The golden age of series production would be coming to an end. At least that’s what the American media claims. Bloomberg in a survey published on July 5. Many Hollywood studios and services streaming have revised their budgets downwards and canceled the programming of certain licenses to face the recession which is setting in.
Streaming services undermined
It was the announcement of the slowdown in Netflix’s growth that confronted the players in the industry with the harsh reality. The streaming giant has lost nearly 200,000 subscribers, the first in more than ten years. As a result, the California-based company saw its stock quote drop 25% when it released its first quarter 2022 results.
A decline in growth that is becoming widespread among streaming services and audiovisual production companies. Bloomberg reports that the average salary of directors has dropped significantly, from $4 million per year to $750,000 in 2022. Program budgets have also been cut by more than 30% while some are simply cancelled. Companies would rather waste a few million dollars by offering nothing than spend a lot of money on a program that doesn’t work.
This reluctance can be explained by the strong production of series in recent years. In 2021, the industry produced 559 scripted series, a far cry from the 200 written and filmed in 2013. With such a large number of programs, it is difficult for viewers to watch all the content on offer.
In response to this issue, Netflix said it would no longer spend as much as before on the production of its series. Amazon is also careful about the sums it invests since the recruitment of Mike Hopkins, the former president and CEO of Hulu, at the head of Amazon Prime Video. Only Apple continues to spend lavishly on its original Apple TV+ series.
In the meantime, Netflix has separated from more than 450 employees since the beginning of its crisis. A spokesperson said the company has ” made these adjustments so that our costs increase in line with our slower revenue growth “. This major wave of layoffs is part of a context of mass dismissals within many technology companies as economic activity in the sector slows.
Audiences prefer to see films in theaters
Film productions are also being undermined. Movies produced by streaming companies don’t appeal as much as they used to. Parrot Analytics, a data science company that measures global demand for content across all platforms, reports that last year theatrically released films such as Spider-Man: No Way Home Where Matrix Resurrections generated far more engagements than the release of Don’t Look Upone of Netflix’s most popular films.
Alejandro Rojas, Vice President of Applied Analytics at Parrot Analytics, explains to Bloomberg that ” theatrical movies tend to have higher demand before and after they first air [au cinéma] “. The success of films in theaters depends above all on the number of people traveling to watch them. Depending on its budget, a film must sell a certain number of tickets to repay its production cost and become profitable.
This does not work the same way for works produced by streaming services. The latter work by subscription and receive a fixed sum according to their number of subscribers, even if they do not watch the film.
For the moment, it is difficult to know what turn the market for streaming and audiovisual productions will take. For John Landgraf, president of the American television channel FX, it was obvious that streaming services were spending far too much money without caring about the quality of their productions and their financial balance. From now on, they will have to watch their spending so as not to take the full brunt of the recession that is beginning to affect the sector.