The buzz that has been accompanying us for months has already become a verifiable fact: the business of streaming is going through an economic crisis. The signs that reach users directly and that affect their direct experience are increasing: reduction of budgets for the production of new content, increase in rates, elimination of features (such as account sharing) that a while ago were an inseparable part from the experience…
But in addition, there are analyzes that corroborate this situation in the sector, one that could worsen in the coming years.
From glory to anonymity. In his article ‘The broken economy of streaming services: A statistical explanation’, analyst Daniel Parris exposes the dead end that many streaming services have reached. streaming. To do this, it details how the platforms grow and maintain themselves, and how this dynamic requires financial endurance that is not within everyone’s reach. Before, he gives an obvious and recent example: Paramount, one of the most emblematic film producers of the 20th century, has become the latest media conglomerate to enter the streaming business with Paramount+.
However, the results have not been good: not only is its platform economically deficient, but it is far from having the relevance of competitors like Netflix.
The long career of maintenance. Parris says that the way for companies to grow within the sector is to maintain their audience without significant portions of it migrating from platform to platform, in a panorama so saturated that it is impossible for the average viewer to be an active user of all of them. The one that has carried it out most effectively has been Netflix, and that is why it has won the war of streamingstarting with the eclectic and varied nature of its catalogue, which literally appeals to tens of millions of customers of very varied backgrounds.
He streaming It has become a long-distance race in which to stay in business there is no choice but to produce a lot without stopping. That is why the size of Netflix’s catalog is double that of its immediate competitors.
Show me the pasta. There is only one way to reach these figures, and that is with a checkbook. In 2022, it was estimated that Netflix would invest almost twice as much in content as its most direct competitor, Prime Video ($18 billion compared to Amazon‘s $10 billion). Things may have changed (Netflix has possibly reduced its expenses once it reached the top, and it is possible that Amazon, with series like ‘Citadel’ or ‘The Rings of Power’, has multiplied its own), but the proportions remain being valid.
People don’t stay. The problem is that the services are so varied and so expensive that many of the platforms find it difficult to retain the audience, which is the true variable to measure the success of a platform (and its future problems). Second Measure measured how long customers stayed on the services, and on platforms such as Peacock (owned by Universal) and Apple TV+, customers stayed on average for around a year. You just have to compare it with Netflix, which has an average retention period of 50 months.
The whiting that bites its tail. In this situation, the only way to increase audience retention is to generate more and more attractive content. Not filler content, but content that the viewer considers essential to fill their leisure hours. More ‘Stranger Things’ or more ‘Ted Lasso’: the platform doesn’t matter, but the content has to be valuable. Only Netflix has the financial muscle to make proposals of this type every month, but it entails an added problem: the excess catalog disperses the news. A new season of ‘The Squid Game’ is not like the first time: now it is just another season of one more series in an ocean of offers. Paradoxically, the fight for the survival of streaming (producing more) has led to its own suffocation (producing too much).
A temporary solution. Is there a way to put an end to this uzumaki of inevitable productions that, at the same time, inevitably, sink the platforms into their own excess? Producing cheaper is one of those ways: although some calculations suggest that platforms spend more than ever on increasing their catalogue, the truth is that, as we said above, there are fewer and fewer blockbusters. In fact, it does not contradict what we have just stated: we are looking for more series that make the audience stay month after month, not an unforgettable and very expensive impact every eight months, which continues to be Warner’s policy.
The cryptocurrency of the entertainment industry. All of this, its contradictions and the uncertainty of the near future for the industry, is summarized very well in a 2023 Vulture article by director Steven Soderbergh: “The entire industry has moved from a world of Newtonian economics to a world of quantum economics, where two seemingly opposite things can be true at the same time: you may have massive success on your platform, but it’s actually doing nothing to increase your platform’s revenue. It’s absolutely conceivable that the subscription model. “streaming is the cryptocurrency of the entertainment business.”
Terra incognita. The situation is undoubtedly complex: it is not clear that a production of 200 million dollars will yield profits, nor is it clear that the solution is for the budgets of the series and films produced by the platforms to decrease. The general feeling in the industry, such as declared numerous personalities in Vulture, is that Netflix has changed the industry so much that it has literally left it unrecognizable. For years, the audiovisual sector has been advancing in unknown territory. Which, without a doubt, gives rise to exciting phenomena and abundant business opportunities. And bankruptcy.
Header | Netflix, Venti Views
In WorldOfSoftware | It is normal that you do not remember what happened in the last season of your favorite series: the industry has a serious deadline problem
