Late last week, news broke that American subscription-based streaming video service Netflix is in talks with Jack Ma-backed Wasu Media Holding Company to bring Netflix to China. Netflix, the maker of popular original shows like House of Cards and Orange is the New Black, has aspirations of being a global power, and it can hardly realize those without China’s billion-plus internet users. Netflix spokeswoman Anne Marie Squeo told reporters Netflix plans “to be nearly global by the end of 2016,” which implies a China launch could be coming soon.
The news caused a jump in the stock prices of both Netflix and Wasu, but the personally I think it’s cause for concern rather than excitement.
First of all, what happened to Netflix’s plan to enter China without a partner? Just two months ago, Netflix chief content officer Ted Sarandos told reporters:“It’s unlikely that we would definitely pursue [a local partner model] as a strategy… These ventures become very complex and very difficult to manage, and ultimately difficult to be successful”.
Now, barely two months later, the company is reportedly in talks with local partners? What has changed? It’s true that Netflix entering China alone would have been very tough given that it would have to finagle rare licenses out of China’s government in order to operate legally. But the fact that it has so quickly abandoned that dream and embraced a model it called “difficult to be successful” makes me question whether Netflix really knows what it’s doing here. Was the company fully aware of the difficulties when it said it planned to enter China alone? If so, why did it abandon those plans so quickly? If not, why should we believe it’s got a better grasp on China now?