Netflix announced better quarterly earnings and subscriber growth than projected on Tuesday, aided by the breakthrough hit “Squid Game.”
In its first four weeks, the Korean series, in which people starving for money enter a deadly race, was watched by 142 million households, according to Netflix, making it the most remarkable series debut in the company’s history. In 94 nations, including the United States, the show was ranked top.
Thanks to the show’s success, Netflix added 4.38 million members in the third quarter, up from 2.2 million a year ago. Analysts predicted that the firm would attract 3.78 million paying members in the third quarter.
In the third quarter, the streamer’s revenue increased 16 per cent year over year to $7.48 billion. The company’s net income increased to $1.45 billion from $790 million a year earlier, handily above expert expectations.
Netflix’s approach of increasing its investment in foreign language content and local stories has been validated by membership growth. The firm has greenlighted such titles as reality dating series “Indian Matchmaking” and German drama “Barbarians,” which have resonated internationally among its 214 million members, under the direction of Bela Bajaria who was elevated to president of global TV last year.
The film “Squid Game” was released on Sept. 17. Season 5 of the crime thriller “La Casa de Papel,” which was seen by 69 million households in the first four weeks, and Season 3 of the comedy “Sex Education,” which was seen by 55 million households in the first four weeks, were among the most popular titles in the quarter, according to Netflix.
During an earnings presentation, Netflix co-Chief Executive Ted Sarandos remarked, “Our team identified something that no one else did and created an environment for that creator to develop a fantastic programme.” During the event, his co-CEO Reed Hastings donned a “Squid Game” tracksuit.
“What we see in ‘Squid Game’ is years of execution on a well-planned approach,” Michael Morris, a senior managing director at Guggenheim Partners, said.
Some foreign-language shows are less expensive than American shows. Netflix, for example, spent $21.4 million for “Squid Game,” compared to $24.1 million for stand-up comedian Dave Chappelle’s special “The Closer,” according to Bloomberg. According to Bloomberg, “The Closer,” which premiered on Oct. 5, had a significantly lower audience of at least 10 million viewers.
Netflix has gotten a lot of reactions after Chappelle’s inflammatory statements regarding trans people in his unique, which some fear could lead to further violence against the trans community. Netflix’s attitude on the subject has been attacked by several artists, notably Australian comedian Hannah Gadsby.
Netflix said it has no plans to remove the programme since it does not promote violence. Some have applauded the corporation for supporting its employees’ creative visions, while others have chastised the streamer for failing to support its trans staff.
Trans employees at Netflix and their allies plan a walkout on Wednesday, followed by a rally in Hollywood. Netflix must include a disclaimer in front of transphobic content, according to one of their demands.
The scandal has had little impact on Wall Street’s business view, which saw its stock rise 0.2 per cent to $639 on Tuesday.
Monday, “The Closer” was ranked No. 8 among Netflix’s top 10 shows in the United States.
“Netflix’s brand seems like it came out on top,” said Larry Adams, CEO of LVA, a marketing firm in New York. “The fact is that a great partner stands by their creators.”
When questioned about the organisers’ requests during a talk on charity at the Milken Institute Global Conference in Beverly Hills on Monday, Hastings declined to respond.
Hastings explained, “I’ve always kept the two worlds distinct.” “I don’t talk about Netflix, attempt to promote Netflix, or answer Netflix inquiries while I’m in charity.”
Sarandos, on the other hand, expressed sorrow for his handling of the “The Closer” incident on Tuesday evening, telling the Wall Street Journal that he “screwed up” in sending out letters defending the comedy special and its success on Netflix.
In the interview, Sarandos stated, “What I should have begun within those emails was humanity.” “I should have realised that a section of our colleagues was in serious distress.”
Netflix has a good start in international countries, despite increasing rivalry from Walt Disney and other competitors.
Subscription prices in New Zealand, the Netherlands, and other countries have recently increased, according to the Los Gatos, Calif.-based firm.
“The price hikes are an indication of strength, as is the capacity to produce a global success like ‘Squid Game,'” according to Berna Barshay, an analyst with Empire Financial Research.
Netflix has been putting a lot of money into expanding its intellectual property, most recently purchasing Roald Dahl Story Co., which administers the rights to the late author’s works for an unknown sum. It’s also giving away free mobile games to its members. Netflix purchased Night School Studios, a game development studio based in Glendale, earlier this month.
Gaming, according to analysts, is a method for the firm to attract more family members to spend time on its platform.