Can Netflix Jumpstart the Streaming Revolution in China?

April 25, 2017 by Chris Lange

Netflix Inc. (NASDAQ: NFLX) saw its shares rise handily in Tuesday’s session after it was announced that the online streaming company is in talks with Baidu Inc. (NASDAQ: BIDU) subsidiary iQiyi. In fact Netflix shares hit an all-time high once these talks became public.

Some sources say that these two companies have reached a distribution deal for Netflix content to be offered in China via iQiyi. Through this deal Netflix is looking to build brand awareness in this massive market.

China has long been a target for Netflix and is seemingly the last major market that the company has not officially entered. With a population of over a billion, this market could easily push Netflix viewership to a level unseen before. Last year Netflix reached 130 countries, with China not making an appearance on that list.

As recently as Friday, Netflix CEO Reed Hastings reported that the company had reached 100 million subscribers worldwide, which could only be a drop in the bucket if China comes online.

However, this is not the only agreement going down in China. Other companies are cutting deals and trying to break into the space as well. Notably Disney has tried to gain a foothold in the Chinese market via Alibaba.

Other companies like Time Warner and Lions Gate already have deals in place to distribute films online in China. But Netflix could help to bring about a streaming revolution for the People’s Republic.

Shares of Netflix were trading up 6.5% at $153.22 on Tuesday, with a consensus analyst price target of $154.97 and a 52-week trading range of $84.50 to $153.42.

Baidu traded up 3.8% at $186.87. The 52-week range is $155.28 to $201.00, and the consensus price target is $194.09.

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