Netflix: 142 Million Households Watched ‘Squid Game’ in First 28 Days; Streamer Tops Q3 Guidance, Adds 4.4 Million Subs

Netflix Oct. 19 revealed that 142 million subscriber households streamed original South Korean horror drama “Squid Game” in its first 28 days of release. The tally shatters the previous viewing record of 82 million households set by Shonda Rhimes’ period series “Bridgerton.”

The success underscores Netflix’s successful strategy creating shows that appeal to multiple demographics in different territories worldwide.

‘”Squid Game” has become our biggest TV show ever,” co-CEOs Reed Hastings and Ted Sarandos, and CFO Spencer Neumann wrote in a shareholder letter.

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Indeed, the series ranked as Netflix’s No. 1 program in 94 countries (including the United States). “Squid Game” has also pierced the cultural zeitgeist, spawning a “Saturday Night Live” skit and memes/clips on TikTok with more than 42 billion views. Demand for related consumer products is high, with merchandise items headed to retail, according to Netflix.

Separately, Netflix said it added 4.4 million subscribers worldwide in the third quarter (ended Sept. 30). The streaming pioneer added 2.2 million subs in the previous-year period. Netflix ended the fiscal period with 214 million subs — tops among all SVOD platforms globally.

Netflix said it expects to add 8.5 million global subs in the current fourth quarter.

The streamer said it under-forecasted (by 900,000) paid net adds for the quarter, while the paid memberships were within 0.4% of the company forecast. For the second consecutive quarter, the Asia Pacific region added the most new subs with 2.2 million net adds (half of total paid net adds). In Europe, Middle East and Africa, Netflix added 1.8 million, up from 188,000 in Q2.

North America, which includes the U.S. and Canada, and Latin America added a combined 400,000 — a relatively small amount given the high penetration of broadband in the regions.

“We believe we still have ample runway for growth as we continue to improve our service [in the regions],” Hastings, Sarandos and Neumann wrote. “We’re very excited to finish the year with what we expect to be our strongest Q4 content offering yet, which shows up as bigger content expense and lower operating margins sequentially.”

Cinedigm Posts $26.5 Million Q2 Loss

Cinedigm reported a $26.5 million loss for the second quarter (ended Sept. 30). That compared with a loss of $3 million during the previous-year period. The Los Angeles-based home entertainment distributor said revenue came in at just $7.1 million, down about 31% from revenue of $10.2 million a year ago.

On the positive side, Cinedigm said transactional VOD revenue increased 27% year-over-year, with ad-supported VOD streaming revenue up 44% over revenue in the first quarter of the fiscal year and 45% over the comparable quarter in 2019.

Streaming and digital content distribution’s adjusted pre-tax earnings increased 3% in the quarter versus the three-month period ended Sept. 30, 2019, and increased by $2.3 million, or 72%, from the six-month period last year.

Cinedigm said it reduced total debt by $20.9 million, or 40%, from the prior year, including conversion of $15 million of convertible notes to equity.

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The distributor Nov. 20 announced the launch of female-focused streaming linear channel MyTime Movie Network on The Roku Channel. During Q2, Cinedigm launched “hundreds of movies, TV episodes and three streaming channels” on NBCUniversal’s Peacock digital streaming platform; announced partnership with Fantawild, China’s largest theme park operator and producer of children’s animation in Asia, to launch a new global streaming service and distribute Fantawild’s animated content outside of China.

Cinedigm is majority-owned by China’s Bison Capital, a Hong Kong-based investment firm.

Other quarterly highlights included a partnership with Bloody Disgusting to launch a new horror streaming network that premiered for the Halloween season. The company also announced a partnership with TwentyOne14 Media to launch a new, urban multi-cultural entertainment and lifestyle network. Cinedigm also partnered with Rad to distribute Cinedigm’s portfolio of streaming channels. Rad is a provider of streaming content to the gaming ecosystem, where it claims to reach more 110 million Sony PlayStation consoles and other streaming devices, including Android TVs.

“We made strong progress in this seasonally slow quarter as streaming revenue continued to accelerate behind additional channel launches, platform/device expansion and enhanced digital sales, particularly TVOD,” CEO Chris McGurk said in a statement.

The market might not agree. Cinedigm shares are trading at 59 cents per share, which is below Nasdaq’s $1-per-share minimum.

Cinedigm Ups Quarterly Net Loss as Revenue Falls Due to COVID-19

Home entertainment/OTT video distributor Cinedigm Aug. 14 reported a first-quarter (ended June 30) net loss of $19.9 million on revenue of more than $6 million. That compared with a net loss of $5.1 million and $9.8 million in revenue during the previous-year period.

Los Angeles-based Cinedigm attributed the increased loss to the expected decline in its Cinema Equipment business and the negative impact of COVID-19 on theatrical revenue. This was partially offset by growth in OTT/streaming revenue. Overall OTT/streaming revenue, including digital content licensing, increased 22% with sales billings up 30%. OTT AVOD Channel revenue increased 28% versus last year and 48% versus the prior three-month fiscal period.

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“Due to COVID-19, advertisers ‘pressed pause’ industry-wide in late March through mid-May and we were impacted like everyone else,” CFO Gary Loffredo said in a statement. “Despite this, we generated strong streaming results in the quarter … and our ad-fill rates are now exceeding pre-COVID-19 levels with CPMs also back to 90% of pre-COVID-19 rates.”

Erick Opeka, president of digital networks, said the consumer shift toward on-demand video entertainment continues at a “dramatic and accelerating” pace.

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“We took advantage of this with the launch or signing of six new streaming channels during the quarter, which will be available on a number of key streaming platforms, including Roku, Xumo, Peacock and Plex, among many others,” Opeka said. “Our streaming device platform reach has now expanded to over 800 million global devices and will only continue to grow.”

Netflix Names Ted Sarandos Co-CEO; Hits Another Fiscal Home Run, Adding Record 10M Subs, Revenue Up 25%

Netflix July 16 named veteran executive Ted Sarandos co-CEO with co-founder Reed Hastings. Sarandos, who has been Netflix since its beginning, is the current chief content officer — a position he will continue. The former home video executive now joins the company’s board of directors. Greg Peters, chief product officer, adds chief operating officer to his resumé.

“Having watched Reed and Ted work together for so long, the board and I are confident this is the right step to evolve Netflix’s management structure so that we can continue to best serve our members and shareholders for years to come,” Jay Hoag, lead independent director, said in a statement.

Meanwhile, Netflix continues to be immune to economic challenges posed by the coronavirus pandemic. The SVOD pioneer said it added 10 million subscribers in the second quarter, ended June 30. It now has more than 192 million subs worldwide. Netflix had projected 7.5 million net new subs and 190.36 million globally — up 25.6% from the previous-year period.

Netflix added 2.94 million subs in the U.S. and Canada, compared to a loss of 130,000 subs in the previous-year period. The service added 2.75 million subs Europe, the Middle East and Africa, versus 1.69 million last year. It added 1.75 million subs in Latin America, compared with 340,000 in 2019; and the SVOD added 2.66 million subs from 800,000 last year in Asia and Pacific Rim countries.

How strong is Netflix’s sub base? The net subscriber additions included a small percentage of subs Netflix canceled due to non-use of the service.

Revenue skyrocketed nearly 25% to $6.14 billion from $4.9 billion in the previous-year period. Net income reached record $720 million, compared with income of $271 million last year.

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Indeed, Netflix in the first half of 2020 saw “significant pull-forward” of subscriber growth with 26 million paid net adds, compared with 12 million the prior year.

“We live in uncertain times with restrictions on what we can do socially and many people are turning to entertainment for relaxation, connection, comfort and stimulation,” CEO Reed Hastings and CFO Spencer Neumann said in an understatement in the shareholder letter.

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The executives said they expect less growth for the second half of 2020 compared to the prior year — with just 2.5 million net sub adds in Q3 (ending Sept. 30) and 195.45 subs worldwide. The streamer added 6.8 million subs in the prior-year period.

“We’re expecting paid net adds will be down year over year in the second half as our strong first half performance likely pulled forward some demand from the second half of the year,” Hastings and Neumann wrote.

The executives said that due to long production lead times, 2020 plans for launching original shows and movies continue to be largely intact. For 2021, Netflix expects the current paused productions will lead to a more second half weighted content slate in terms of big titles.

“We anticipate the total number of originals for the full year will still be higher than 2020,” they wrote.

Recent acquisitions include The Trial of the Chicago 7​ from Aaron Sorkin and ​previously reported The SpongeBob Movie: Sponge on the Run​ (global excluding U.S. and China). Netflix also acquired nearly completed seasons of unreleased original series like ​”Cobra Kai”​(seasons 1, 2 and a brand new season 3) and ​”Emily in Paris,” s​tarring Lily Collins.

“The pandemic and pauses in production are impacting our competitors and suppliers similarly,” Hastings and Neumann wrote. “With our large library of thousands of titles and strong recommendations, we believe our member satisfaction will remain high.”

Disney Eyeing Possible Fiscal ‘Black Tuesday’

Among media companies navigating the coronavirus, few are more in the fiscal crosshairs of the pandemic than The Walt Disney Co.

When the Mouse House and new CEO Bob Chapek disclose second-quarter fiscal results on May 5, scuttlebutt suggests a sobering fiscal reality underscoring the impact COVID-19 has had on the brand’s amusement parks, movie studio, cruise ships and consumer products — all of which have been shut down worldwide for almost a third of the fiscal quarter due to government mandates in place to stop the spread of the virus.

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Disney last month cut executive pay and reportedly furloughed about 100,000 workers, many of whom worked at Disney’s shuttered Parks and Resorts, which include six amusement parks and cruise lines, and accounts for about 33% of Disney’s total revenue — a financial nightmare that continues to consume a third of the current Q3 period.

Disney’s studio business, which accounted for more than 40% of the global box office in 2019, has been shuttered since March. The studio has delayed  launching tentpole titles such as Mulan and Black Widow, while releasing other titles to the upstart (and lone bright spot) Disney+ SVOD platform.

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Disney, unlike Universal Pictures, is not in favor of bypassing the traditional theatrical window for premium VOD — even in a pandemic and despite Universal generating a record $100 million in PVOD revenue for animated release Trolls World Tour.

Analyst firm Lightshed Partners contends Disney would have to raise the price of Disney+ from $6.99 to upwards of $20 month to recoup the theatrical losses.

“How long can Disney wait or do you have to just acknowledge that film profitability will fall dramatically until consumers are comfortable again [frequenting movie theaters]?,” analysts Rich Greenfield, Brandon Ross and Mark Kelley collectively wrote in a note last month.

The analysts contend Disney is looking a minimum 30% drop, or $3 billion decline, in studio revenue this year — a figure that could top 50% if production and exhibition channels remain closed.

For the flagship ESPN pay-TV platform, with no live sports to broadcast or stream, subscriptions are expected to fall. Dish Network CEO Charlie Ergen is demanding ESPN reimburse it and other pay-TV distributors for the lack of content, among other issues. The executive cited legal “Force Majeure” (“unforeseeable circumstances that prevent someone from fulfilling a contract”) to get out of Dish’s ESPN retransmission contract.

“U.S. multichannel video subscribers effectively paid ESPN $650 million in April to watch one original series (Chicago Bulls/Michael Jordan documentary ‘The Last Dance’) with literally no live sports on TV or for their talk show hosts to even talk about,” Greenfield wrote.

Longtime Disney bull Michael Nathanson downgraded Disney shares from buy to neutral, citing “significant and unrivaled earnings risk for the foreseeable future.”

Meanwhile, other analysts suggest the virus is just a temporary obstacle. Alexia Quadrani, analyst with J.P. Morgan, early last month said the virus represented a short-term issue for Disney that could be negated by the brand’s skyrocketing appeal in direct-to-consumer streaming video.

“We are impressed with Disney’s ability to balance growth in its traditional businesses with investment in an incredibly successful streaming service,” Quadrani wrote on April 2 — before Disney began furloughing staff and cutting executive pay.

Netflix Projected to Top Q1 Subscriber Growth Estimate

Netflix reports first-quarter (ended March 31) financial results on April 21, and its subscriber growth during the ongoing coronavirus pandemic is expected to exceed the SVOD pioneer’s own estimates.

That, according to new data from Wall Street firm Sun Trust Robinson Humphrey. The firm says a combination of strong content (i.e. current hit “Tiger King”) and worldwide global appeal/deference to localized content should push total sub growth upwards of 9.5 million compared to Netflix’s projection of 7 million subs.

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Netflix ended 2019 with 167 million subs worldwide, including 67 million in North America.

Not surprisingly, Sun Trust Robinson Humphrey has a “buy” rating on Netflix’s stock, which is up 2.9% in early April 6 trading.

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Trans World Entertainment: ‘Substantial Doubt’ Sustaining Operations for Another Year

Trans World Entertainment, parent to mall-based home entertainment retailer f.y.e. (For Your Entertainment), Dec. 18 disclosed it would delay the release of its third-quarter 10-Q regulatory filing to Dec. 23.

The company, which did not submit the filing with its Dec. 17 fiscal release, said it needed additional time to compile required financial data to its accountant (KPMG).

Specifically, TWEC said its primary sources of liquidity include borrowing under its revolving credit facility, tapping available cash and cash equivalents, and cash generated from operations.

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Yet f.y.e. reported an operating loss of $21.5 million, with revenue down 14.7% to $40.8 million. Comparable store sales declined 5.2% — the decline largely buttressed by gains in collectables revenue. And eTailz.com, the ecommerce middleman acquired in 2016 for $75 million, lost $1.4 million.

TWEC, in the filing, said the results “raises substantial doubt” about its ability to continue as a going concern for 12-month period following the Q3 fiscal period.

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The operator of more than 200 f.y.e. stores, said it hopes to improve profitability, implement a performance improvement plan for eTailz and secure additional funding, among other strategic alternatives.