‘Squid Game’ Is King But Netflix Has A LOT Of Other International Hits Coming

It’s been impossible to escape coverage of Squid Game, the Korean horror-satire that has become Netflix’s most-watched show ever, according to the company. The spinoff games, merchandise, immersive experiences, and more are already chugging forward.

But as Netflix executives and other sources suggest, the company’s strategy to move beyond the Hollywood-centric approach of its competitors is paying big dividends well beyond Squid Game, which the company said in this week’s shareholder letter had been watched by a “mind-boggling” 142 million subscriber homes in its first four weeks.

The series has been No. 1 on Netflix in 94 countries, and already spawned a Saturday Night Live skit, a huge spike in sales of Vans all-white slip-on sneakers, and countless Halloween costume how-to videos. The company also quickly launched an e-commerce site with Walmart, focused on exclusive merchandise from the series and a handful of other Netflix hits.

“We picked it up from the Korea team, who did recognize it would be one of their biggest hits,” said Co-CEO and studio chief Ted Sarandos. “I can't tell you we had the same eyeball on it to tell you it was going to be biggest hit ever. (The creator) spent 10 years trying to sell the show and our team recognized it. Sometimes you have something that turns out to be lightning in a bottle.” 

Squid Game certainly achieved that, but so too are other shows produced for Netflix operations across the planet.

Teams in 45 of the more than 190 markets where Netflix operates oversee production and acquisition of local shows that in turn may break out, the company said in this week’s shareholder letter.

“Squid Game is incredible but it’s not that (Co-CEO and studio chief) Ted (Sarandos) commissioned it,” said Co-CEO Reed Hastings. “It's the team we built. It was one of our leaders in Korea who commissioned it. There's got to be other incredible projects we don't know about.”

Among the big, foreign-made successes last quarter was durable Spanish hit La Casa de Papel (Money Heist), whose fifth season attracted 69 million household views in its first four weeks (a standard Netflix measure of viewership) during the quarter. Netflix has commissioned spinoff versions of the series in other languages for local distribution.

Another returning show, the third season of U.K. comedy Sex Education, attracted views from 55 million households in its first four weeks, the company said.

“La Casa de Papel was our first non-English language title to show that - with subtitling and dubbing - great stories truly can come from anywhere and be loved everywhere,” the shareholder letter notes. “While the goal of our local content executives is always to create locally authentic stories that will resonate in their country (like The Chestnut Man, which we expect to be watched by approximately two-thirds of our Danish members during its first four weeks), Netflix is a global, direct-to-consumer service, which enables creators to reach broader audiences - and gives our members an even greater choice of stories to enjoy.”

It’s a marked contrast with the Hollywood-centric production mindset of many of Netflix’s streaming competitors, many of which are just now getting production pipelines back to pre-pandemic levels even as they move to open international operations . Most aren’t even showcasing foreign-language originals, though HBO Max has now debuted several international shows in recent weeks.

That will matter more and more as those streamers extend their International reach. While big Hollywood movies have often travelled well internationally, it’s a different dynamic with direct-to-consumer services that thrive when consumers keep coming back for more shows to watch. And overwhelmingly, those audiences want to see more shows local to their language, place and sensibility.

Netflix only recently has begun releasing more information about viewership data (and announced in the shareholder latter that it will shift beginning this quarter to an “hours-viewed” metric and away from the “household views in first four weeks”). But even beyond the company’s own closely held data, there’s third-party evidence that international audiences are embracing the company’s overseas shows.

This week, Parrot Analytics released an analysis of the most in-demand original shows globally across all the streamers for the last week of September. Parrot’s “demand share” metric pulls from a wide range of channels to capture how much audiences are talking about a show across social media, blogs, news stories, and other public sources.

Squid Game, Sex Education and La Casa de Papel accounted for three of the top five shows on Parrot’s global list of the most in-demand shows. All had more than 70 times the average demand share, led for now by Sex Education, with Squid Games growing fast, Parrot said.

“The first half of Netflix’s 2021 has featured consistently record-low digital original demand shares each quarter and subscriber losses in the US and Canada, but a string of September releases has brought global audiences back to Netflix Originals in droves,” Parrot said in a research note. “A surprise trio of international Netflix Original series are allowing the streaming giant to close Q3 2021 on a high note. This matters because audience demand for original programming is the key indicator of subscriber growth for SVODs.”

In a possibly intimidating prospect for Hollywood-based streamers, Netflix said it will have an overstuffed slate going into the holidays.

“We’re in uncharted territory, we have so much content coming in Q4 and that rolls into early next year,” said Hastings.

That makes it difficult to predict potential impacts on subscriber adds, said CFO Spence Neumann, but the company guidance was for 8.5 million new subs in Q4, nearly double the 4.4 million added in Q3.

“We’re looking at how it’s going to impact (subscriber growth and retention), but we certainly think it’s a positive,” said Sarandos.

Among the Q4 arrivals are Oscar contender The Harder They Fall, with Idris Elba, and Red Notice with Dwayne Johnson, Ryan Reynolds and Gal Gadot, as well as new seasons of enduring hits such as The Witcher (based on a popular series of European fantasy books and games) and Cobra Kai.

Maid, about life on the poverty line in a wealthy community, launched just after the start of Q4, Netflix noted in its investor letter. The often grim series based on a best-selling memoir is expected to reach 67 million households by month’s end.