‘Squid Game’ boosts Netflix’s third-quarter subscriber growth

The breakout success of Squid Game helped Netflix to double its new subscribers from a year earlier, exceeding forecasts and signalling a stronger finish to the year as it releases a flood of new movies and television shows.

The hit South Korean drama, released in September, has been the video streaming service’s biggest-ever series launch, reaching more than 142m viewers globally. Netflix projected it would add 8.5m subscribers in the fourth quarter of this year, above the 8.33m expected by Wall Street, and reach 18.4m new viewers for the year.

Most new subscriber growth came outside the US, with the Asia-Pacific region contributing 2.2m in paid net new subscribers.

Netflix’s growth slowed in the first half of the year, as Covid-19 related production delays dented the number of new shows on offer. Competition from studio-owned video streaming services also picked up, with Disney Plus, HBO Max and others launching aggressive campaigns to capture the attention of locked-down viewers.

But Netflix has regained momentum with Squid Game, a surprise hit released on September 17 that the company says has become its biggest TV show. It said demand for Squid Game merchandise was high and it had started shipping consumer products to retailers.

Netflix has been criticised for mishandling the controversy that followed the third-quarter release of its latest stand-up special by the comedian Dave Chappelle, The Closer. Ted Sarandos, co-chief executive, has stood by the show, which has been condemned as transphobic. Some Netflix employees are threatening to walk out on Wednesday in protest.

Netflix said it expected to see the “positive effect of a stronger slate” of programming in the second half of the year, including the big-budget action film Red Notice, starring Dwayne Johnson, Gal Gadot and Ryan Reynolds, and Don’t Look Up, featuring Leonardo DiCaprio, Jennifer Lawrence and other A-listers.

“We’re in uncharted territory,” said Reed Hastings, co-chief executive. “We have so much content coming [in the fourth quarter], like we’ve never had.”

The company said it had started testing its nascent games business, which it expanded in the third quarter with the acquisition of the game producer Night School Studio.

Company officials said the push into gaming was very early, but the goal was to offer a service without the unpopular features on other platforms such as ads and in-game monetisation.

Hastings said he hoped the company would soon be able to create a “whole experience”, where a hit show such as Squid Game could spin off a successful consumer product offering and a video game.

“A company like Disney is ahead of us in putting the whole experience together,” he said. “In the next three to five years we want to catch up and maybe pass them on the all-round experience.”

Without further Covid disruptions, Netflix said it expected to release more original programming in 2022 than it had this year. In a research note, analysts at Morgan Stanley projected the company would have better subscriber growth next year, with net additions of roughly 25m.

Shares in Netflix, which have underperformed the broader market so far this year, fell 1 per cent in after-hours trading.

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