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China can have 'tremendous' upside for Netflix, analyst says

Netflix will face some unique challenges when it enters China, but the upside can be quite tremendous for the video-streaming service, analyst Tuna Amobi said Thursday.

His comments come on the heels of a statement by Netflix's chief content officer, Ted Sarandos, who said Thursday the company will "continue to look into China."

"For Netflix, I think it's probably going to be a marathon, not a sprint. This is a market that requires a lot of patience," said Amobi, senior media and equity analyst for S&P Global Market Intelligence.


Netflix on computer
Andrew Harrer | Bloomberg | Getty Images

He told CNBC's "Closing Bell" he expects Netflix to announce its specific China strategy in the second half of this year, and believes the company will be more open-minded when it comes to things like joint ventures.

It will face competition not only from internet giants like Alibaba, but also from a host of local players, he said. There are also unique issues, he added, like the fact that the broadband speeds in China are not as high as the U.S.

"They are moving in the right direction, and if Netflix can be very smart about how they launch or whom they partner with, I think there is really tremendous upside here," said Amobi, who has a "buy" rating and a 12-month target price of $120 on Netflix.

In fact, he believes everything is in place for Netflix to deliver on its international expansion strategy.

"If they can get through this year, 2016, we think it really sets them up well to really expand on their profitability and be able to grow subscribers, potentially reaching 100 million subscribers worldwide in the next few years," he said.

— Reuters contributed to this report.