Netflix, LeEco deal seen as path to China TVs

Netflix's content deal with Chinese streaming platform LeEco lays the foundation for what could be the streaming giant's eventual entry into the Chinese market, industry observers said.

For the Los Gatos, California-based Netflix, it has been no secret that it hopes to make its platform available worldwide, just like the company has been open about its difficulties in gaining a foothold in China.

Analysts see its content-distribution deal with the Beijing-based LeEco (formerly known as LeTV) as a partnership with a domestic company that could make China an eventual reality for Netflix, where its original productions are currently already being watched by millions. The deal is to be formally announced in the third quarter, according to Liu Hong, LeEco's co-founder and vice-chairman.

"Since Netflix announced in January it has a near global presence, China has been the big blank spot on the global Netflix map. Netflix needs a partner in China to achieve its global ambitions," said Eric Harwit, an Asian studies professor at the University of Hawaii.

"If Netflix can work with LeEco and Chinese regulators to craft a Netflix role in China that would be acceptable to government officials, we could see the American company moving into the market in some form," he said.

The deal will most likely be for Netflix-owned content to stream on LeEco's platform in the US, where the Chinese company has been making moves to set up local headquarters, so it won't yield Netflix any automatic gains in China, but experts said it will no doubt eventually lead to Netflix's entry there.

"A first market to tap would be Chinese users who come to the US, like foreign students. The other reason would be to establish this partnership framework for future collaborative content production or future distribution" said Aynne Kokas, media studies professor at the University of Virginia.

"But I think one of the things we can see particularly with Uber's exit from the Chinese market is that there really doesn't seem to be an end to the difficulties that US platforms are having in the Chinese market," she said. "And I think if anything the terms of the deal would suggest that Netflix is ceding some ground - not a large amount - in markets in which they are very competitive in order to have greater long-term access to China in the future. It points to the types of tradeoffs that American companies are willing to make."

amyhe@chinadailyusa.com