Is Netflix (NASDAQ: NFLX) going to China? Investors certainly hope so, as reports that the SVOD service is in talks with Chinese online video providers, including BesTV New Media and Wasu Media Holdings, sent its stock skyrocketing over $600.
An unnamed executive at Wasu told The Wall Street Journal that Netflix has been in talks with the company since February. "We are still taking time to know each other better because America's content industry is very different from China's," the exec told the newspaper.
No kidding: China's frequent crackdowns on online content have made it difficult to stream OTT video in the country. Even partnering with existing OTT providers has its pitfalls. For example, despite the popularity of House of Cards, which is streamed in China thanks to a licensing agreement with Sohu.com, its third season was delayed while the country's media regulator reviewed the content for objectionable material.
Netflix would need to partner with one of the seven Internet TV companies licensed by the State Administration of Press, Publication, Radio, Film and Television. And to be available on as many screens as possible, the company it partners with must have licenses for content to be shown on mobile devices, computers and set-top boxes, according to Bloomberg Business.
But China is too big of a market for Netflix to ignore: Last year Go-Globe.com published an infographic showing that China has more than 450 million online video viewers who watch, collectively, 5.7 billion hours per month of online video content. Bloomberg Business noted that China's OTT market may triple by 2018, to CNY ¥90 billion (USD $14.5 billion).
With more than 62 million subscribers globally and analysts wondering if Netflix will hit a subscriber ceiling in the U.S. in the near future, a half-billion potential new subs is a juicy, delicious-looking target for the provider.
Netflix crossed the $600-per-share mark for the first time in its history on Friday following the report, rising $26.40 to close at $613.25.
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