MEDIA

Netflix Said to Be in Early Talks With Chinese Companies

By EMILY STEEL
Netflix is in preliminary discussions with a handful of Chinese media companies to explore how it can bring its streaming service to China, a development that has the potential to increase its subscriber counts but also faces significant challenges, including censorship.
Netflix has held talks with Wasu Media Holding, an Internet company backed by Jack Ma, the executive chairman of Alibaba Group Holding, and BesTV New Media, a Shanghai-based media group, according to one person with knowledge of the discussions who spoke on the condition of anonymity. Netflix has also had discussions with other Chinese companies that have the licenses needed to operate streaming television services in the country.
Shares in Netflix surged 4.5 percent to $613.25 Friday on the news, which was first reported by Bloomberg.
The development is part of Netflix’s broader quest to expand into 200 countries by the end of 2016, faster than it previously had forecast. The company is seeking to bolster its international presence after experiencing slowing growth in the United States.
Netflix now operates in more than 50 countries. Outside of China, Netflix does not work with other operating partners.
Operating in China poses a number of challenges. One is that Netflix would most likely need to censor the programming available on its service. Another issue is whether it owns the rights to stream programs in the country. While Netflix now seeks global rights when it strikes content deals, the company previously licensed some of its more notable original content to other companies in China. “House of Cards,” for instance, already is popular on a streaming site called Sohu.com.
Separately, other ad-supported video sites in China offer programming free that is available on Netflix in the United States.
In January, Netflix called its ambitions for China “modest” and said that it planned to operate a “small service” in the country if it is able to obtain required permissions.
“If we go, it will be a modest investment,” Reed Hastings, Netflix’s chief executive, said in a conference call in January. “Because we won’t have that much content, we’re going to be very cautious and feel our way along through that process, if we’re able to get that license.”