Netflix Loses Its Chill, Scraps Plans to Launch Streaming Service in China

Despite offerings available in most countries of the world, Netflix admits initial defeat in China, with only licensing deals in place for the foreseeable future.

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Netflix’s goal to become the world’s most ubiquitous streaming service in the world hit a snag on Monday with the company officially putting its plans for China on ice.

“We still have a long-term desire to serve the Chinese people directly, and hope to launch our service in China eventually,” the company said in a letter to investors, describing the regulatory environment for foreign digital service providers as “challenging.”

Netflix CEO Reed Hastings foreshadowed the decision earlier this month at the New Yorker TechFest where he said the service’s China launch “doesn’t look good.”

So, China has now officially joined North Korea, Syria, and Crimea as one of the few countries with no access to Netflix’s original shows such as Stranger Things, Narcos, and The Get Down, along with other programming.

The company’s new strategy is to license content to existing online service providers – a plan even they admit will only result in “modest” revenues. There’s going to be plenty of content to sell, though. The company says it plans to create 1,000 hours of original new shows, spending US$6 billion (RMB 40.4 billion).

By comparison, Beijing-based iQiyi plans to spend RMB 10 billion (USD 1.4 billion) on content next year. Youku Tudou subsidiary Heyi Pictures will be making 15 to 20 shows, and Tencent Pictures plans to make 20 new film and TV projects. In August, LeEco, one of China’s largest Internet firms, dropped a big hint that it was looking to have “very significant cooperation” with the US streaming giant.

In August, LeEco, one of China’s largest Internet firms, dropped a big hint that it was looking to have “very significant cooperation” with the US streaming giant. Unfortunately, according to Variety, that deal is only likely to cover Netflix-owned shows playing on LeEco’s video-streaming platform in the US, not here. But at least LeEco will be making 30 movies and 400 hours of TV shows itself.

But Netflix is still holding out hope that one day Beijing will change its tune.”We still have a long-term desire to serve the Chinese people directly, and hope to launch our service in China eventually,” the shareholder letter concludes.

— This article first appeared on the Beijinger.