Tim Gong Yu is the founder and CEO of iQiYi, China’s largest video streaming service. His comments in an interview with The Hollywood Reporter reveal how limited Netflix’s prospects in the Chinese market really are.
Entry into China’s billion-consumer market is the cornerstone for many companies’ growth strategies. Not so much for Netflix. The Chinese government bans media companies from doing business in China directly. It also caps the amount of foreign content that Chinese companies can serve.
Gong said that Netflix would struggle in China even with an open market. “I think the culture gap would pose a big problem,” Gong said. “They would have a lot of catching up to do.”
iQiYi and Netflix Originals
Since it couldn’t enter the Chinese market directly, Netflix inked a deal with iQiYi that licenses Netflix original content for streaming in China. Gong told The Hollywood Reporter that it isn’t any different from iQiYi’s deal with Disney. “It’s only perceived as different because of how people view Netflix,” Gong observed while adding that the volume of business with Netflix “hasn’t been much yet.”
Gong played down prospects for iQiYi originals on Netflix. The company’s international strategy focuses on “overseas Chinese viewers” rather than foreign markets. “When we have some content that fits Netflix’s user base,” Gong added, “we expect to distribute some to Netflix.”
China Restricts Foreign Content
Even within the limited relationship between iQiYi and Netflix, the American company experiences challenges getting its content to Chinese viewers. China tightened restrictions on foreign media content earlier this year. A few days after the Netflix-iQiYi deal went into effect, Bloomberg reported, the Chinese government ordered iQiYi to pull all episodes of BoJack Horseman.
Censorship, foreign content caps, and outright bans on doing business in China won’t change anytime soon. That leaves little room for Netflix to maneuver as it tries to expand its presence in China.