Netflix is currently available in nearly 200 countries across the globe, but the streaming giant has historically never been able to break into China. With upwards of 1.3 billion people, China is an incredibly important market for Netflix to tap into, especially amidst some analyst concerns regarding the company’s ability to drastically increase revenue growth once its subscriber count plateaus.
As for Netflix’s conspicuous absence in China, Netflix CEO Reed Hastings explained last year: “In China, you need specific permission from the government to be able to operate, so we’re continuing to work on that and we’re very patient. I think we’re going to be a success there, but it’s going to take some time.”
Earlier this week, Netflix announced that it had finally managed to break into China, though not as a subscription service. As our sister-site Variety recently reported, Netflix recently inked a licensing deal with iQIYI, a massive streaming platform in the country with more than 500 million users. Interestingly enough, iQIYI is a subsidiary of Baidu.
So while a licensing content deal wasn’t likely Netflix’s favored way to get into China, the company views it as a step in the right direction.
Speaking on the matter, Netflix VP of content acquisition Robert Roy explained:
China is an important market for obvious reasons; it’s also a challenging market for obvious reasons. Right now what we will do is look to license content into China. We closed a deal with iQiyi, which is exciting.”
For us, it does a couple of things. It gets our content distribution into the territory and builds awareness of the Netflix brand and Netflix content.
As for the vitality of Netflix’s entire business, the company recently said that it finally surpassed the 100 million subscriber threshold. And with the stock currently trading at an all-time high, investors clearly believe Netflix has a lot of room left for growth.