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Vizio's Chinese Buyer in Content Discussions With Netflix

2 Aug, 2016 By: Erik Gruenwedel

Chinese tech conglomerate LeEco just bought Irvine, Calif.-based LCD television manufacturer Vizio for $2 billion. Netflix wants to enter China, a notable void in the subscription streaming pioneer’s global footprint, and stymied in part by the communist government's strict regulation, censorship and consumer prevalence for local content.

Now Chinese media reports say LeEco is in discussions with Netflix regarding a pact that could see the SVOD service supply original content to LeEco/Vizio in exchange for possible easier access into the world’s most populous country. 

LeEco in China markets smartphones and smart TVs bundled with live sports and movies and TV shows. It is also seeking market penetration in Russia and India. 

“We are planning a very significant cooperation with Netflix, and details will be announced in the third quarter,” Liu Hong, co-founder and vice chairman of LeEco, said in a statement reported by South China Morning Post.

Indeed, while Netflix co-founder and CEO Reed Hastings keeps sounding upbeat about entering the Chinese market, he admitted during a July fiscal call that doing so had become more challenging.

“This year the regulatory climate in China for our service has become more challenging,” Hastings wrote in the July shareholder letter. The executive cited Disney’s streaming service, DisneyLife, launched in conjunction with Alibaba, being sidelined along with Apple iTunes movie service.

“We continue to explore options and, in the meantime, have plenty of work to do in our newly opened markets,” Hastings said.

Meanwhile, LeEco’s purchase of Vizio gives it ownership of the largest LCD TV manufacturer in the United States. While many Vizio TVs already have the Netflix app embedded, the company doesn’t have exclusive content — increasingly considered a point of separation among competitors.

“In terms of content strategy, we will be more open to business cooperation in the US,” Liu said, adding that LeEco also envisions working with independent content producers to assist with their content distribution strategies.

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