Netflix pulls back on China plans

Netflix pulls back on China plans
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Netflix will not continue its attempted expansion into China.

The company made the admission in a letter to shareholders released after the markets closed on Tuesday, along with its quarterly earnings numbers. Instead, it will try to license its programs to Chinese companies.

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“The regulatory environment for foreign digital content services in China has become challenging,” the company said. “We now plan to license content to existing online service providers in China rather than operate our own service in China in the near term.”

Netflix said it expected the revenue from its new strategy to be “modest.”

The decision points to the difficulty many American tech companies have had clearing regulatory hurdles in the Chinese market.

Apple, for example, which has long had solid relationships with China, saw its movies and books products shut down in the country earlier this year. CEO Tim Cook has since made several trips to the country, where he’s met with local officials.

Google moved its search product to Hong Kong from mainland China in 2010. It is expected to try to get back into China in the future.

Netflix has, otherwise, fairly successfully pursued a strategy of global expansion. The popular streaming service expanded to 130 countries on the same day earlier this year. And it says that in the long-term, it hopes its roster will include China, as well.

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