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Netflix Entering Chinese Market

25 Apr, 2017 By: Erik Gruenwedel


Digital market share in China


As expected, Netflix reportedly is set to enter the lucrative yet restrictive Chinese market through a third-party. The subscription streaming video pioneer is partnering with iQIYI, the streaming video provider owned by Chinese search behemoth Baidu.

Netflix has made no formal announcement. Spokesperson Jonathan Friedland said a launch date is unknown. Robert Roy, VP of content acquisition at Netflix, unofficially broke the news at APOS 2017, the media, telecom and entertainment confab taking place through April 27 in Bali, Indonesia. 

Notably missing from Netflix’s global rollout last year, China represents a massive untapped market for Netflix, which is leveraging its future on global penetration and growth.

Yet, the self-proclaimed “TV disruptor” could not persuade Chinese officials to approve a third-party non-Chinese standalone SVOD service to operate in the Middle Kingdom.

“The regulatory environment for foreign digital content services in China has become challenging," CEO Reed Hastings and CFO David Wells wrote in a shareholder letter last October. "We expect revenue from this licensing will be modest. We still have a long-term desire to serve the Chinese people directly, and hope to launch our service in China eventually."

With a reported 500 million members, iQIYI has apparently become a go-to channel into China for U.S. studios.

Last month, Warner signed a distribution agreement with iQIYI, licensing rights to 200 movies (Gravity, Godzilla, etc.), including exclusives to The Lord of the Rings Trilogy and The Great Gatsby, among others.

The Chinese service, which also has agreements with 20th Century Fox, Lionsgate, Sony Pictures, Disney, Paramount, Universal and Studiocanal, among others, is competing against national competitors Tencent Video and Youku Tudou. Earlier this month, iQIYI acquired rights to Oscar winners Moonlight and La La Land.

 

 


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