Netflix is playing down the significance of its first major distribution deal in China

Netflix has played down the significance of its first major licensing deal in China, news of which was announced this week.

The company’s share price surged nearly six percent after it announced that it had agreed to a distribution deal with iQiyi, one of China’s largest video portals which was started by internet giant Baidu. The news was first revealed at the APOS 2017 event in Bali, where executives briefed selected entertainment media, but, rather interestingly, the partnership was officially announced today with a fairly major caveat.

Netflix said in a statement that “expectations of our deal are modest in scope.” It detailed also that the deal is remains subject to regulations that government online streaming content in the country. Further, it hasn’t revealed exactly which of its Original content will be broadcast in the country.

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Those aforementioned regulations could yet be significant. Regulations are thought to have nixed Apple’s iTunes Movies service, just six months after its launch in China, while concern around content rules is the chief reason why Amazon Prime and Netflix are not available locally in the market. Netflix said previously that it retains an interest in offering a local service in China, but for now it is going after distribution deals like this partnership with iQiyi, which has close to 500 million monthly viewers. From the company’s statements today, it seems like it is playing down its hopes for China despite investors and the market adopting a very bullish take.

The company is likely much more keen to trumpet that its userbase has passed 100 million paying members, with the percent of overseas users now up to around 50 percent. Speaking at an event in Bangkok this week, where Netflix launched a localized version of the service, executives told media that its total audience of viewers is estimated at around 250 million people, making it a major platform for storytellers across the world. To that end, the company said it is actively exploring distribution opportunities with content producers across Asia to get their work in front of its global userbase. Already, in Asia, it said it has commissioned original content from Korea, Indian and Indonesia.