Netflix has wanted a presence in China’s mammoth media landscape for years, but the streaming service today said it will halt any and all launch plans in the country due to a "challenging" regulatory environment. In place of an official Netflix launch, the company now plans "to license content to existing online service providers in China rather than operate our own service," Netflix said in a shareholder letter published alongside its third-quarter earnings report. Netflix expects only modest revenue from these licensing deals.
China has notoriously strict regulations regarding foreign digital services and media, with many imported television shows and movies requiring some form of censorship to meet the country’s local standards. That’s made it very difficult for Netflix to launch its service there, as it would have to spend years building a custom library of titles that have been reformatted to fit Chinese regulatory requirements. Still, as the world's most populous country, China represents an economic opportunity unlike any other market in the world. "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.
"The regulatory environment... in China has become challenging."
The change in plans regarding China aren't too surprising given the executives' recent comments. CEO Reed Hastings said earlier this month at the New Yorker TechFest that its China launch "doesn’t look good." He cited situations in which both Apple and Disney ran into regulatory trouble trying to bring US films to the Chinese market. "We’re really focused on the rest of the world. There is so much opportunity for us in India, Poland, Turkey, Latin America, and Vietnam," Hastings added.
Back in January, Netflix launched its service in 130 new countries simultaneously, putting its total count today at more than 190 countries around the world. Now, the only places that Netflix is not available are North Korea, Syria, Crimea, and — for the time being — China.