Netflix Giving Up for Now Trying to Expand Service Into China, Company Says

Netflix is giving up for now trying to expand its service into China because “the regulatory environment for foreign digital content services in China has become challenging,” the company said Monday in its quarterly letter to shareholders. “We now plan to license content to existing online service providers in China rather than operate our own service in China in the near term. We expect revenue from this licensing will be modest. We still have a long term desire to serve the Chinese people directly, and hope to launch our service in China eventually." In Q3, quarterly global streaming revenue at Netflix exceeded $2 billion for the first time, the company said. Netflix estimated 40 percent of its Q3 streaming revenue was “generated abroad.” The company is now in the fourth year of its “original content strategy” and is “pleased with our progress,” it said. Netflix plans to release more than 1,000 hours of “premium original programming” in 2017, up from over 600 hours this year, it said. The internet “allows us to reach audiences all over the world and, with a growing base of over 86 million members, there’s a large appetite for entertainment and a diversity of tastes to satisfy,” it said. Netflix faces “immense competition for consumer screen time,” the letter said. “Our challenge is to continue to improve our service and content so that we better meet consumer desires. Total screen time is quite large and growing as technology and content improve globally.” In after-hours trading Monday, Netflix shares jumped 20 percent to $119.39, presumably because Q3 subscriber additions exceeded forecasts in the U.S. and internationally.