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Netflix shares fall after Alibaba’s plan is revealed

Netflix shares fall after Alibaba’s plan is revealed

Shares of Netflix fell Monday after Alibaba Group Holding revealed its plans to introduce a similar video streaming service in China. Netflix fell 1.8% to $649.28 in early afternoon trading. The planned streaming service by Alibaba, China’s e-commerce giant founded by Jack Ma, will be launched in about two months and is aimed at fending off potential competition from Netflix and HBO, which have international ambitions.netflix-building-fromap

Called “TBO”, or Tmall Box Office, it’ll produce its own content and also license movies and TV shows from China and other countries, according to a report Sunday by Reuters, citing Alibaba’s digital entertainment chief Patrick Liu in Shanghai. “Our goal is to become like Netflix in the U.S, HBO in the U.S.,” Liu said.

Netflix has about 20 million subscribers outside the U.S., or one-third of its total customer base. With cable networks playing hardball and more streaming service options flooding the market, Netflix has turned to original content production and international markets for sustaining revenue growth. In the first quarter, revenue from markets abroad — including Brazil, Germany, the U.K. and dozens of others — grew 55% year-over-year to $415 million.

In March, Netflix’s Chief Content Officer Ted Sarandos told reporters in China that the company is eager to enter the world’s largest consumer market, but would like to try it without a local partner, Reuters reported. While the go-alone strategy would give Netflix more control in marketing and product release, conducting business in the country, where piracy and censorship are rampant, is notoriously difficult and rife with operational and regulatory challenges. Sarandos said Netflix would need about eight different licenses to launch in China, Reuters reported.