'Squid Game' boost: Korean thriller helps Netflix tops subscriber target

However, Latin America region had a slower growth in paid memberships in the third quarter of 2021 when compared to Europe and Asia

Netflix squid game
Photo: REUTERS/Kim Hong-Ji/Illustration

Global interest in Netflix Inc’s Korean thriller Squid Game lured more new customers than expected in the recent quarter and the world’s largest streaming service predicted its coming lineup would boost growth through the end of the year.

Shares of Netflix were close to even in after-hours trading at $641. After a sharp slowdown in the first half of 2021, Netflix added 4.38 million subscribers from July through September to reach a worldwide total of 213.6 million. Wall Street analysts had projected 3.86 million new customers, according to Refinitiv data.

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The streaming company reports that, for the second consecutive quarter, the Asia and Pacific region was its largest contributor to membership growth with 2.2 million paid net adds (half of total paid net adds). In Europe, the Middle East and Africa also improved: 1.8 million vs. 188,000 in Q2 as several titles had a particularly strong impact.

The US, Canada and Latin America regions grew paid memberships more slowly. Latin American subscribers number reached 38.99 million against 38.66 million in the Q2 of 2021. These regions have higher penetration of broadband homes although the company believes it still have “ample runway for growth” as it continues to improve its services.

Netflix enjoyed a subscriber boom last year as COVID-19 kept audiences at home, but growth stalled in the first half of 2021. At the same time, competitors including Walt Disney Co’s Disney+ and AT&T Inc’s HBO Max have bolstered their offerings. Netflix partly blamed this year’s early weakness on a thin slate of new programming caused by production shutdowns during the pandemic.

‘Squid Game frenzy’

Then, Squid Game debuted on Sept. 17 and surprised executives by becoming the streaming service’s most-watched original series in its first month, according to the company. On Tuesday, Netflix said 142 million households had watched the show.

Squid Game’s protagonist, Lee Jung-jae (center) and the series director Hwang Dong-hyuk (left). Photo: Netflix/Courtesy

The dark drama tells the story of people who compete in a deadly competition to erase financial debt. The series has topped 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.

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The fervor around Squid Game also is expected to boost 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.

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It also expects a “more normalized” programming slate in 2022 spread throughout the year, “assuming no new COVID waves or unforeseen events” that force production shutdowns, the letter 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 will 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 for consumers’ time 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.

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