The service will be called 'TBO', or Tmall Box Office, with content bought from China and other countries, as well as in-house productions, Alibaba's Patrick Liu told reporters in Shanghai on Sunday.
TBO will launch into a competitive online video market in China, where companies are spending billions of dollars to buy media content to attract enough viewers to become dominant.
"Our mission, the mission of all of Alibaba, is to redefine home entertainment," said Liu. "Our goal is to become like HBO in the United States, to become like Netflix in the United States."
It was not immediately clear how the service would fit with Youku Tudou, one of China's biggest video streaming platforms in which Alibaba bought a 16.5 percent stake last year.
However, unlike the majority of domestic rivals, about 90 percent of TBO's content will be paid for, either by monthly subscription or on a show-by-show basis, Liu said. The remaining 10 percent would be free.
Netflix itself is also considering an entry into China, a notoriously difficult task for foreign Internet companies.