Netflix posted sharply higher third-quarter earnings Tuesday thanks to a stronger slate of titles, including Squid Game, the dystopian survival drama from South Korea that the company says became its biggest-ever TV show.
The company has ramped up production, rebounding from pandemic-induced delays in the first half of the year. It’s also looking beyond movies and TV and said it plans to fund “new growth opportunities,” such as video games, which are being tested in some markets.
“It remains very early days for this initiative and, like other content categories we’ve expanded into, we plan to try different types of games, learn from our members and improve our game library,” the company said.
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 blamed the earlier weakness in part on a thin slate of new programming caused by production shutdowns from the pandemic.
142 million tune in to dark drama
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 a “mind-boggling” 142 million households had watched the dark drama.
The fervour around the show is also 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.
But as it faces saturation in the U.S. market, Netflix is focusing on growing its international subscriber numbers. For instance, it launched a free mobile plan in Kenya in the hopes it will get more people in the country to sign up for paid memberships.
Netflix earned $1.45 billion US, or $3.19 per share, in the latest quarter. That’s up from $789.9 million or $1.79 per share, a year earlier.
Revenue grew 16 per cent to $7.48 billion from $6.44 billion.
Netflix also said Tuesday that later this year, it will change how it reports its viewership metrics. Instead of how many accounts stream its titles, it will report the number of hours viewed. Netflix said this is a “‘slightly better indicator of the overall success of our titles and member satisfaction.”
“It also matches how outside services measure TV viewing and gives proper credit to rewatching,” Netflix said.
Fallout from Chappelle special
The company made no mention in its earnings press release of the fallout surrounding a recent Dave Chapelle comedy special, which premiered earlier this month after the third quarter ended.
Netflix said Friday that it had fired an employee for disclosing confidential financial information about what it paid for the special, The Closer, whose content employees and advocacy groups condemned as being transphobic and harmful to transgender people.
The employee, who wasn’t named, shared “confidential, commercially sensitive information outside the company,” a Netflix statement said.
The media watchdog group GLAAD said that “anti-LGBTQ content” violates Netflix’s policy to reject programs that incite hate or violence.
However, Netflix co-CEO Ted Sarandos told managers in an internal memo that the show doesn’t cross “the line on hate” and will remain on the streaming service.
Transgender employees and their allies are planning to stage a walkout Wednesday in protest.