The green light flashes and I dart forward under the watchful gaze of a giant pigtailed animatronic doll. The doll’s eerie voice intones, “Red light.” I try to stop short, but the vibrating electronic bracelet on my wrist tells me I’ve failed. If I were a character in Netflix’s dystopian drama series Squid Game, I would be executed on the spot. If I were on the recent reality spin-off Squid Game: The Challenge, I’d lose the chance to win millions. Luckily, I’m just a player in a Los Angeles live experience called Squid Game: The Trials, where fans pay to reenact the show’s childish amusements like marbles and Red Light, Green Light. A big X simply appears across my photo on the leaderboard, and I exit through the gift shop.
If you ever wonder how serious Netflix is about winning the global streaming wars, keep in mind that it transformed a brutal South Korean critique of capitalism into a capitalist blockbuster with many tentacles. It had its squid and ate it too. “Legacy media businesses are all retreating because their linear businesses are decaying faster than they expected, and that is giving Netflix strength,” says Rich Greenfield, an analyst for the research firm LightShed Partners. “The new strategy of legacy media companies is to slash content, slash marketing, jack prices, and pray for the best.” As for Netflix? At press time, its well-regarded film chief, Scott Stuber, had announced his departure, but a positive earnings report had the company’s stock surging. “They created the sandbox,” says a top Hollywood agent. “Everybody has it and everybody uses it. They’re the most powerful operator in the television space right now.”
Netflix’s path, of course, had a few deep potholes. In April 2022, the streamer announced that it had lost 200,000 subscribers and expected to lose 2 million more in the coming quarter. Its stock fell precipitously, costing the company $54 billion in market cap overnight and prompting the layoff of hundreds of employees. It was a massive stumble that seemed to signal the end of the whole streaming industry’s boom phase, when media and tech companies devoted mad money to compete with Netflix for talent and subscribers. Last year’s writers and actors strikes exacerbated the struggle for many entertainment companies, which were trying to make their streamers competitive while dealing with dying network television and ailing movie divisions. Guessing which streamers will merge or be shuttered is one of Hollywood’s current favorite parlor games.
“We don’t have a legacy, so this is all we do,” says Bela Bajaria, Netflix’s chief content officer. “We’re focusing on being a place that does give lots of opportunities across many genres and many languages for different kinds of storytelling.” When I ask her what’s next, she reels off a slate that mixes big swings and safe bets, the risky and the retro. Among them are a new comedy by Parks and Recreation’s Michael Schur based on the documentary The Mole Agent, a new Beverly Hills Cop movie, a riff on the 14th-century text The Decameron executive-produced by Orange Is the New Black’s Jenji Kohan, and a Colombian series based on the legendary novel One Hundred Years of Solitude. Finally, there’s the long-awaited sci-fi epic 3 Body Problem from Alexander Woo and Game of Thrones creators David Benioff and D.B. Weiss, which drops on March 21. “Netflix were the ones who brought it to us, so that made it easy,” Benioff says of their decision to ditch HBO after Netflix VP Peter Friedlander suggested they adapt Liu Cixin’s trilogy. “On a flight home from Japan, both of us finished the third book at around the same time,” Benioff tells me. “We both fell in love with the potential of this project.”
For Benioff and Weiss, it is a relief to adapt a book series that’s fully written after the controversial final season of Thrones. “The ending of the third book is phenomenal—it goes to the end of the universe and the end of time, and it comes together in a beautiful way,” Benioff says. “We have a rough sense of the structure of the entire series, and we’re just hopeful that we get to tell the whole thing and don’t get canceled.”
Greenfield, the analyst, believes Netflix stumbled in 2022 because not even cofounder Reed Hastings had anticipated how desperately media conglomerates would follow his company’s lead and compete for streaming supremacy—even if it led the whole industry to the edge of a cliff. “The capital markets and investors enabled companies to lose ungodly amounts of money,” he says. Until they didn’t.
Netflix’s stock crash sparked a lot of schadenfreude within the industry. It didn’t help that they were notoriously secretive with many show creators—refusing to reveal useful ratings info to them—and that they axed shows quickly. But then competitors like HBO Max and Disney+ went one step further and yanked whole series from circulation. Suddenly Netflix didn’t look so bad. “You have Netflix’s reputation going up just by virtue of other people getting worse,” says the agent. “Creatively, nobody thinks of them as doing high art, with a few exceptions around very high-end film directors and monster projects like 3 Body Problem. But the whole business is so challenged that, by contrast, they look a lot stronger.” Recently, Netflix took baby steps toward increased transparency by publicly revealing hours-watched stats on nearly all of its shows for the first time. The new Writers Guild of America contract requires streamers to report specific viewership data to determine bonuses for many writers, though the results can remain confidential.
And what about those extravagant deals Netflix dispensed to lure talent in the door? There’s a widespread feeling in the industry that the streamer is much less likely to spend as lavishly as it did at the streaming wars’ peak. “They’re definitely backing away from that,” says an industry dealmaker. “They’re not as emotionally driven anymore. Now the way to get a show ordered is to come in with something undeniable that can be produced at less than $10 million an episode.” Bajaria waves away the notion that budget plays a major role in her current decision-making. “There’s a wide range of budgets, and so that’s not really the consideration,” she says. “For me, it’s really always about what’s going to really connect with people.” She remembers a moment last year when the top three Netflix shows were The Night Agent, Beef, and Love Is Blind—a mainstream thriller, an idiosyncratic awards-magnet drama, and a reality series. The juxtaposition was so striking that she took a screenshot.
In fact, many of Netflix’s most iconic shows (think: Orange Is the New Black, Stranger Things, Squid Game) were surprisingly quirky. Bajaria’s predecessor, Cindy Holland, created a slate of edgy scripted series that wove themselves into the pop culture fabric. After Bajaria arrived in 2016, she built a successful unscripted-TV division and ramped up global production, injecting reality favorites like Queer Eye and foreign dramas like Lupin into American consumers’ bloodstream along with homegrown hits like Wednesday and Bridgerton. As Squid Game: The Trials suggests, Netflix is exploring even more ways to turn its shows into a Disney-style universe, whether through in-person events, an ever-expanding menu of video games, or a reported string of physical stores.
The streamer has taken aim at two other huge arenas: live TV and sports. Instead of spending a billion dollars on game rights, Netflix snuck in through the side door with behind-the-scenes reality series like Beckham, Full Swing, and Formula 1: Drive to Survive. As co-CEO Ted Sarandos recently said at a media conference, “There’s a very lucrative business for us to help them grow the league, and then for us to tell the story. And that’s something that we can outcompete everybody on.” The streamer has also just signed a giant deal with the WWE to bring its flagship live wrestling show to Netflix starting next year.
In the streaming wars’ version of Red Light, Green Light, Netflix has decided speedy and nimble is the only way forward. Just watch for the green light or check out the gift shop.