Alibaba Pictures Lost $139 Million in 2016

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China’s Alibaba Pictures reported a $139 million net loss for 2016, which it blamed mainly on marketing costs for its online movie ticket subsidiary in a Thursday regulatory filing.

The company reported 1.1 billion yuan (about $160 million in marketing expenses) for 2016, largely related to its online ticketing platform Tao Piao Piao. Last month, Alibaba warned its shareholders that it would report a loss of about this size.

Online ticketing companies have engaged in a price war in China, as operations backed by mega-conglomerates like Alibaba, Tencent and Baidu have battled it out for market share with huge subsidies and other promotions. About 8 in 10 movie tickets in the country are sold via mobile apps. However, those subsidies began to soften toward the second half of last year — as did the Chinese box office.

Alibaba Pictures, which has an office in the Los Angeles area, took a minority stake in Steven Spielberg’s Amblin Pictures in October. Their first release together, “A Dog’s Purpose,” starring “Beauty and the Beast’s” Josh Gad, has reeled in $75.5 million in China — topping the $63.5 million the film has grossed domestically.

Earlier this month, Alibaba Pictures signed a three-year agreement with parent Alibaba Group that gave its streaming service, Youku Tudou, priority in distributing Alibaba Pictures’ films in a deal that bound different parts of the conglomerate closer together as a slowing movie market and strict capital controls have made it more challenging for Chinese film companies to invest abroad.

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