Why the big streamers are reassessing how they do business amid recession fears | features

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The last few months have not been easy for streamers. The specter of a recession has prompted investors to reconsider the business model and question the billions that platforms are pouring into content in their race for subscribers.

Those questions were raised even more when Netflix announced in April that it had lost 200,000 subscribers — and that it is projected to lose 2 million by July.

Amid a broader stock market slump, Netflix’s stock price is down 67% year to date, making the company one of Wall Street’s biggest losers. But it’s not the only one. Disney’s stock price is down 30% year-to-date, while Warner Bros Discovery is down 27% since its market debut as a merged company in April. (Numbers correct at the time of writing.)

Analysts predict that rising inflation and interest rates will push cost-conscious consumers to limit spending on discretionary items like streaming service subscriptions. (According to a recent survey by Altman Solon, US households currently have an average of three streaming subscriptions each.)

Figuring out what consumers will do and which streamer (or streamers) they might ditch is no easy task. Not long ago, Netflix was the default provider of choice for many subscribers: its first-mover advantage, extensive library, and bold content rendering made it an obvious choice for households. This is still true in many ways, but not to the extent that it used to be – few competing streamers can match Netflix in volume, but they increasingly do so in quality.

After a slow start, Apple TV+ is picking up steam. His clever take on the Oscar-winning Best Picture coda has likely prompted more subscribers to try the service, while its limited offering is slowly but surely expanding to include quality new shows — many of which are in Primetime Emmy competition — such as severance pay, The after party, slow horses, We crashed and pachinkoto add to the returnees Teddy Lasso, Mythic Quest and The morning show.

HBO Max has also impressed with a new roster that includes station eleven, The White Lotus, peacemaker, Julia, bitch, The Gilded Age and Tokyo Vice — and acclaimed recurring series successor and euphoria. Disney+, meanwhile, is hoping for the recent launch of Obi Wan Kenobi can attract more war of stars fans and are helping him on his way to a goal of 250 million subscribers by 2024.

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Tighten straps

As households start slashing subscriptions, streamers may need to start reducing their content spending — which hit $220 billion last year, according to Ampere Analysis. Of course, this would have a huge impact on the currently booming television and film production industry.

At the moment, however, there is little concrete evidence that streamers are cutting back significantly. During Cannes, Netflix reportedly paid $50 million for the Emily Blunt drama pain hustlerwhile Apple snapped Riz Ahmed and Jessie Buckley’s sci-fi romance fingernails. The Netflix deal, in particular, shattered early thoughts that it might be shy about pulling out its wallet after its punitive first-quarter subscriber loss and precipitous fall in market cap.

However, the streamers have hinted at plans to be more cautious about spending. In May, Netflix laid off 150 employees and updated its corporate culture principles to urge employees to “spend our members’ money wisely.” Warner Bros Discovery boss David Zaslav has expressed the need to be “smart” and “cautious” when it comes to spending money on content. In April, he axed CNN+, his ambitious news-streaming service that had launched just a month earlier.

Still, streamers seem unlikely to make any deep cuts. The market is still in its infancy, with many new services fighting for market share. The platforms are also aware of the risks of a cut. Any sign of weakness will result in producers taking their best projects to competing services.

And in the background looms the specter of tech giants like Apple and Amazon, with market caps of $2.4 trillion and $1.7 trillion, respectively. They continue to ramp up their streaming ambitions and likely won’t feel the same pressure as others to curb content spending. With such fierce competition, the real question is, can every streamer afford to cut spending?

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