Written by Eshna Agrawal, a grade 9 student.
Here’s a fun fact – Netflix spends $15 billion per year on original content and another $13 billion to license content from other studios.
Yup, that’s a big number!
Other expenditures include technology and marketing, each costing billions per year.
The problem was this. Netflix’s revenues (income or earning) have only recently reached $16 billion, so the company was forced to borrow a lot of money to produce original content, and maintain its dominant position in the US streaming market.
This is why the company has accumulated $21.516 billion in debt.
In 2018, Yahoo Finance published a story titled, “Netflix is addicted to debt and investors should be terrified.” Middle of this year, Netflix shares were down by 8 %, causing everyone to be distressed about this being Netflix’s path to bankruptcy.
Enter, The Squid Game
A South Korean drama that revolves around 456 cash-strapped contestants who accept an invitation to compete in children’s games for a tempting sum of money but the stakes are vicious to say the least: saved the company.
The show referred to here is none other than Squid game. It was released on 17th September, 2021 and has taken the world by storm with its unique storyline. This Netflix original was released in Quarter 3. It racked up views from 142 million households in 94 countries ! In the first 23 days of its release, Netflix users spent 1.4 billion hours binging this thrilling South Korean Drama. Squid Game was a standout, generating $891.1 million in impact value, which is around 41.7 times (that’s its efficiency score) its budget of $21.4 million.
It is subtitled in 31 languages and dubbed in another 13, allowing larger audiences to enjoy the series without understanding Korean. The subscriber growth validates Netflix’s strategy of expanding its investment in foreign language titles and local stories. The widespread popularity of the series initiated several trends all over social media, attracting users of different strata to engage with the series more. This helped Netflix add 4.38 million subscribers in the third quarter, up from 2.2 million a year earlier.
The streamer’s revenue rose 16% to $7.48 billion in the third quarter, compared with a year earlier. Net income was $1.45 billion, up from $790 million a year earlier, and easily surpassed analyst estimates.
This was the story about how Netflix was in debt, hence decided to make a series about people being in debt, and it came out richer than ever, just like Seong Gi-hun did. Anyone else sees the irony in this?