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‘Squid Game’ frenzy helps Netflix top subscriber targets

squid game

Global interest in Netflix Inc’s (NFLX.O) Korean thriller “Squid Game” helped lure more new customers than expected, the world’s largest streaming service said on Tuesday, adding that a heavy programming lineup should help boost signups through the end of the year.

After a sharp slowdown in the first half of 2021, Netflix added 4.38 million subscribers from July through September to reach 213.6 million worldwide. Wall Street analysts had projected 3.86 million additions, according to Refinitiv data.

Netflix enjoyed a subscriber boom last year as COVID-19 kept audiences at home, but growth stalled early this year. At the same time, Walt Disney Co’s (DIS.N) Disney+, AT&T Inc’s (T.N) HBO Max and other competitors bolstered their offerings. Netflix blamed the earlier weakness in part on a thin slate of new programming caused by production shutdowns from the pandemic.

Then, “Squid Game” debuted on Sept. 17 and surprised executives by becoming the streaming service’s most-watched original series in its first month. On Tuesday, Netflix said 142 million households had watched the dark drama about people who compete in a deadly competition to erase financial debt.

The series shot to the top of Netflix viewing charts in 94 countries, kick-started sales of track suits and Vans sneakers, and kindled interest in learning Korean. “Squid Game” merchandise is now on its way to retailers, Netflix said.

The fervor around “Squid Game” also is expected to lift the current quarter. Netflix projected it will pick up 8.5 million new customers by year’s end, ahead of industry forecasts of 8.33 million, as the pace of new releases accelerates. Upcoming debuts include big-budget action flick “Red Notice” and a second season of fantasy drama “The Witcher.”

“We’re very excited to finish the year with what we expect to be our strongest Q4 content offering yet,” the company said in its quarterly letter to shareholders.

It also expects a “more normalized” programming slate in 2022 spread throughout the year, “assuming no new COVID waves or unforeseen events,” the letter said.

Shares of Netflix were close to even in after-hours trading at $641 following the earnings report.

OVERSEAS GROWTH

The company’s biggest growth is coming from outside the United States and Canada. Netflix is trying new ways to attract customers, including offering a free plan in Kenya. It will take one to two years to tell if that tactic leads to more paying subscribers, Netflix said on Tuesday.

For the quarter that ended in September, diluted earnings-per-share came in at $3.19, beating analyst expectations of $2.57. Revenue rose 16 per cent to $7.5 billion.

Before the earnings report, Netflix shares had risen roughly 22 per cent this year and were trading near record highs, but their gains lag behind the 54 per cent increase in the Nasdaq.

Netflix, which keeps much of its viewership data secret, also said it will release information more frequently and shift its main publicly reported metric to hours viewed, rather than the number of accounts that watched a title for at least 2 minutes.

The company noted that it competes with a large set of activities beyond TV including TikTok and Fortnite. When Facebook Inc (FB.O) suffered a global outage in early October, “our engagement saw a 14 per cent increase during this time period,” Netflix said.

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