today that it is deepening its foray in the cloud computing and entertainment business through a partnership with Rayvision. The pact will introduce a cloud computing built digital effects platform, and widen the company’s influence in the film industry.

The newly launched service will be given the title of cloud Rendering, a bi-product of Alibaba’s Aliyun and Rayvision. Rayvision, currently commands about 70% of the respective market share. Alibaba’s cloud computing service, Aliyun was first introduced in China in 2009, and commands a customer base of around 1.4 million customers to date. Alibaba’s entertainment arm, Alibaba Pictures, will not have much direct involvement in the cloud Rendering Partnership. However, the company has plans of using the service in its film endeavors. Moreover, Alibaba Pictures also announced today that the company might execute a strategic partnership with Aliyun and Rayvision in the future.

President of Aliyun, Simon Hu stated today: “By providing computing capacity, we hope to help Chinese filmmakers produce Hollywood hits like ‘Kung Fu Panda’. We hope to integrate cloud computing with the film and animation industry, and serve global studios, enabling small studios worldwide, to produce high-definition blockbusters with great visual effects.”

The Cloud Rendering Service is projected towards the country’s independent producers. The Aliyun-Rayvision partnership will inject a cloud-based platform providing 100,000 cores of computing power. Moreover, the e-commerce giant also ensured that the partnership is built on introducing efficiency to the structure, as it plans on slashing rendering costs by roughly 40% and rendering duration to weeks.

More importantly, Alibaba Group Holding Ltd, recently announced that it intends to make its cloud computing platform, Aliyun relatively “cost competitive.” presently, Alibaba’s cloud computing platform amounts for 1% of the company’s total revenue.

The partnership also navigates Alibaba Group Holding to deeper penetration in the film industry. Alibaba realizes the significance of further enriching its entertainment arm, as the Chinese film industry quickly escalates towards premier quality animation and digital effects. Furthermore, research analyst at Gutoi Junan International, Ricky Lai; recently displayed considerable optimism for Alibaba’s entertainment arm: “We expect that assert injection to be completed this year and further transform Alibaba Pictures into a bigger, one-stop operation for movie production, financing, and ticketing sales.”

Out of the 44 analysts polled by Bloomberg, 37 recommend a Buy; five suggest a Hold, and two advocate a Sell on it. The 12-month consensus target price is $108.13, centralizing an upside of almost 27% compared to the current share price of $85.08.