Still, there could be some benefits in store for Netflix from the deal.
“This is the largest market in the world … What they’re hoping to do, I think, is to get the Netflix branding and programming into a market legally,” Wang said, adding that entering the market before other Western competitors could be good for Netflix in the long term.
As for why shares of the company rose almost 6 percent after news of the licensing deal broke, Wang said it was possible that investors simply did not realize what the terms of the agreement were.
“They were probably reacting to the fact that (Netflix) was now in one of the largest consumer markets in the world,” Wang said.
“Partnering is the only way for distribution to get into this market and it’s still at best risky, which is why I can understand why (Netflix CEO) Reed Hastings has been very cautious (in) talking about things being immaterial in that market,” Wang added.
