Netflix yesterday revealed its third quarter earnings report and, not surprisingly, they’re doing great with a subscriber growth of 4.4 million, more than the expected 3.8 million, and projected to gain 8.5 million more in the fourth quarter. On paper, then, if you take yesterday’s results announcement in isolation, Netflix is in great shape.
But that’s not the full picture. Because there’s an employee walkout planned for today to protest the company and Chief Content Officer Ted Sarandos’s support of Dave Chappelle’s The Closer and how he’s handled the backlash. Over the last couple of days, he’s been trying to massage the situation, admitting that he f-cked up in his management of the controversy, particularly with the internal memo that was sent to Netflix staff. NBC News interviewed Ted Sarandos yesterday and you can read his comments here. This is damage control.
Because as Vulture points out, while Netflix has not yet been hurt financially by the ongoing fallout:
“…the epicenter of the current crisis is within the company’s own (largely virtual) walls. Staffers angered by the events of the past two weeks feel the company has breached their trust: After Sticks & Stones came out, Netflix execs seemed to promise the company would handle future Chappelle specials with more caution and consideration, according to a report from Bloomberg’s Lucas Shaw. That clearly didn’t happen. Frustrated, some employees have called for a daylong walkout this Wednesday, while others have taken to leaking confidential internal data about Netflix production costs and viewership. One was even fired for leaking, a move that resulted in even more bad PR for the company. (Netflix hasn’t said who the leaker was, but The Verge reported the staffer was Black, trans, and pregnant.)”
So even though the stock remains stable, for now, things may change in the coming days and weeks. The Closer was released two weeks ago and it’s still a major story in the news cycle, at a time when attention spans are short and there’s always a story waiting in the wings to bump off the top headline. And let’s be real – the stock performance is always the main priority for these corporations. So that’s the whole point of the protest: to continue to agitate, disrupt, and push for change, and make commercial consequences a reality, tying commercial success to creative integrity, which is ostensibly one of Netflix’s corporate philosophies.
All of this is happening concurrently with one of the biggest wins in Netflix history: Squid Game, now officially it’s “biggest TV show ever”.
“Netflix estimates that its latest megahit, “Squid Game,” will create almost $900 million in value for the company, according to figures seen by Bloomberg, underscoring the windfall that one megahit can generate in the streaming era.”
Squid Game has become so precious to Netflix that Reed Hastings, the co-founder and Chairman of Netflix, wore the green tracksuit yesterday during part of the earnings call. As I have been writing about for almost two years now, Netflix’s ongoing investment in Korean and other East Asian content has been one of their most astute business moves, and Squid Game is the ultimate payoff for their commitment to cultural creative diversity. But these gains in inclusion are now being compromised by how they’ve excluded the concerns of a marginalised and vulnerable community. They could have been celebrating…and instead they’re scrambling.
How do you think their competitors are feeling about this? Netflix’s closest streaming competitor is probably Disney+. Interestingly enough, as Squid Game continues to be one of the pop culture success stories of the year, Disney+ is launching in East Asia, including South Korea, Hong Kong, and Taiwan, on November 12th and announced last week its first major slate of Asian Pacific programming. One of the most highly anticipated Korean dramas on Disney’s list is a series called Snowdrop, starring BLACKPINK’s Jisoo. A BLACKPINK documentary celebrating the group’s fifth anniversary will also be available on Disney+.
Disney is hoping for its own Squid Game – or at least Squid Game results, if not the dark and disturbing storyline. Because Squid Game doesn’t exactly fit with Disney’s brand wholesomeness. I can’t imagine a show like Squid Game would ever be able to stream on Disney the way it did on Netflix without all kinds of notes and possible creative interference that would have changed the series completely. But Netflix’s stumbles could be advantageous to others.
Yours in gossip,