Netflix Scales Chinese Entry Wall By Striking Licensing Deal With iQiyi


Netflix has finally found a gateway into China via a licensing deal with the country’s iQiyi streaming service, Shanghai Daily reports.

iQiyi will license Netflix shows; other details about the arrangement have yet to be disclosed. There’s also no word yet on the process Netflix shows will have to go through to clear Chinese government censors.

Still, this appears to be a major step forward in Netflix’s effort to enter the biggest market where it doesn’t have a foothold. iQiyi — spun off by search power Baidu — said last year that it had more than 20 million subscribers.

Netflix shares are up about 1.2% in pre-market trading.

CEO Reed Hastings told a gathering in October that the prospect of a Netflix entry into China “doesn’t look good.”

“Disney, who is very good in China, had their movie service shut down. Apple, who is very good in China, had their movie service closed down,” he noted at the New Yorker TechFest.

Early in 2016 he said that his company was engaged in “continuing discussions” regarding China and noted that any deal “will have only a modest financial effect in the near term.

Wall Street listened. It’s “prudent to assume zero traction is gained in China,” PiperJaffray’s Michael Olson noted in a report last week.

Netflix reported that it had 47.89 million international subscribers in Q1. The number could soon eclipse the number of U.S. customers, at 50.85 million.

iQiyi  last month pacted with Warner Bros for 200 library titles including Harry Potter, Rush Hour and Lord Of The Rings. It also has long-term output deals with Lionsgate, Fox, NBCU, and the BFI.

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