Netflix doesn’t think highly of its licensing deal with China’s leading video platform iQiyi

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What has only been a speculation earlier this week has been officially confirmed today. Netflix has finally stepped foot in the Dragon’s land by collaborating with Baidu-owned video streaming platform ‘Qiyi’. These two technology giants have signed a content licensing agreement to bring Netflix’s original content to the netizens of the Asian country.

But, you know what, Netflix doesn’t think very highly of its first major licensing agreement in China. In the official blog post, the on-demand video streaming giant has mentioned that it’s delighted to make its debut in the country. It had been looking forward to put an end to thinking and release its services in China — but there’s the Great Firewall to cross. Thus, it decided to give up on its original plan for expansion and partnered with a local video streaming service.

It states that the country’s massive populace will now easily be able to enjoy Netflix original series (and movies, to be added soon) on iQiyi, a video platform they’re widely acquainted with. It, however, adds that the company’s expecatations from the licensing deal are modest, with regards to the region they’re now stepping foot into. But, the investors are positive of the same and the company’s share price has increased by 7-odd percent in the last five days.

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Talking of the same, Jessica Lee, VP, Communications – Asia, Netflix said:

Though our expectations of this deal remain modest, we are delighted that consumers will be able to enjoy these highly-popular series on iQIYI, the leading media platform in China.

It is currently downplaying the milestone which a Western content platform, like Netflix, has achieved by stepping foot into China. It is definitely a significant move, especially when tech giants likes Facebook, Google, Twitter and others are banned from operating in the country. There’s the possibility that Netflix is worried about two prominent things —

  • One that the agreement has only been signed and will now be subject to relevant regulations on online streaming of imported drama and film content in China. This is very important for the authorities of the country, who like to maintain full control on what the netizens have access to.
  • Secondly, there is a downside to the licensing agreement. Netflix will not be earning much with such a deal with a locally-based video streaming platform. Analysts are of the opinion that the deal may prove to be immaterial as Netflix may get a minimal cut by streaming its content in China.
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As for Baidu-owned video streaming portal iQiyi, which boasts of around 480 million users, the company is delighted to have gained Netflix as one of its content partners. This will enable them to further market its services and attract users who had been waiting to enjoy its original series in the country. The licensing agreement involves a subset of Netflix original series like Stranger Things and Black Mirror, two TV series which have gained immense popularity for their sci-fi storyline over the past year. It hasn’t commented on what other shows or movies will come to the platform in China.

Commenting on the partnership, Yang Xianghua, senior vice-president of iQiyi said:

We commit ourselves to making more original contents and high-quality shows from around the world accessible to our viewers in China. In teaming up with important content providers such as Netflix, iQIYI is capable of keeping abreast of latest trends and development in the industry around the globe.

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