Netflix's Dave Chappelle controversy clouds 'Squid Game' success

Yahoo Finance's Alexandra Canal breaks down the highs and lows at Netflix as the company gears up to report Q3 earnings.

Video transcript

SEANA SMITH: Well, speaking of earnings, a big company to watch next week that's set to report its results is Netflix. Now we know Netflix has been performing very, very well, recently hitting an all time high today, trading not too far. Although these are extended hours. Not too far from that recent all time high. It's a big quarter to watch because they've had massive success in "Squid Game" but then there's also recent controversy about Dave Chappelle's new special. And that of course is causing some concern over at Netflix. Alexandra Canal has the latest on that for us. Ali, what can you tell us?

ALEXANDRA CANAL: Yeah, there's a lot going on at this company before earnings. But let's start with "Squid Game". I just finished it last night. My anxiety was through the roof. But this has just been a global phenomenon for Netflix. The company's saying that over 111 million households tuned in to watch "Squid Game". Now a caveat here is that Netflix counts a viewer as someone who watches two minutes of content. However, the first two minutes of "Squid Game" were very captivating. So I think the probability is high that people continue to watch.

But if we compare that to the previous record holder for Netflix, that was "Bridgerton" with just over 82 million households reached in those first 28 days. So "Squid Game" just blowing things out of the water here, really underscoring Netflix's commitment to global content. But as you mentioned, that's being overshadowed a bit by this Dave Chappelle controversy. His special is on the platform, pokes fun at the trans community. And in a memo obtained by Variety, Netflix chief Ted Sarandos doubled down on keeping that special on the platform.

He said in part, quote, "while some employees disagree, we have a strong belief that content on screen doesn't directly translate to real world harm. Adults can watch violence, assault, and abuse or enjoy shocking stand up comedy without it causing them to harm others." Now also in that memo, Sarandos said that Netflix has faced this before. He specifically cited the film from last summer, "365 Days", critics saying that that really romanticized violence against women.

So this is something that Netflix has dealt with before. But it really calls into question whether or not these tech platforms should censor content. So I'm sure that's going to be a larger conversation in the coming weeks and months. Now in response to all of this, Netflix trans employees and allies have scheduled a walkout next week, October 20. That's the day after Netflix reports those Q3 earnings. So I expect all of this to be addressed. I did reach out to Netflix for comment. But I did not hear back.