New | Netflix extends its global reach to China – but not on its own terms

Netflix moved a step closer to worldwide dominance with a major licensing deal that enables its original programmes to gain access to China, a vast entertainment market that has long eluded the world’s largest pay-TV service.

Through an exclusive licensing deal with iQiyi, China’s major streaming-video provider controlled by the country’s internet giant Baidu, Netflix is expected to bring a wide range of content to China, where the online video market was valued at US$8.83 billion in 2016, slightly bigger than Netflix’s global streaming revenue of US$8.3 billion in the same year.

According to a statement from the Beijing-based iQiyi, the licensing deal covers a wide range of Netflix’s programmes, including original TV series, animation and documentaries. The latest seasons of Netflix’s hit TV series, such as Black Mirror and Stranger Things, are expected to be available to iQiyi’s more than 20 million paid subscribers simultaneously with Netflix’s broadcast in the United States.

Despite the major breakthrough, analysts are not entirely confident that Netflix can replicate its huge success in China as the majority of Chinese are still used to watching free content online. Advertisements contributed about 54 per cent of the revenue for China’s online video sites in 2016, said market research firm iResearch.

“Netflix will gain some success, but not in a large scale unless it changes its business model in China, because paying for subscriptions is not the mainstream of consumer behaviour yet,” said Wang Xiaofeng, senior analyst with Forrester Research.