HONG KONG (BLOOMBERG) - It took Squid Game just four weeks last year to become the most-watched Netflix show ever released in any language. But when it comes to the streaming giant's global ambitions, what happened afterwards matters even more - viewers who devoured Squid Game started watching more shows in Korean.
During the week of Oct 11, My Name, a drama about a woman seeking to avenge her father's murder, jumped into the Netflix top 10 for non-English series. The following week, The King's Affection, a romance set during the Joseon dynasty, did the same. The week of Nov 15, Hellbound, a fantasy thriller set in the near future, supplanted Squid Game as the most-watched non-English show on Netflix across the world.
The series were not just popular in South Korea. People were consuming them in Indonesia, Thailand, Colombia and Mexico. All told, over the past six months, South Korea has contributed more popular Netflix programmes than any country other than the United States, according to the company's weekly top 10 lists.
Now, Netflix is hoping to ride its Korean surge to greater success elsewhere in the Asia-Pacific zone.
Netflix, which reports earnings next week, ended September with 213 million subscribers, the most of any streaming service, and executives believe it can one day reach 500 million customers.
The pressure remains to keep growing its audience. Investors, who value the company at more than US$230 billion (S$309 billion), expect Netflix to continue its track record of adding 20 million or so customers each year.
To do so, the Asia-Pacific currently represents Netflix's greatest opportunity for growth, said Mr Michael Morris, an analyst with Guggenheim. "If you are on this path to hundreds and hundreds of millions of subscribers, a lot of it has to come from Asia given how big it is," he said.
Capitalising on its current momentum will be crucial. Already, Netflix has tapped Ms Kim Minyoung, once its top creative executive in South Korea, to oversee programming across all of Asia-Pacific, excluding India.
Ms Kim and her colleagues, who helped forge Netflix's hard-earned success in South Korea, are betting the lessons they learnt there and the pipeline of local language shows they have built can be used to jump-start Netflix's growth in myriad other countries.
"We do believe there is a global audience (for those programmes)," said Ms Kim.
The first idea was to try to carve out a niche by differentiating Netflix's menu from what could already be found on Korean TV. For decades, Korean dramas had been widely popular across Asia and were known for melodramatic, fairy tale-style romances.
Netflix set out to make romantic comedies that blended personal struggles, science fiction and elements of espionage into the typical formulaic love stories.
Netflix's early attempt to make Korean rom-coms different failed to resonate widely with viewers. At the same time, Netflix hit on a better approach: mining the scrap heap of discarded ideas from local television.
Bound by certain social taboos and rules on what could be shown on public broadcast TV, mainstream networks in South Korea typically passed on most of what they got pitched. The resulting flow of rejected ideas created an opening for Netflix.
Netflix began harvesting ideas considered too edgy for the broadcasters and building a slate of programming that leaned into sex and violence, as well as prickly themes, such as social inequality and politics.
The new strategy paid off. One of the first shows that Netflix bought in the new mould was Kingdom, a zombie costume drama that creator Kim Eun-hee had been pitching unsuccessfully to Korean broadcasters for more than five years.
In 2019, when Netflix released Kingdom, viewers responded favourably to the dark material, and the series grew into the service's first breakout hit from South Korea.
"That's when people started to open up and to be willing to do business with us," said Ms Kim.
In 2019, Netflix struck a deal with Studio Dragon, a subsidiary of CJ ENM, South Korea's largest studio. The arrangement gave Netflix the exclusive overseas streaming rights to a valuable slate of popular TV series such as Crash Landing On You and It's Okay To Not Be Okay.
Moving forward, many popular shows that debuted on Korean TV would then go on to stream on Netflix all around the world.
In 2020, the company turned its first annual profit in South Korea while reporting sales of US$356 million. South Korea is now one of Netflix's largest markets in Asia, trailing only Australia and Japan. The company has more than five million subscribers in South Korea, according to Media Partners Asia.
To date, Netflix has spent more than US$1 billion on programming in Korean, one of its largest content investments outside the US. Along the way, Netflix's status has flipped. Once shunned by the local creative community, Netflix is now courted.
After ending 2019 with 16.23 million subscribers in the Asia-Pacific, the company is currently on pace to double its subscriber base over two years. Even so, Netflix still faces plenty of daunting obstacles throughout the region.
In South and South-east Asia, Netflix's strategy of using unconventional shows to grab audiences has already run into setbacks in an area rife with cultural differences and conservative policies.
In 2020, the Netflix series A Suitable Boy caused an uproar in India over a scene showing its Hindu female protagonist kissing a Muslim man. Last year, India introduced stricter rules for streaming services, including more oversight for content containing sexually explicit scenes, violence and abusive language.
Netflix is also under increased scrutiny in Vietnam, with officials complaining in 2020 that it failed to comply with tax and content laws.
Another issue is price. For many potential customers, Netflix is quite expensive and in many parts of Asia does not provide as much local content as it does in South Korea or Japan. Less expensive local steaming options continue to attract more customers than Netflix in markets such as Indonesia and Thailand. The area is also rife with illegal pirate websites that allow viewers to stream hit movies and TV series, cribbed from legitimate services like Netflix, without paying.
Additionally, Netflix is likely to face growing competition from a strong field of international and regional players. Walt Disney launched Disney+ in South Korea, Taiwan and Hong Kong in November with local language titles and is working on a slate of local originals.
WarnerMedia opened a new office in Singapore and plans to introduce HBO Max to Asia soon. Amazon.com and Apple already offer video services across Asia and have the resources to compete for top projects, as do Chinese streaming services backed by Baidu and Tencent Holdings.
IQiyi, one of China's leading streaming services, has ramped up its production of originals outside China, announcing plans for shows from Korea, Thailand and Malaysia.
Despite the many challenges, Netflix executives are confident they can succeed by following their Korean playbook: hiring top executives with deep connections to the local entertainment industry, identifying content that can travel across cultures such as Korean-language shows and Japanese anime, and increasing local language programming.
"We've only been here for five years," said Ms Kim. "We are just starting."