Netflix Breaks The Great Wall: Enters China
China has been an inaccessible market for most technology companies, particularly as local Chinese competitors have managed to mimic ideas and execute them far better than their western counterparts. The Chinese Google, Baidu, is by far the market leader for all things search related for the country which holds 1.3+ billion people. WeChat, the Chinese answer to WhatsApp, has taken the time to fully understand its target market, becoming a central hub for all things related to anything!
However, one company might have finally found a way to break through the Great Wall, that is China’s barrier to entry. Netflix has just signed its first major deal to mark its presence in the Chinese market. Having given up on its hopes to enter the country last October, choosing to do licensing deals instead, Netflix has just signed a deal with iQiyi, which is a subsidiary of Baidu.
iQiyi, with nearly 500 million monthly users, is a leading video portal in China, and has agreed to host some Netflix content. Although which titles will be made available on the portal haven’t been disclosed yet, a Netflix spokesperson did confirm the deal to TechCrunch.
Regulatory barriers had previously prevented the streaming and original content giant from launching in the Chinese region.
Robert Roy, Netflix VP Content Acquisition had said earlier, “We’d love to have direct relationship in China and it’s just a matter of when and how, and that’s something that we’re trying to figure out over time.”
AliBaba’s biggest competitor in the retail e-commerce space, Amazon, is another major global player that has been unable to penetrate the Chinese market due to regulatory concerns.
For now, Netflix continues to focus on closing similar distribution-centric deals for Mainland China. It’s flagship series, ‘House of Cards’ was previously licensed out to the video service Sohu, prior to the Chinese regulators pulling it out from China.
Baidu owned, iQiyi, recently took to the market to raise $1.5 billion to further pursue its content strategy as it looks to build on its Netflix-subscription service. Having started out with an ad-supported model, iQiyi has begun its transition towards a subscription model.
Engaged in a battle with AliBaba’s $3.5 billion acquisition, Youku, iQiyi claims to have 481 million users and 5.579 billion hours of time per month spent on its service.
With Netflix recently reporting its subscribers numbers at 100 million, this latest development will help them continue their rapid international growth. Netflix has revealed that it plans to raise an additional $1 billion in capital to help fund its video content strategy.