Global 'Squid Game' mania lifts Netflix quarter
Netflix Inc's global sensation "Squid Game" helped
lure more new customers than expected, the world's largest streaming service
said as it predicted a packed lineup would further 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 Disney+, AT&T Inc's 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, South Korean drama "Squid Game" debuted on
17 September and surprised executives by becoming the streaming service's
most-watched original series in its first month. On Tuesday, Netflix said a
"mind-boggling" 142 million households had watched the dark drama
about people who compete in a deadly competition to erase financial debt.
The series, made with a relatively small budget, 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 it
releases a heavy lineup of new programming. Upcoming debuts include big-budget
action flick "Red Notice" and a second season of fantasy drama "The
Witcher."
It also expects a "more normalized" programming
slate in 2022 spread throughout the year, "assuming no new COVID waves or
unforeseen events," the company said in a quarterly letter to
shareholders.
Shares of Netflix were close to even in after-hours trading
at $641 following the earnings report.
OVERSEAS GROWTH
Most new customer pickups in the quarter came from the Asia
Pacific market, where Netflix now has 30 million subscribers. Industry experts
believe the region may rival the United States and Canada - Netflix's largest
market - in three to five years, said Third Bridge senior analyst Joe
McCormack.
Netflix is trying new ways to attract customers overseas,
including offering a free plan in Kenya. It will take one to two years to tell
if that tactic leads to more paying subscribers, the company said.
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% to $7.5 billion.
Before the earnings report, Netflix shares had risen roughly
22% this year and were trading near record highs, but their gains lag behind
the 54% 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 suffered
a global outage in early October, "our engagement saw a 14% increase
during this time period," Netflix said.
Executives did not address worker complaints about a Dave
Chappelle comedy special, which the company has previously defended. Some
employees say Chappelle made comments that harmful to transgender people, and
they plan a walkout on Wednesday.
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