What Happened
Netflix announced on Tuesday that it has signed a content licensing deal with IQiyi, one of China’s biggest OTT streaming services and a subsidiary of the country’s search giant Baidu. Details of the agreement are still scarce at the moment, but it seems most likely that Netflix’s original content will be able to get into the Chinese market as a result.
This announcement practically indicates that Netflix has officially given up on entering the Chinese market directly as a service provider. This deal will allow it to bypass China’s regulatory roadblocks while also allow it to open up a new revenue stream. It is worth noting that iQiyi itself is in the midst of transitioning from an ad-supported video platform to a subscription model similar to Netflix.
What Brands Need To Know
The open nature of the internet has made it possible for content platforms to reach customers across national borders, and the proliferation of smartphones has granted internet access for more customers than broadband ever did. These new digital mega channels, led by Netflix, the self-proclaimed first global TV network, reflect an increasingly globally homogenizing consumer culture and interconnected communities.
This allows brands to reach customers across the globe that have more in common in terms of their interests and media habits than their geography. Although Netflix is an ad-free subscription service, it does allow product placement in its original shows such as House of Cards. Plus, there are several other smaller yet global-reaching platforms such as musical.ly and Twitch that are much more open to brands.
For more in-depth analysis how brands can leverage global mega-channels and niche micro-channels to effectively reach key audiences, check out the Global Culture section of our Outlook 2017.
Source: The Hollywood Reporter