Netflix’s biggest show ever may be a dystopian South Korean drama, says co-chief executive Ted Sarandos. Squid Game has topped Netflix charts in more than 76 countries, including the US and the UK, days after its release. Investors seeking to benefit from its popularity may be looking in the wrong places.
In Squid Game, named after a Korean game of tag played in a squid-shaped court, a desperate group of 456 indebted people, including a gambling addict, a fugitive banker and a North Korean refugee, sign up to try their luck at a $39m jackpot by playing six children’s playground games. The losers die. VIPs bet on the players.
A strong reception from global viewers and a rare 100 per cent critic score on review site Rotten Tomatoes have sparked indiscriminate buying of shares of local entertainment companies in the past fortnight. Shares of production house Bucket Studio have doubled. Peers Showbox, Studio Santa Claus and AStory are up more than a fifth.
Yet, most have little exposure to Squid Game. Siren Pictures, its production company, is privately owned by one person. AStory is the maker of Netflix’s Kingdom, an unrelated zombie drama series. Bucket Studio seems more relevant, with a stake in the agency representing Squid Game’s lead actor. But even that connection is tenuous. The agency manages more than 20 actors and the stake is small, at 15 per cent. The profit split is in favour of the actor.
Like the sector’s volatile stocks, the value placed on producers and actors is quickly rerated following each hit. Previous rallies have proved shortlived. Shares of Barunson, the studio behind the movie Parasite, tripled when the film won the Academy Award. The shares had reversed their gains six weeks later.
Still, growing demand for content from streaming platforms continues to push up licensing fees. Local production margins run as high as 40 per cent. For investors looking for broader exposure to the sector, the two largest houses, Studio Dragon and Jcontentree, may be a safer bet. The two churn out a continuous flow of new TV series all year round. Some of these will be hits.
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