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Hosts Janice Min, Richard Rushfield and Tatiana Siegel are joined by new Ankler contributor Sean McNulty of The Wakeup newsletter to discuss the first likely recession of the streaming era, which, if it were to happen, would further roil companies already getting pounded by Wall Street and, in the case of Netflix, subscriber losses.
McNulty references the last recession following the 2008-2009 collapse of the financial markets. It was pre-streaming and HBO was the dominant premium player at the time. “HBO really never saw a big hit in [previous] recessions… but that was in the ecosystem of cable TV, where it was a lot harder to cancel your HBO,” says McNulty, a former executive at HBO and Charter. “Now, you can literally cancel at the click of a button on your [remote]. I think we haven't seen too much [subscription decline] yet. But I think by end of by Q3… this will be very interesting.”
Marketing cuts appear already to be underway as the streamers tighten their belts. “You're not gonna cut back necessarily on production, but you cut back on marketing and advertising… [they] take the first hit, which is where Warner Bros. Discovery already has positioned its ax,” adds McNulty. “And layoffs are sweeping the industry.” Additionally, an across-the-board pullback in advertising is expected as well right as streaming services pivot to advertising to goose revenue.
Siegel also discusses the role of inflation in the new subscription economy: “Everyone right now is terrified of the economic outlook, because no matter how wealthy somebody is in the industry, even if they're at the highest echelon of the industry, they are seeing that a pint of strawberries is $19. And you have to wonder how long will people be able to have four different streaming subscriptions under those kind of economic [conditions].”
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