Netflix will continue to look into the possibility of entering China in a bid to develop its subscriber base outside the U.S., Chief Content Officer Ted Sarandos said at a media event in Seoul on Thursday.
Without giving details, he said, “Since China is a great opportunity, we continue to look into China.”
Netflix struggling in Asian markets?
Netflix is attempting to counter slowing growth in the U.S., and in January, it expanded its services to over 130 new markets. The streaming service is still not in the planet’s most crowded nation, China, where content providers face stringent controls and censorship challenges. Also the U.S. firm has struggled to make progress in other substantial Asian markets. For example, in South Korea and Indonesia, it has struggled because of a lack of local content and regulatory obstacles.
“The weakest point for Netflix according to people is the local content but that’s because we require time to learn not just the market and the box office as well as about what and how Korean people watch,” Sarandos told reporters in response to a question about their strategy in South Korea.
Without explaining much, Sarandos said that to improve its offerings, Netflix is looking at various investment opportunities in Asia. In April, the streaming giant forecast weaker-than-expected U.S. and global subscriber growth for the second quarter, thus underscoring its need to grow.
Concerns about subscriber growth overblown
Netflix was up Wednesday after Pacific Crest recommended the stock as a buy, citing decreased risk to subscribers increments in the second quarter.
In a note, Pacific Crest analysts stated, “Netflix’s forceful movement to full global allocation has energized uncertainty that currently now elevated by concerns about Q2 domestic subs and full- year international subs. We believe this concern is overdone.”
Many analysts have raised concerns about slower U.S. net additions growth owing to cost increments and deceleration in international net addition growth after the initial global launch. However, Pacific Crest analysts said they could not come up with anything to suggest “a material change” in the domestic subscriber growth pace. The analysts expect international subscriber growth to reaccelerate in the third quarter. They believe the second quarter will be impacted “via seasonality and elevated churn taking after the global launch in Q1.”
Pacific Crest kept an Overweight rating on the stock with a price target of $130. The streaming firm is likely to release its 2016 fiscal second quarter results on July 18 after the market close.
At 9:50 a.m. Eastern, Netflix shares were down 0.78% at $90.35. Year to date, the stock is down more than 22%, while in the last year, it is down almost 4%.
