The entertainment giant, Netflix, estimates that its new megahit ‘The Squid Game’ will mean more than 900 million dollars of revenue for the company, which shows the collection capacity of the creations for streaming.
This new era of audiovisual entertainment has changed the business model of the industry. Netflix does not generate income through the sale of specific shows and movies, as traditional companies would do, but is based on the catalog subscription model. For this reason, you need to attract customers with great titles .
However, after capturing a client, the company offers an extensive list of lower-value content , something similar to what happens in the traditional industry. In general, the large audiovisual multis do not give up the rights to a single title, but rather force cinemas and televisions to purchase packages containing attractive content and the rest.
Based on this model, the Netflix acquisition data shows the company the programs that are causing the subscription of new customers and, in this sense, it is how the company understands that it will be this title that will generate such amount of benefits.
More than 130 million people have watched ‘The Squid Game’
It should be noted that, according to company data, ‘The Squid Game’ already has more than 130 million viewers . To this information must be added the low cost of producing the series: the total outlay was only 21.4 million dollars, about 2.4 million per episode, although those figures are only for the first season, according to some documents seen by Bloomberg .
On the other hand, in this business model a new data intervenes, the adherence rate . Although this data was also used before, with drastically less accuracy, today it is more important than ever.
The possibility of knowing in detail how long a viewer stays watching a program increases the radius of action of streaming companies , a figure that was previously only obtained by extrapolating a small sample.
In this sense, Netflix estimates that 89% of the people who started the show watched at least 75 minutes, more than one episode, and 66% of the viewers, 87 million people, finished the series in the first 23 days. That is, in total, the public has spent more than 1,400 million hours watching ‘The Squid Game’ .
Boost for Netflix value
Of course, this Korean megahit has not gone unnoticed by investors. Although the company had been dragging several unsuccessful months, especially due to strong competition from Disney +, ‘The Squid Game’ has been a boost for the company.
Netflix shares have risen nearly 7% since the show’s September 17 launch , valuing the company at $ 278 billion. “We believe that Netflix has found a solid and profitable strategy with its content internationalization efforts, ‘The Squid Game’ is a perfect example,” said Michael Pachter, analyst at Wedbush Securities. “This and their release of ‘Seinfeld’ in the fourth quarter should provide a solid cushion.”