Instead of operating its own business in China, Netflix will license existing local operators to stream its content. (Photo : Getty Images)
Netflix is temporarily giving up on its dreams to conquer the Chinese market due to a "challenging" regulatory environment.
The online streaming service provider has long expressed its intent to pursue China, whose market is said to challenge that of the U.S.
In a shareholders letter released recently, Netflix said that it will only "license content to existing online service providers in China" instead of operating its own business there.
China is known for imposing strict regulations on imported content, making it harder for foreign companies, most recently Apple, to penetrate its market.
Netflix's decision to halt its plans in China comes as no surprise. In an interview with The New Yorker editor David Remnick, Netflix CEO Reed Hastings said that the company's future in the country "does not look good.
"We are figuring our way out (in China), but we are really focused on the rest of the world. There is so much opportunity for us in India, Poland, Turkey and Latin America and Vietnam," told Hastings. He also cited Apple and Disney's recent setbacks as reasons why Netflix is still not in China, the world's second-largest economy.
Still, the company is not closing its doors to a possible negotiation with Chinese regulators in the future.
"We still have a long term desire to serve the Chinese people directly, and hope to launch our service in China eventually," the company reiterated.
Netflix reported that it added 400,000 subscribers in the U.S. in the third quarter and 3.2 million members internationally for the same time period. For the last nine months, the company signed 12 million global members.
Netflix rolled out its services to 130 countries in January, making its reach officially available to more 190 countries in total.
After releasing its third-quarter results, Netflix scored a 19 percent boost in its stock price.
