Netflix in Talks With Alibaba-backed Wasu Media About China Partnership

Netflix Daredevil - H 2015

Netflix Daredevil - H 2015

Netflix is looking for local partners to help negotiate the country's thorny regulatory environment.

Netflix is talking to Wasu Media, a Chinese media group backed by Alibaba chief Jack Ma, and other possible partners, as it tries to access the Chinese online video market, Bloomberg reported.

China is the world's largest Internet market with 649 million users, with 60 percent of the audience using smartphones and tablets to watch. The online video market is worth an estimated $6 billion.

Licenses for online content are strictly controlled by the government and the regulator, the State Administration of Press, Publication, Radio, Film and Television (SAPPRFT) has given Internet TV licenses to seven companies, including Wasu.

Wasu, which operates cable TV and broadband networks in Hangzhou, where Alibaba is based, has been working with Ma's company to produce set-top boxes since 2013.

Netflix wants a partner that has licenses for content on all devices -- including mobile phones, computers and set-top boxes, Bloomberg quoted people close to the talks as saying.

Earlier this year, Netflix Chief Content Officer Ted Sarandos said it was planning to go it alone in its attempt to break into the booming China market, but Sarandos qualified these remarks this week, saying the company intended to "try to figure out China and how to get there", and that the company doesn’t intend to go to China without a partner.

Netflix plans "to be nearly global by the end of 2016," a spokeswoman, Anne Marie Squeo, told Bloomberg.

Despite being an attractive market, China can be difficult on the regulatory side -- Google, YouTube, Facebook and Twitter are all blocked.

Under rules introduced in April, foreign TV shows wishing to screen online must get censorship approval for the whole season before they can be broadcast. This suits Netflix in some ways, as shows like DaredevilHouse of Cards and Marco Polo are all produced a whole series at a time, unlike other shows which shoot every week.

Local rivals such as iQiyi and Tencent are already streaming many overseas shows in China.