The writer’s and actor’s strike threatens to propel the SVOD industry into recession and end the Peak TV era. But Peak TV’s legacy could mitigate the damage if providers can make discovery work harder!
Strike action threatens the SVOD industry with a recession
The writer’s and actor’s strikes are set to wreak havoc with the content flow into SVOD services. The services could begin to feel the impact before the end of the year, and if the dispute drags on, it could make 2024 the worst year ever for streaming services. The problem for streaming providers is that most customers are committed to them only for the next month. Many won’t stick around if the flow of new movies and TV shows dries up. The resulting wave of cancelation could cause the first major contraction in the SVOD business.
Another problem for the industry is that it is hard to justify price increases if there is no new content for subscribers to watch. Major providers like Disney and WB Discovery are pushing hard to make their direct-to-consumer services profitable, and without increasing prices, that will be very hard to do.
If nothing changes, next year could be a nuclear winter for SVOD. Luckily, there is something the industry can do now to mitigate the damage. And it stems from the peak TV era and our magpie tendencies.
Peak TV era to the rescue
The combination of a pullback in content spending by service providers and the strikes seems to have ended the peak TV era. However, its legacy could be a critical lifeline for SVOD services. In 2022, 599 original scripted series were produced in the US across traditional TV and streaming, a 7% increase from 2021. And series production has been above 350 a year for the last ten years, double the production rate at the turn of the century.
The way the industry, and particularly SVOD services, operate is to focus on the latest releases at the expense of everything else. Specifically, advertising spending tends to focus on new releases. There is a good reason for the focus on advertising; it is the main way viewers discover new things to watch. 48% of US and Canadian adults say commercials during other TV shows help them find something new to watch. Word of mouth, social media, and display ads are also effective.
Unfortunately, the dependence on advertising created a problem for service providers. With so many new shows flowing into services, viewers quickly forget about yesterday’s big release when a new show campaign kicks off. Consider what happened to The Old Guard on Netflix at the beginning of July 2020. Google searches on the movie title show that interest peaked right after the release, at the height of the advertising campaign. Still, three months later, search interest had plummeted to pre-launch levels. We see the same pattern with The Mandalorian on Disney+. Search interest peaked while the shows were being released for each season, and then it fell back to a low level quickly afterward.
How many people missed The Old Guard because they were watching something else when it was released and, when they were done, got distracted by the latest bright, shiny thing? Count me as one.
A huge backlog of great shows awaits viewers
This magpie-like obsession with the latest bright, shiny thing means viewers have almost certainly missed many shows and movies they would have enjoyed. If the industry can help viewers find them, those shows will help keep their customers until the flow of new content is restored.
And there is plenty of room for improvement with content discovery. Only 27% of US and Canadian adults said suggestions from their guide helped them find something good to watch. Providers can do a much better job of understanding the interests of their viewers, matching them to library shows they have not seen, and boosting these shows in the recommendations.
Using great discovery tools to lever out great content from Peak TV bloated libraries can help providers weather the coming SVOD recession.
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