Netflix Abandons China Launch Plans

Streaming giant cites challenges in “regulatory environment for foreign digital content services”

Last Updated: October 17, 2016 @ 3:31 PM

Netflix has decided to drop its plan to launch in China for now, the streaming service announced during its third-quarter earnings report after markets closed Monday.

“The regulatory environment for foreign digital content services in China has become challenging,” Netflix said in a statement. “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.”

The company said it expects “modest” revenue from its licensing plans.

“We still have a long term desire to serve the Chinese people directly, and hope to launch our service in China eventually,” the statement said.

Netflix’ stock soared Monday afternoon after it announced earnings that exceeded expectations — helped by hit shows such as “Stranger Things”  and “Narcos,” which the company touted as major drivers behind its increase in subscribers over the last three months. The streaming giant counted 86.74 million subscribers as of Sept. 30, 2016, more than the 85.48 million it had internally anticipated.

Netflix also reported earnings of 12 cents a share, which topped Wall Street’s consensus estimate of 6 cents a share. Revenue, however, fell short of the expected $2.28 billion forecast by analysts, clocking in at $2.16 billion.

The good news caused the streaming company’s stock to spike, jumping nearly 20 percent after earnings were released.