Netfllix is having a hard time penetrating the Chinese market. (Photo : Getty Images)
The stumbling block of the company is mainly due to the monopoly of Chinese companies and internet restrictions.
The company wanted to offer to a stream of "House of Cards" to mainland China, with a potential profit of $14 billion in three years. However, content was banned and government regulations seemed to be in favor of Alibaba, Tencent Holdings, and Baidu Inc.
With 1.4 billion consumers and 360 billion broadband subscribers, Netflix has been trying to penetrate the Chinese market in a slow and steady pace. But they can only be seen in Taiwan, Hong Kong, and Macau, which are only small portions of the Chinese market.
Netflix intends to start with movie distribution in these three areas. To date, they have nearly 800 movies and 300 TV shows in each of these territories, according to the unofficial Netflix online Global Search service.
Netflix CEO Reed Hastings said that the company is taking its time and conducted talks with Chinese companies and with the government.
"Our efforts in China are modest. We're on a slow and steady path," he said.
While Netflix held preliminary talks with Jack Ma, Alibaba bought Youku Tudou, Inc. to show HBO programs. Tencent is streaming live NBA shows and Badu's IQiyi is streaming HBO content as well.
According to internet consultancy firm IResearch, China's online video market will be valued at 90 billion yuan or $13.7 billion by 2018.
Netflix will have to contend with China's censorship laws as well. Most of their movies will have to go through the government before release. However, Hastings is not worried.
"We're not really controversial like a sharing service like YouTube," he said, "We're more like Disney or Starbucks as an entertainment and lifestyle service."
