Can Netflix's crazy global expansion strategy shake the foundation of the Chinese market?

At the beginning of 2015, Netflix, which had invested $9.5 billion in its plan to dominate the entire global streaming video market, finally announced that it would accelerate its global expansion and had included the Chinese market in its expansion.

Recently, Netflix released its fourth quarter and full-year financial report for fiscal year 2014. The report shows that both revenue, net profit, and total subscribers in the United States and other parts of the world have grown and increased significantly. In response, Netflix officially announced that it will promote its services to 200 countries and regions with broadband services in the world within the next two years, including the Chinese market.

However, can Netflix, which dominates the global market with its streaming video services, really adapt to the Chinese environment?

Free? Paid?

Netflix has made it clear that it will continue to replicate the current subscription-based, ad-free streaming service model during the implementation of its overseas expansion strategy, ensuring that it will continue to remain profitable while expanding. However, looking back at the Chinese online video market, although it has experienced rounds of industry reshuffles and corporate adjustments, the entire video website industry is still in the initial "free + advertising" model stage, and the dual model of "insertion + implantation" has made advertising revenue the largest source of income for video website companies.

Netflix's video service method is different from that of traditional domestic video websites. Whether in terms of user experience acceptance or the mainstream trend of the market, Netflix's road to entering China does not seem to be smooth.

Of course, Netflix has also made it clear that its plan to enter the Chinese market will maintain the principle of "moderation"; based on the actual environment, the streaming video services provided in the Chinese market will be limited to a smaller scale and will mainly focus on original and globally licensed content.

Netflix, which has become an international brand with its self-produced drama "House of Cards", has indeed provided a successful example based on the principle of big data for global video broadcasting platforms, and several major domestic video websites have also gradually turned to self-produced content to enhance brand differentiation in the past two years. However, compared with Netflix's self-produced dramas that have been selected for the American Film and Television Golden Globe Awards, the production level of my country's online self-produced dramas still needs to be improved.

More importantly, as the popularity of flat-screen TVs and Internet TVs has not seen significant growth, the promotion of streaming video services on the TV side may come under pressure from a shortage of device terminals, which will inevitably be a fatal flaw for Netflix, which mainly relies on a subscription payment model.

If we must find a business characteristic that is the same as the Chinese market for Netflix, which plans to enter China, it is that Netflix, which focuses on international streaming services, is still in an overall loss-making state, just like domestic video websites.

Radio and Television! License!

Netflix's determination to enter the Chinese market has made CEO Reed Hastings realize that licensing issues may be the primary problem restricting Netflix's expansion in the Chinese market. The current model that the domestic market can learn from is the cooperation between Internet TV service provider Youpengpule and licensee Southern Media.

But in fact, in addition to licenses, the supervision and review policies of radio and television will also be another headache for Netflix in the Chinese market.

At the end of last year, the State Administration of Radio, Film and Television issued the "Notice of the State Administration of Press, Publication, Radio, Film and Television on Further Implementation of Relevant Provisions on the Management of Online Foreign Films and TV Series". The notice stipulates that foreign film and television works must be reviewed before broadcast and managed locally, and cannot be broadcast live simultaneously. Starting from 2015, newly launched foreign film and television series must not receive a full season of the entire series and add subtitles before submitting for review. After passing the review, they must obtain an introduction license number before being broadcast online.

Recently, some netizens have reported that many American TV series have been removed from domestic video websites, including this year's new series and the latest seasons of old series. Both the broadcasting platforms and the related series have confirmed the existence and severity of the "foreign restriction order".

On the other hand, American TV series, which are known for their novel themes and large scale, may also be subject to substantial cuts and rejections by the State Administration of Radio, Film and Television. In particular, the content involving political systems, such as "House of Cards", and the suspected erotic and obscene dramas, such as "Masters of Sex", will not escape the "eyes" of radio, film and television. The opening drama "The Empress of China", which has just been re-released to "reduce the breasts", may be a typical lesson learned from the past.

But no matter how difficult the road to entering China is, if Netflix, whose domestic business growth has obviously slowed down, wants to truly succeed in expanding into the international market, the Chinese market, with its rapidly developing Internet TV industry and huge number of online video users, is an important overseas market target that it cannot ignore or give up.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.