Netflix In China Case Study

Netflix’s market entry strategy: Licensing

Depending on circumstances, situations and conditions, a company determines which type of mode of entry it will choose. Companies which want to go global, have different modes of entry to choose from mainly licensing, joint venture or foreign direct investment (FDI) (Hollensen, 2007). The Chinese government is not very flexible and do not allow streaming companies to have some leeway. Netflix is no exception to the rule. As just said, without a license, streaming companies cannot operate in the country and only 7 Chinese media and entertainment companies currently have this license. It is obvious that if Netflix wanted to operate in China, the company needed to have a partnership with an

Because of the very strict rules imposed on foreign companies in China, Netflix has had to face a double challenge: to respect the Chinese regulations and to satisfy customers as much as possible. In its domestic market, the streaming company’s main goal is giving an access to different movies and television shows which are sometimes updated daily or weekly to meet the customers wants. In China, each content is subject to control, making it impossible to provide an episode of the same series every Thursday of each week for example, as Netflix is used to doing in other countries such as England or Germany. However, this kind of censorship is not totally new to Netflix. Indeed, the company has already pixelated sex and nudity scenes in Japan because it was required. In order to overcome these restrictions and to conform with local broadcast standards, Netflix would probably use an adaptation strategy that is to say creating high-quality original programs such as movies or series in Chinese language like the company is already doing in European countries amongst others. These new exclusive programs will have to be adapted to the Chinese culture which is a real challenge since understanding culture is one of the most difficult part in an international expansion (Hollensen, 2007). According to Geert Hofstede (cited in Hollensen, 2007) “culture is the collective programming of the mind which distinguishes the members of one human group from another”. Some audiences like Chinese prefer streaming content produced in their native language. Considering this, the difficulty for Netflix is to prove that they can offer quality original programs in Chinese and justify its price. Another major obstacle in Netflix's expanding into China is piracy. This issue has a huge impact on the attractiveness of