Netflix, Inc. To Follow Its Traditional Ad-Free Model In China: CEO

Netflix, Inc. To Follow Its Traditional Ad-Free Model In China: CEO
NFLX Photo by Matt Perreault

Netflix is continuing with its global expansion strategy, and China seems to be the next challenge. To meet this challenge, the streaming company has decided to offer a commercial free subscription video streaming service in the region, according to Reuters.

Netflix exploring various options

To succeed in China, Netflix has chosen to move ahead with its traditional business model, rather than seeking advertisers, CEO Reed Hastings noted on Wednesday.

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“Our focus and our expertise are really in commercial free,” Hastings said. “That may confine us to being only part of the market the first couple years, but that’s what we would do.”

This is in contrast to previous hints given by the company, when it said it planned to offer “modest” content in the region provided it is able to secure permission to operate in China. Chinese viewers generally watch free entertainment, which is supported by ads or is acquired illegally through piracy. Netflix provides commercial-free on-demand TV shows and movies to the viewers in exchange for a subscription fee.

Contradicts previous comments from Sarandos

The Netflix CEO also said that the company is evaluating different options for China including talking to the U.S. companies that have had “success and difficulty in China and Chinese companies.” Such comment from the CEO are in contrast to the comments made by the company’s chief content officer, Ted Sarandos, last month, when he said that the company will go without a local partner in China. However, on Wednesday, Sarandos retracted his comments, and said they were “a little bit out of context.”

At present, Netflix is offering its video streaming services in as many as 50 countries, and it hopes that by the end of 2016 it will be able to offer its services in about 200 countries. The company has an effective strategy, and is also adding new original shows to its portfolio of content. At the same time, it is making shows available for viewers of all age groups as well as in several different languages to cater to the needs of specific countries. At the end of the March quarter, the company hit 62.3 million streaming subscribers, above the firm’s own guidance.

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