Netflix hopes for China expansion, but admits it may not be easy

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Netflix hopes for China expansion, but admits it may not be easy

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Online video service Netflix is hoping to dip a toe into China as a way of addressing stalling growth in its main market, the United States.

It is part of plans to expand to as many as 200 countries over the next two years. Currently it operates in 50 countries.

Netflix Chief Executive Reed Hastings said it would initially be a “modest” move in China using its original TV series and licensed content.

He acknowledged it is not “100 percent clear” they would get permission to do that.

“For every country we know what we want to do, but in China we are still exploring our options,” Hastings said.

“We’ll learn a great deal if we can successfully operate a small service in China…That is our preference, for the next few years, if we are able to acquire the necessary permissions,” he added.

Analysts point out the country is not easy for foreign firms, with Google, YouTube, Facebook and Twitter all blocked there and Chinese online giants like Tencent and Alibaba spending hundreds of millions of dollars to bring foreign TV and films to China.

“The real question is do they (Netflix) think they’ve got something, have they hammered out all these relationships with foreign content providers that Chinese companies can’t offer?” said Mark Natkin, managing director of Beijing-based Marbridge Consulting. “My sense is not.”

He said Netflix’s ambition reminds him of hopes voiced by a string of international firms dazzled by the market’s promise, obscuring China’s complexities.

“Another company… sees this magical 1.3 billion number, multiplies it by some fractional percentage of market share, and that equals a pot of gold at the end of the rainbow,” said Natkin.