Netflix Inc is in talks with a Chinese media company backed by Jack Ma (馬雲) and other possible partners as it seeks entry into the country’s US$5.9 billion online video market, according to people familiar with the matter.
Netflix has held discussions with companies including Wasu Media Holding Co (華數傳媒) about forming a partnership, said the people, who asked not to be identified because the talks are private.
Netflix plans “to be nearly global by the end of 2016,” a spokeswoman, Anne Marie Squeo, said in response to questions about a possible China partnership.
Entering China would allow the broadcaster of House of Cards and Orange is the New Black to take advantage of what is forecast to be explosive growth in online television in the nation of 1.4 billion people. The market is expected to almost triple to 90 billion yuan by 2018, according to Shanghai-based Internet consultant IResearch.
Wasu’s Shenzhen-traded shares, which had been down as much as 10 percent in the morning, reversed declines and briefly rose to a record after the news came out, and closed little changed.
A local partnership would be essential given the Chinese government’s strict controls over licensing for online content. Netflix wants a partner that has licenses for content on all devices — including mobile phones, computers and set-top boxes, according to the people. China’s State Administration of Press, Publication, Radio, Film and Television has given Internet TV licenses to seven companies, including Wasu.
Netflix, based in Los Gatos, California, is investing heavily in original programming to keep the US business growing and support international expansion. Chief content officer Ted Sarandos told an investor conference on Wednesday that Netflix intends to “try to figure out China and how to get there.” The company does not intend to go to China without a partner, he said.
“We’re open to all different models to get there eventually, because we want to be fully global,” he said. “And it’s a pretty big chunk of the world to have an asterisk.”
Netflix would need to sort out content censorship regulations with Chinese authorities. Starting last month, new episodes of foreign programs — including Mad Men and The Simpsons — cannot be shown until after the shows’ seasons have ended, according to a government notice.
Episodes need to be handed in to censors for approval, and content deemed violent, sexual or offensive to the ruling party can be cut, according to notices.
Wasu, one of the first in China to receive an Internet TV license from the government, has been working with Ma’s Alibaba Group Holding Ltd (阿里巴巴) to produce set-top boxes since 2013. Wasu operates cable TV and broadband networks in Hangzhou, where Alibaba is based.
Wasu said in April last year it would sell a 20 percent stake to Alibaba chairman Ma and fellow billionaire Shi Yuzhu (史玉柱).
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