Myth of the Global Streaming Hit
Netflix and streaming pour money into foreign content. Since 'Squid Game', it's been a disaster
Of the following three IMDb descriptions, which sounds worst:
Walter moves from the city out to the countryside after a nervous breakdown. But his dream of a peaceful life is ruined when he meets his loud neighbors.
A police detective tries to get back his girlfriend as well as his sense of smell, and gets help from a perfume maker who uses deadly methods to find the perfect perfume.
A romantic film featuring two people who are not right for each other. The story is about Prajakta's character who is a tech wizard and the guy who is interested in her.
Well, that last one is just awkward. The second one might be the worst thing I’ve ever read. But the winner is option one, and it goes along with this poster:
What links these three films? They all premiered on Netflix as Netflix Originals in the last few months (from Brazil, Germany and India respectively). As I’ve been writing on my website and here for The Ankler, while we all spent 2021 praising Squid Game for showing that foreign titles can break through in America (which nicely fits a globalist narrative), we’ve mostly spent 2022 not following up, asking if foreign titles are still doing well in America (and other countries). Since I track nearly every new TV show or movie Netflix puts out to write my weekly streaming ratings report, I am seeing just how many titles from other countries fail to perform in America.
This isn’t an academic exercise about taste; it gets to one of the core theses of the Streaming Wars. One of Netflix’s advantages is, supposedly, that it can buy/produce a title in one territory/country and make it a “global hit.” (Netflix is currently in 190 markets producing local content it seeds to other territories). Call it the “Squid Game advantage” if you will. It’s a core pillar of its business model.
The idea that Netflix could “scale” globally — and hence justify an incredibly high valuation — was premised on the idea that it can make a show in one territory and sell it globally. Reed Hastings has in the past said his goal is to create a distribution platform to make global hits. Other streamers are copying this strategy. (This is a separate conversation from overseas growth, where Netflix reported adding 2.3 million subscribers globally in its Q3 earnings. One could argue that even if these titles aren’t resonating globally, they are attracting local audience.)
Netflix, Prime Video, Hulu and Disney+ are dropping big bucks on soap operas from South Korea, anime from Japan, action films from India, thrillers from Germany, and so on. And while these bucks are cheaper than many American-produced films and shows, budgets across the world have increased considerably with this influx of buyers.
My premise for today is to show you just how very badly, according to data, this strategy is playing out. I am singling out Netflix as the example today since it is the global leader who put in motion the dynamic of today’s market.
In this article I’ll cover:
The absolute lack of global hits since Squid Game.
The poor ratings by customers of the vast majority of Netflix’s foreign language films
The slightly better performance of foreign TV
And why global “scale” in streaming could bleed lots of money