Stranger Things Is the Reason Netflix Ditched China, And the New Season Will Keep It That Way

One of Netflix’s biggest hits Stranger Things is entering its third season with great fanfare, but our love for the series, even though sincere, is also slightly bitter. It is this show that threw us back to our childhoods and proved that family adventure films are not doomed to mediocrity. But for those of us making a living here in the Middle Kingdom, it is also one of the reasons we have to struggle with VPNs and shady subscription schemes every time we want to, quite literally, Netflix and chill.

Back in 2016, when Netflix rolled out the first season of the sci-fi horror teen drama, the company was still earnestly contemplating its prospects in China. The streaming service was scrounging for new subscribers and China with its enormous population seemed like an unmissable target. Yet it all changed with the premiere of Stranger Things (and several other positively received shows like Narcos) that helped the service rack up over 3.5 million new subscribers within just three months. 

Original content allowed Netflix to shake off the dust of the on-demand video era and venture out into the territories previously exclusively controlled by television. The success of its very first original show House of Cards was a clear signal to keep going, and Netflix kept going. High quality original productions, although costly, were an efficient way of attracting new viewership and luring in new subscribers in company’s key markets, while at the same time avoiding hostile directions like China, where severe competition would inflate the acquisition price per new customer. Stranger Things came at a time when Netflix was in desperate need of a new subscriber injection and was preparing to hand the syringe to China regardless of the costs, but the popularity of the show suddenly solved the pressing issue. 

For years original content production had been keeping Netflix afloat by ensuring steady subscriber growth with numbers soaring by 3-9 million every year and reaching over 148 million in 2019, which is not to say that the company makes mind-blowing profits. Well, technically it does, but it also spends billions of dollars a year on original shows to keep growing. And the truth is that its spending exceeds its profits by a huge margin, which is not likely to change in the near future. Up until now original content was just a bait for users, who came for Stranger Things but stayed for Marvel blockbusters and a full collection of vapid Adam Sandler flicks. But with all the major entertainment companies out there starting streaming services of their own and pulling content from Netflix, original productions are nothing but a means of survival.

Netflix is expected to spend roughly $15 billion on programming in 2018, up from $12 billion in 2018. The company is hectically trying to transition from being an online film library to somewhat of a new generation cable channel. And at turbulent times like this, securing a solid foothold in its key markets is what dominates the agenda. The new season of Stranger Things is there to make sure that the millions of people who once came to Netflix for the show, will stay there instead of defecting for a tempting Disney+ subscription. 

Needless to say, with so much competition at home, there’s little chance that the company would risk to step into a market full of very mature and successful competitors like Tencent Video or the Baidu-backed iQiyi. Netflix needs to settle all its domestic battles, before it can afford to wade into an international one. So, China will mostly likely need to wait a little longer for its share of addictive western online entertainment.