Though Netflix has faced opposition in its efforts to break into the Chinese market, the company has just announced that it will introduce original content in China via a licensing deal with one of China’s largest video streaming services, iQiyi.com.
As the streaming giant has continued with its tenacious global expansion efforts, a deal with China has remained a huge challenge. Streaming services in the region must adhere to strict data storage regulations and foreign films and television shows are regularly censored.
In October, Cofounder and CEO Reed Hastings referred to a direct streaming deal with China as “slim” and said that Netflix had not made any progress obtaining government approvals there at the time.
iQiyi is backed by one of the largest internet companies in the world, Baidu, Inc., which is a Chinese-American company headquartered in Beijing. In February, it raised $1.53 billion in an effort to outdo the competition.
Analysts estimated that Netflix would grow its global subscriber base by nearly 2.4 million in the second quarter, but in typical Netflix style, the company is expected to surpass that estimate and add 3.2 million.
Though the company continues to grow at a rapid pace, touting more than 94 million subscribers worldwide, it still fights to remain competitive. Netflix has spent huge amounts of money to both produce original content and to acquire content, which is why the company announced yesterday its aim to raise $1.08 billion (1 billion euro) through a senior note offering outside the U.S.
Net proceeds will be used for “general corporate purposes, which may include content acquisitions, capital expenditures, investments, working capital and potential acquisitions and strategic transactions.”
Via a shareholder letter last week, Netflix said, in part, that although it expects a $2 billion negative cash flow this year, it plans to continue the growth of its content lineup. With its shares up 50% in the last year, Netflix remains a surefire bet.
