Alibaba Acquires Majority Stake in Sun Art; VOD Predicted to Rise to $175bn by 2026

In today's ExchangeWire news digest: Chinese holdings firm Alibaba enhances its ecommerce output by increasing its shares in supermarket chain Sun Art; research from Global Market Insights forecasts that the VOD market will reach $175bn by 2026; and the Trump administration renews its campaign to bar new downloads of TikTok within the country.

 

Alibaba bolsters ecommerce offering with majority stake in China’s Sun Art

 

Holdings titan Alibaba has announced that it plans to buy a majority stake in supermarket chain Sun Art. The Group intends to spend USD $3.6bn (£2.8bn) to acquire a 72% share in Sun Art by buying equity from France-based Auchan Retail, which currently holds around 51% of the equity interest in the chain.

The deal will see all of Sun Art’s 484 brick-and-mortar stores become part of Alibaba’s existing food-based companies, including supermarket platforms Taoxinda and Tmall, as well as logistics service Cainiao and food-delivery firm Ele.me.

The plans mark a renewed investment from Alibaba into the supermarket giant – the conglomerate bought 36.16% share in Sun Art for around USD $2.88bn (£2.22bn) back in 2017. As is the case with the latest acquisition push, the investment formed part of Alibaba’s “New Retail” strategy. New Retail, according to TechCrunch, seeks to blend online and offline retail by “turning physical stores in pickup points for online orders, integrating supply chains and enabling shoppers to use the same digital payment methods on its e-commerce platforms and in brick-and-mortar stores”.

With consumers noticeably shifting to ecommerce (in no small part due to the ongoing pandemic), the move and the wider plan it forms part of could well prove fruitful for Alibaba.

 

VOD market to grow to $175bn by 2026

 

Market research company Global Market Insights has projected that the video-on-demand (VOD) market will grow to USD $175bn (£134.7bn) by 2026. The forecast is based on a recent study carried out by the firm, which found that the continuing adoption of cutting-edge technologies, including smartphones and smart TVs, as well as increasingly widespread access to the internet have spurred growth in the market. The firm predicts that this is set to continue well into the next decade.

Whilst the growing availability of smarter technology is key to projection, it is soaring consumer demand for readily-available, instantly accessible entertainment that is truly behind the boom in VOD. Unlike most other sectors, streaming services were well-paid by the global health crisis and the stay-at-home measures imposed in an attempt to resolve it, with millions across the world turning to VOD platforms to relieve boredom and provide escape.

Whilst VOD was on the rise prior to the pandemic, the phenomenon has accelerated growth by stirring demand whilst simultaneously stifling the channels competitors as cinemas were forced to close their doors and TV saw live events cancelled and productions postponed.

Whilst some are wary that the VOD bubble is destined to burst, this prediction indicated that at least as many observers are confident that its success is only set to grow.

 

US resumes efforts to ban TikTok

 

The Trump administration is reportedly working on lifting an injunction that has so far prevented the US government from banning TikTok. The move is just the latest chapter in a long-running saga, which began in August this year when the White House announced it planned to ban the Chinese-owned social media app in order to mitigate purported risks to national security.

The Department of Justice (DOJ) filed papers with the D.C. Circuit Court of Appeals, requesting that the Court reconsider its decision to prohibit the Commerce Department from pressing ahead with its intentions to ban new downloads of the popular short-form video app, effectively nullifying an executive order issued by president Trump to remove TikTok from US cyberspace.

An appeal launched by TikTok saw D.C. Circuit Court Judge Carl Nichols rule in the app’s favour. Nichols concluded that the service provided by TikTok is not subject to the powers set out by the International Emergency Economic Powers Act, the legislation under which the president launched the order.

The DOJ argues that Nichols failed to appreciate the threat TikTok poses to national security, and maintains that a ban will “minimise the national security threat posed by the company’s aggressive data-collection practices and the Chinese government’s intelligence practices.”

Meanwhile, Oracle and Walmart’s supposedly successful bid to acquire TikTok’s US operations remains suspended in limbo.