China is one of the prominent territories which has long avoided technology giants from the West to function seamlessly, without any content or service restrictions. The widely popular on-demand video streaming service, Netflix, had been looking to step foot into the Dragon’s den for long. But, it has finally given up on its pursuit to expand organically and has now signed a licensing deal with leading video streaming platform iQiyi in China. This at least gives the company’s brand a presence in the Chinese market.
The American video streaming giant is said to have reached a content licensing agreement with Beijing-based search giant Baidu’s widely popular video platform called iQiyi, according to The Hollywood Reporter. Netflix’s original content will be made available through iQiyi on a day-and-date or near simultaneous basis. Its presence will be expanded to other regions as well.
While the former is leading the video streaming revolution in the States with over 40 million registered users, the latter is exactly its counterpart and boasts of around 480 million users. This figure is surely plausible in a country like China where around 700 million people are connected to the Internet, mostly via their mobile devices. The country maintains tight control over the content aired by foreign providers and censors the content which makes its way to the populace.
Talking about this licensing deal, Robert Roy, Netflix’s vice president of content acquisition said,
China is an important market for obvious reasons; it’s also a challenging market for obvious reasons. Right now what we will do is look to license content into China. We closed a deal with iQiyi, which is exciting.
For us, it does a couple of things. It gets our content distribution into the territory [which has difficult to explore] and builds awareness of the Netflix brand and Netflix content.
This move from Netflix is certainly a significant one as it now becomes the only player from the West to have a presence in China. It largely competes against Amazon Prime Video and it still doesn’t have any presence in the South-east Asian (SEA) region. Netflix has also banked on this opportunity and inked a partnership with Uber and Lazada to jointly create an online rewards program for users in the said region.
Since there is immense scrutiny over the content which is made available to the masses of the country, Netflix has not announced the original shows and movies that will eventually make their way over the Great Firewall — a security system installed to keep tech giants and intruders out of the system. But now, it is sure that Netflix will make its content accessible to around 500-million monthly active viewers on the Chinese ad-supported video platform.
As for iQiyi, is an online video platform operated by search giant Baidu and it operates out of Beijing, China. It was founded earlier in 2010 and has raised around $2 billion from the likes of IDG Capital Partners, Hillhouse Capital Group, Sequoia and even Xiaomi. But, it added a fresh $1.53 billion to its coffers via convertible notes just recently to better its chances of competition against rival offerings from Tencent Holdings and Alibaba Group’s Youku Tudou.
The company now plans to aggressively produce original content for its Netflix-style subscription service, which currently has about twenty million subscribers. There have recently also been rumors that the company is planning a public offering, with an aim to raise somewhere around $1 billion. Netflix is also looking to raise a fresh $1 billion through the sale of senior note debt offering. This would enable the latter to lead content acquisitions and other partnerships.