Credit: Shutterstock photoNetflix, Inc.NFLX CEO yesterday provided some updates regarding the company's expansion into China and his vision of using artificial intelligence technologies for growth at the ongoing DLD Conference in Munich.
CEO Reed Hastings stated that "It may be soon that we have a license in China, or it may take a couple years, but we're going to be very patient." Netflix recently expanded to over 190 countries across the globe but it has not been able to enter China. It has been in talks with the Chinese government and other partners like Wasu Media Holding Co. to enter the online video market over there.
China with a population of over 1.3 billion and a growing middle class would be an important market for Netflix. According to a recent iResearch report (Dec 2015), the online video market in China was worth approximately $1.3 billion (8.29 billion Yuan) in the second quarter of 2015, marking an increase of 34.7% year over year and 24.6% on a sequential basis.
Despite the scope for growth, Netflix has not been able to capitalize on the opportunity owing to stringent government regulations. However, the company has been putting in a lot of effort to make its service available in the region. Last week, Netflix started taking measures to stop proxy users from accessing content not available in their own country.
This move specifically came as a blow for China-based users who earlier could get access to Netflix content by using VPN and other proxies. According to certain research reports, about 30% of the total Netflix users in 2014 were based in China. By blocking them, the company will be indirectly putting pressure on the government in these regions to allow it to stream officially.
Apart from China, another important market for Netflix is India. Hastings commented that the scope for growth in India is significant given the increasing investment in broadband network by the government.
Additionally, referring to his plans of enhancing its offerings through artificial intelligence, Hastings said "Future of intelligence is a race brewing between carbon-based lifeforms and silicon-based lifeforms." The company is already using advanced data analytics and machine learning tools to analyze the performance of each of its programs. This allows the company to take better decisions. In fact, the company's top performing original programs like Orange is the New Black and House of Cards have benefited hugely from the insights drawn from analyzing data.
Currently, Netflix has a Zacks Rank #3 (Hold). Better-ranked stocks in the space include The E. W. Scripps Company SSP , GrupoTelevisa, S.A.B. TV and NTN Buzztime Inc. NTN . All three carry a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days . Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
NETFLIX INC (NFLX): Free Stock Analysis Report
GRUPO TELEVISA (TV): Free Stock Analysis Report
NTN BUZZTIME (NTN): Free Stock Analysis Report
EW SCRIPPS CO (SSP): Free Stock Analysis Report
To read this article on Zacks.com click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
