International woes: Disney on ice in China, Netflix's global push leaves analysts cold

DisneyLife, the SVOD service launched last year in several countries outside the U.S., is off the screens of Chinese viewers according to Alibaba, the media company that licensed the service in the country. Ostensibly, DisneyLife was shut down for "service upgrades," but The Wall Street Journal, citing people familiar with the issue, said regulators put a halt to the service.

DisneyLife launched in the UK in late November and also partnered with Alibaba to become available in China, streaming exclusively through a device (shaped like Mickey Mouse, of course) sold via Alibaba's Tmall website. Alibaba is issuing refunds for both the device and the one-year subscription fee, indicating that the service likely won't be back online in China anytime soon.

Chalk it up as another setback in content providers' international aspirations. China's stringent regulations aside –Apple (NASDAQ: AAPL) was also stung by government bans recently, and a planned livestream of the Oscars by iQiyi was abruptly cancelled in February -- moving OTT into a global realm has been challenging for many U.S. companies, including Netflix (NASDAQ: NFLX). The SVOD provider is weathering a shaky period in the stock market following its first-quarter earnings and analysts voicing doubts about the long-term success of its expansion into 130 countries late last year.

"Why was Wall Street so upset with the results? One of the reasons is Netflix' pessimistic view of the next quarter," said Colin Dixon in an nScreenMedia post.

In a Forbes article, Brian Solomon pointed out that Netflix's expected 2 million international subscriptions for the second quarter are down 15 percent year-over-year. But while CEO Reed Hastings chalked that up to both the traditional Q2 slowdown and the strong take-up of the service in Australia and New Zealand the year previous, "the strength of the Q4 international growth (4.04 million new subscribers) calls that into question."  

Jefferies analysts rated Netflix stock at "hold" following its earnings report last week, not just because of its lower international forecast but also because other market factors could pressure its earnings, including the higher cost of licensed content, competition at home and abroad, and the continued impact of VPN masking by users wanting Netflix content they can't get inside their country. MoffettNathanson also maintained its "neutral" rating on the company's stock.

For more:
- see this NYT article
- see this Forbes article

Related articles:
Disney launches £9.99/month DisneyLife SVOD service in the UK, but Marvel and Star Wars are MIA
iQiyi's cancelled Oscars stream may signal trouble for U.S. media companies trying to break into China
ESPN, Tencent ink partnership deal to live-stream sports content in China