The short answer: it’s unclear.
What is clear, is that the streaming wars are becoming increasingly expensive. Everyone is vying for the customer’s prime-time attention. Just to watch the latest new original series X on streaming service Y is a mind-bending calculation. Just between those two variables alone, and conservative estimates on new original content: roughly 10 services with original content, 5 new series per year at 10 episodes each, comes to about 250 episodes to stream. That’s roughly 250 hours worth of content to stream pear year. America’s greatest export is after all, entertainment.
That’s a lot to keep up with, and that doesn’t even include cable studio production releases that come from favorites such as FX or SYFY.
Professor Scott Galloway makes a great point that SVODs that have an economic flywheel (e.g. companies that attract customers via Prime or iPhone sales, and enjoy the benefits of staying within those ecosystems such as Prime Video or Apple TV+ respectively) are immune to economic downturns. A couple of obvious giants that fit that mould are Amazon and Apple:
Following that rubric, Disney+ doesn’t enjoy the flywheel designations and Netflix is experiencing an especially painful truth — producing original content is very expensive:
I’m not even sure Netflix gets out alive. Netflix is now the US economy, vulnerable to a spike in interest rates as it takes on increasing amounts of debt to fund staggering investments in original content. The original gangster can’t rely on gross margin dollars from Mandalorian action figures, handsets, or paper towels (no flywheel). The key question is can Netflix’s first-mover advantage/skill be replicated in other markets.
If Netflix isn’t careful, when the next recession or economic downturn hits, (reminder: the American deficit is nearing $1 Trillion) it’s entirely possible that Netflix won’t survive.