Alibaba’s (BABA) $1 billion deal last week to gain control of the biggest e-commerce company in Southeast Asia overshadowed a smaller, but in ways equally intriguing, deal that the e-commerce giant closed a few days earlier.
In that one, an Alibaba offshoot (somewhat unimaginatively) called Alisports—which includes as minority investors Sina and a private equity firm controlled by Jack Ma—said it invested “multi-millions of dollars” to develop rugby in the country in exchange for exclusive broadcast streaming rights to the sport.
Jack Ma’s bid to bring rugby to China was signed with the sport’s governing body, World Rugby, and includes the goal of developing 1 million rugby players in China over the next decade—from all of 1,300 players today.
As an investment, it’s too small to be significant for Alibaba and the payoff—rugby in China?—looks limited.
But the deal is part of a trend in China in which the big Internet players have been signing all the streaming sports deals they find. The most notable deals over the past year include the NBA’s reported $700 million, six-year deal with Tencent Holdings (TCEHY). LeTV has spent tens of millions on digital rights to 120 sports properties including English Premier League soccer games and Wimbledon tennis. PPTV, backed by retailer Suning, paid $75 million a year through 2020 for Spanish Liga soccer matches.
The companies are preparing for a sports boom in China like the one that has fueled ESPN’s rise in the America. Spending on all sports—recreational and professional— is about 0.6% of China’s GDP, compared to the U.S. Rate of 2.6%, according to brand consultancy Millward Brown China. China’s central government has enacted policies to boost participation and said the country’s sports industry should grow five-fold to $780 billion by 2025.
Rugby, then, is one more sport filling out the roster of matches at Alibaba’s video sites.
And the potential growth of the sport, is, well, rich: the Chinese Rugby Football Association says China has only 1,337 registered rugby players. World Rugby says 8 million play the sport globally.
As is the potential for online video advertising, the reason all these companies are rushing to build a library of content: iResearch says the market is expected to more than double in the next three years to $8.5 billion.