Netflix plans ‘Squid Game universe’ as shares dive 20% amid stalling growth

Squid Game

Netflix’s share price dived almost 20% yesterday as it predicted a slowdown in subscriber growth, while also confirming an upcoming “universe” based on hit Korean drama Squid Game.

The SVOD, like many of its rivals, saw customers flock to the service during the pandemic but it is now facing slowing demand just as its investment in content reaches new heights – estimated at $17.9bn this year.

During its earnings update, Netflix said it expects to add just 2.5 million new customers by the end of Q1 2022, although that will still take the company to 224.3 million subscribers.

However, this time last year it added 4 million new subscribers and the company admitted it is now facing “added competition” from streamers such as HBO Max, Peacock, Paramount+ and Disney+. Shares dived from $508 to $408 in after-hours trading.

Ted Sarandos

The streamer, which upped the cost of its most popular US plan to $15.49 earlier this month, also revealed it had missed its target for subscriber growth in Q4 of 2021, with 8.3 million net new customers against analyst predictions of between 8.4 – 8.7 million.

It ended 2021 with 18 million net subscribers, against the 37 million secured in 2020.

Content slate

The declines came despite a buoyant few months for Netflix on the content side, with Korean duo Squid Game and Hellbound, as well as films such as Brazen and Don’t Look Up, driving global viewing.

Other shows such as Stay Close and The Witcher also powered viewing hours, with subs growing by 1.2 million in North America during Q4, reversing a recent trend of static or declining numbers in the region.

However, the outlook reflects dampened demand in many areas of the world and Netflix blamed a “more back-end weighted content slate” for the pessimistic Q1 prediction in its letter to investors.

Upcoming shows on the slate include the second season of Bridgerton, due in March, but the streamer said the “ongoing Covid overhang” is affecting subs growth, as well as “macro-economic hardship” in some parts of the world.


The strength of the US dollar has also affected revenue brought in from outside of the US, where most of the streamer’s growth has been over recent years.

Squid Game universe’

Back on the content front, Netflix co-CEO & chief content officer Ted Sarandos told analysts that the streamer is “absolutely” planning another season of Squid Game.

“The Squid Game universe has just begun,” Sarandos said, adding that he expected it to also generate income from areas outside of the series, such as live experiences and franchised video games.

The show is Netflix’s most watched show to date, with more than 1.6 billion hours streamed by viewers. The first season cost the streamer just over $21m and resulted in “impact value” of $891m, according to Bloomberg.

It has also led to the streamer doubling down on Korean content, with plans revealed earlier this week to launch 25 shows this year.

Tags: Netflix

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