Korea’s Squid Game is a two-edged sword for for Netflix

The success of South Korean drama Squid Game has the potential to boost Netflix revenue further via merchandise sales but also to drain its coffers if net neutrality rules are revised to account for the volume of traffic such series generate.

The retail angle

As subscriber growth slows, Netflix is looking to create new revenue streams: Netflix Hub is a digital storefront on Walmart’s website that will sell merchandise related to its hit shows, such as Squid Game T-shirts.

But it’s not just about revenue according to Josh Simon, vice president of consumer products at Netflix. “The real value is in reinforcing fan love for the shows and films they see on Netflix,” he told the Wall Street Journal.

Streaming costs 

Alongside that is the threat of a potential rewriting of net neutrality rules as some broadband suppliers argue that these, established when the internet was young and which treat all traffic equally, are outdated for the current streaming era when a handful of companies – including YouTube, Facebook and Netflix – drive 80% of the traffic on the world’s internet. 

In Korea, SK Broadband has sought to collect network usage fees from Netflix based on the traffic volume on its network generated by Netflix which it says has grown 24x in the past three and a quarter years because of the popularity of series such as Squid Game.

The concerns extend around the world. “They aren’t making a contribution to the services they are being carried on; that doesn’t feel right,” Marc Allera, chief executive of BT’s consumer division, told the Guardian. “Every terabyte of data consumed over and above current levels costs about £50m. In the last year alone we’ve seen four terabytes of extra usage and the cost to keep up with that growth is huge.”

Sourced from Wall Street Journal, Guardian, Business Korea [Image: Netflix]