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Netflix China Launch by 2016 Is Uncertain

Netflix says that its planned move into China, the world’s most populous nation, by 2016 is uncertain.

The company is rapidly expanding its international footprint, especially in Asia. It is rolling out service in Southeast Asia and will launch in Japan in the third quarter of this year, having got Australian and New Zealand operations under way in March this year. But China remains a case apart.

The company previously suggested that it would like to launch its own operations in China. Later it said that a partnership with a local Chinese company might be more practical, and revealed that it had held conversations with Internet TV group Wasu Media, among others.

This week, Netflix senior executives expressed mixed views about when getting a China operation off the ground might be possible.

“I would say China continues to be sort of its own entity in terms of the challenges and the particular characteristics of the market. We’re taking our time and being deliberate in finding a path and the right model to work,” said David Wells, Netflix’s chief financial officer, on a post-financial results conference call with investment analysts. “So just continue to stay tuned. We hope to be able to launch the service there next year; and we’ll continue to treat it sort of as its own territory.”

Reed Hastings, Netflix chairman, president and CEO, was more circumspect. Speaking on the same conference call, he said: “We hope to open the entire rest of the world in 2016. So China, again, we still have some things to figure out, so I suppose that’s possible. But in the rest of the world, we’re pretty confident that we’ll open. And then we’ll have to see how successful we are in Poland. We have to see how successful we are in Indonesia. So there’s still a lot of work to do.”

In a separate interview with Reuters, Hastings said that the biggest hurdles that Netflix needs to overcome in China are regulatory. In the country where media is strictly controlled, government clearance will be needed for any operation and business partnership.

China was on the agenda again later in the call, when Netflix was asked to explain the delay until the first quarter of 2016 of the day-and-date theatrical and streaming release of the sequel to “Crouching Tiger, Hidden Dragon.”

“There were a few other factors. One is that we are going to have a premiere of ‘Crouching Tiger, Hidden Dragon 2’ in China. It will premiere on several screens in China in 3D, and we wanted to line it up with a better window in that way,” said chief content officer Ted Sarandos. “Give the film a little more time… We also picked up a couple of extra production days to expand on the scope of the film. We’re really happy with how that’s coming out and that window just lined up perfectly.”

On the film’s theatrical release, Sarandos added, “I think for us it’s mostly symbolic. I think it’s important for people to understand that these movies are not TV movies; they’re of the same size and scale and scope of the movies you will see in theaters. So one way to do that is to have them in theaters sometimes.”

Netflix’s original movies “will be attractive enough that theater owners will want to book them in their theaters at the same time that they’re on Netflix,” Sarandos continued. But “I wouldn’t move around to optimize for the theatrical window. So that’s not really the driver. This afforded us to do a premiere a few days early in China and helped to launch the film, and the film brand, around the world.”

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