‘Squid Game' Has Been Watched by Two-Thirds of All Netflix Users But Hasn't Moved the Needle on U.S. Subscribers

Source: Netflix
  • Netflix gained 4.4 million new subscribers in the third quarter, but only 70,000 of them came from the U.S. and Canada.
  • The streaming service has added fewer than 1 million new subscribers from the U.S. and Canada in the past 12 months.
  • Netflix said 142 million subscribers have watched at least two minutes of its new hit "Squid Game."

It may seem like every American you know has watched "Squid Game," but the show's popularity has not yet created a surge of new Netflix subscribers in the U.S.

Netflix revealed in its shareholder letter Tuesday that 142 million of its subscribers have seen at least two minutes of the wildly popular South Korean drama. That's exactly two-thirds of the company's 213 million global customers.

But while the streaming service gained 4.4 million net subscribers in the third quarter, topping average analyst estimates of 3.5 million, the growth didn't come from the U.S. or Canada. The company added just 70,000 users from the region in the quarter.

While it's possible Netflix may have added more American or Canadian subscribers resulting from "Squid Game" in the fourth quarter, which began Oct. 1, the company's 8.5 million global forecast for the period matched the consensus average analyst estimate prior to Tuesday's earnings.

It's becoming clear that Netflix's growth has slowed in the U.S. and Canada, where it has added fewer than 1 million subscribers in the past 12 months. That's part of the reason the company is beginning to dabble in video games. It will be interesting to see if Netflix does anything surprising in the coming months to jump-start growth in the U.S. and Canada, or if it's content with its growth plateau in the region as long as it's still charging ahead internationally. One possibility is cracking down on password sharing, which Netflix has already toyed with earlier this year.

"We believe we still have ample runway for growth as we continue to improve our service," Netflix said of the region's results in its shareholder letter.

Netflix's 74 million U.S. and Canada subscriber base also serves as a de facto ceiling for its streaming competition. Netflix still dominates Disney+, Hulu, AT&T's HBO Max, NBCUniversal's Peacock and other, newer streaming services in terms of overall subscribers.

Cowen & Co. published survey results earlier this month in a note to clients that showed 25% of respondents said they used Netflix more than any other video service — including standard cable and broadcast TV. That dwarfed other subscription streaming services. Amazon Prime Video was the next highest at 7.3%.

If "Squid Game" can't bring in millions of new subscribers, it's fair to wonder if any new content can truly move the needle in the region.

Disclosure: Comcast's NBCUniversal is the parent company of both CNBC and the Peacock streaming service.

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