Netflix makes inroads in China through licensing deal

Global Business

Netflix has not been able to establish a firm foothold in China. But it has found a way to get some of its programming in via a licensing deal with the country’s iQiyi streaming service.

CGTN’s Roee Ruttenberg reports.

IT consultant Rong Ruixing, 28, was born in China, but raised in the U.S. That’s where he grew to love American TV shows, shows he now watches back in Beijing. Rong uses a subscription-based IP scrambler, known as a VPN. He also pays monthly for an American content streaming service.

“Part of watching a show is really participating in discussions. And I enjoy that a lot. And in order to do that, I really have to use Netflix or find other creative solutions to get the contents,” Rong said.

Things may soon get easier for Rong. Recently, Netflix announced it was entering the Chinese market via a local streaming agent called iQiyi, a subsidiary of China’s web services giant, Baidu.

By some estimates, one in three people in China are streaming content and Netflix wants a share. Last year, the company announced it was “in nearly every country in the world, except China.”

Chinese iQiyi subscribers welcomed the news that would change.

“If I will be able find more American shows, I would definitely use it. But the problem is, right now, it’s not so easy to find them,” student Shi Yuqi said.

Getting into a market is one thing. But making a dent in that market? That’s another. Netflix shows on iQiyi face stiff competition from Chinese content.

Kitty Fok, managing director of IDC China and a Beijing-based IT research analyst, said Netflix may have paid a heavy price to enter the Chinese market.

“Some of the seasons or episodes (are) probably not allowed in China,” Fok said. “That’s the reason why I think it is super important to have a very strong partner that understands about the government policy, local culture, to help them figure out what is the best content at this moment that they should provide to the Chinese audience.”

The most loyal of viewers like Rong will be watching closely.

“If I see that Netflix China has a lot of things that are edited and I feel uncomfortable about it, then I will have to end up doing the exact same thing that I did before, that I’m doing right now,” he said.

And that may be Netflix’s biggest challenge in China – convincing subscribers like Rong that they are in control.

R “Ray” Wang talks about Netflix’s efforts to get its content into the Chinese market

CGTN’s Rachelle Akuffo spoke with R “Ray” Wang, principal analyst and founder of Constellation Research, Inc about Netflix’s efforts to get its content into the China market.