Netflix Abandons China Expansion Plan For Now

By | Oct 17, 2016 07:20 PM EDT
 A sign is posted in front of the Netflix headquarters on January 22, 2014 in Los Gatos, California.

A sign is posted in front of the Netflix headquarters on January 22, 2014 in Los Gatos, California. (Photo : Getty Images)

Netflix has decided to scrap its China expansion for now, the streaming service announced on Monday during its third-quarter earnings report.

Even though the streaming service has already established its operations in 190 countries, it has been ambitious in wanting to expand in the world's most populous country. Netflix now has cited China's "challenging" regulatory environment for foreign digital content services as a reason for postponing its earlier plans.

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"We now plan to license content to existing online service providers in China rather than operate our own service in China in the near terms," the company said in a statement, adding that it anticipates "modest" revenue from the licensing plans, the Wrap noted.

According to the CBS News, the change of plans seemed to be related to Netflix's content, as the company would most likely need to censor some of its content in accordance with China's regulatory standards.

However, despite the switch of strategy news, Netflix stressed that it has not totally abandoned its goal.

"We still have a long term desire to serve the Chinese people directly, and hope to launch our service in China eventually," Netflix said.

Reed Hastings, the entertainment firm's CEO, admitted last month that Netflix has made no progress toward its China expansion.

"We're focused on the rest of the world," Hastings was quoted saying at the New Yorker's TechFest 2016 earlier this month by Yahoo! Movies. He further added that even Apple and Disney, which have already established a strong track record in China, had their movie services shut down by Chinese authorities.

Meanwhile, Netflix saw a stock increase of 19 percent in after-hours trading, the Mashable reported. The company has also added 3.2 million subscribers in its international markets, a significant figure considering its slow growth in the United States, where it only gained 368,000 new members.

Netflix also revealed it plans to allocate $6 billion on content next year.



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