Netflix says goodbye China for now amid regulatory challenges

PUBLISHED : Wednesday, 19 October, 2016, 12:58am
UPDATED : Wednesday, 19 October, 2016, 12:58am

Online streaming service provider Netflix is saying goodbye to China at least for the time being, citing strict regulations in the world’s second biggest economy as a key reason.

“The regulatory environment for foreign digital content services in China has become challenging,” Netflix said in a letter to shareholders as it announced its third-quarter earnings on Monday.

“We now plan to license content to existing online service providers in China rather than operate our own service in China in the near term.”

Netflix in August was reportedly in talks with Chinese technology giant LeEco, also dubbed the Netflix of China, over possible content cooperation.

Regulatory obstacles have made China, the most populous country in the world, a market that is fairly hard to crack for Western media and tech companies such as Google and Facebook.

Acknowledging that revenue from this licensing would be modest, Netflix stressed it still has “a long term desire to serve the Chinese people directly, and hope to launch our service in China eventually”.

The streaming pioneer has been expanding in Asia since last September, starting with Japan and launching its online streaming service in Hong Kong in January.

The company launched in 130 more countries earlier this year, bring the total to 190 globally.

Despite China concerns, shares in the California-based company gained as much as 20 per cent in Tuesday morning trade in New York after posting an upbeat subscription growth in the third quarter.