Content's Bubble and The Sum of All Fears
ESG's worst-case scenario: "Folks don’t realize they’re in a bubble until after it bursts"
If you want a great syymbol for anxiety, there’s nothing better than a giant comet heading towards earth. It wiped out the dinosaurs, why not us? Just such a premise anchored, in fact, one of Netflix's biggest films of 2021, Don’t Look Up.
In the film they’re looking at a gigantic comet (ostensibly an analogy to climate change, but really an analogy for COVID-19, if you ask me). What’s the supposed lesson? That a bunch of really smart (and also really dumb) people can just choose not to acknowledge impending tragedy. Tragedy that often seems incredibly obvious in hindsight.
So let’s imagine that, instead of a bunch of politicians looking at a comet, it’s entertainment executives looking at this chart that FX research (yes, that FX) puts out of English-language series released in the U.S. over time:
Want to know why I’m anxious? That chart. What if that frothy spending in Hollywood over the last decade, the budgets that funded that huge increase in the number of shows, comes to a screeching halt? Last year, Hollywood made more TV shows than ever before. And not by a little bit. The town added 349 series since 2009! A 166 percent increase! Not even the price of gas is going up that fast!
But but, but…what if, instead of a glide path towards entertainment’s streaming nirvana, that chart represents a bubble that’s about to burst?
FEAR I: Could the Hollywood Production Bubble Burst?
In general, folks don’t realize that they’re in a bubble until after it bursts. Right now, Hollywood is treating the current boom in production as business as usual. I could be really fear-mongering and make a comparison to, say, Flint, Michigan in the ‘60s when auto after auto was rolling off the line, or Allentown, Pennsylvania as the sound of rolling mills converted steel ingots 60 years ago. But I digress.
Still, at some point, industries change. And this hockey stick chart of spending doesn’t match the hockey stick-now-slide downward of streaming stocks (exhibit A: Netflix; exhibit B: Wall Street’s cool reception to Viacom’s more robust streaming offering). What if this entire industry changes its mind on the amount of content required to win the streaming wars? All the folks