Netflix has been lingering on China’s doorstep for a long time, unable to navigate the minefield of local content regulation laws, but that could be about to change.
LeEco, one of China’s largest internet firms, hinted on Tuesday they are planning “very significant cooperation” with the company, to be announced this year. Liu Hong, co-founder and vice chairman of LeEco revealed the partnership at an event in Beijing.
LeEco has set a September deadline for a US event after a two-month delay, where they are expected to outline their strategy for North America. The Chinese company recently purchased a site in Santa Clara for their US headquarters.
The news of the Netflix cooperation comes a week after LeEco announced the US$2 billion purchase of US consumer electronics company Vizio. LeEco said the company’s “steady install base of users” was one of the factors driving the purchase, something Netflix can also offer.
Despite being frequently dubbed the Netflix of China, LeEco is a much more complex company (and would probably reject the comparison). LeEco has expanded heavily outside their core streaming service into smartphones, smart TVs and even connected cars.
China’s tough regulatory environment has deterred Netflix from a direct entry, even as they expand heavily into other Asian countries. In September the US entertainment company announced a wide scale Asia launch, which included South Korea, Singapore, Hong Kong and Taiwan, following an earlier launch in Japan. One of the issues facing Netflix is that TV shows in China are required to release entire seasons to Chinese censors prior to their air date. Shows deemed inappropriately sexual or in contradiction with the government ideals are either edited or banned.
A partnership with LeEco could give Netflix the channel into the country they’ve been looking for. Netflix was rumoured to be in cooperation Alibaba in the past, but the Chinese e-commerce giant has since launched their own subscription streaming service, Tmall Box Office (TBO).
US companies have been under increasing pressure to seal high-level partnerships to enter the Chinese market, rather than attempting a solo expansion. Uber, which set a new benchmark for US companies seeking to localise in China, finally threw in the towel and sold their entire China operation to Chinese competitor Didi Chuxing.