Video streaming services were initially thought to be one of very few industries to benefit from people spending more time at home. However, there are also negative effects and they are becoming increasingly evident as the lock-down continues – also for the major players.

As more and more countries literally shut down, online video streaming have become increasingly important in people’s lives. In the Nordics, as elsewhere, there is a clear increase in viewing as well as in subscriptions. On a global level, Strategy Analytics recently adjusted its 2020 estimate for SVOD subscribers to 947 million – an increase of +5% compared to pre-corona figures. Netflix, being one of the major actors, is also experiencing a boost both in usage and stock price. However, as the restrictions on people and businesses have spread, so have also the negative consequences.

To start, virtually all productions of series and movies in the US have either been cancelled or postponed. Netflix has put all scripted film and TV productions on hold, including Nordic titles such as Love & Anarchy and Home for Christmas. Several Nordic studios have also postponed or cancelled productions, including Nexiko, FLX and Filmlance. Furthermore, traditional TV programs such as entertainment shows and sports have been affected. For example, Swedish Let’s Dance (“Strictly come dancing”), has been forced to change its’ content as some of the participants have fallen ill.

The break in production also risks affecting launches later in the year. For Netflix, battling the loss of high-profile series and movies already prior to the corona outbreak, this is far from good news. Rights owners such as AT&T/Warner Media and Comcast/NBCUniversal have withdrawn popular titles from Netflix, as they are launching competing services. This leaves Netflix highly dependent on its’ original productions. Some competitors, such as Disney, may not be as affected as their library is more extensive.

Apart from this, a market in distress makes the established saying “Cash is king” highly relevant. Netflix has long struggled with negative cash flow, as a result of the huge investments in content (as well as in tech and people). And at the same time, new services are being launched… Disney+ initiated its second phase of the global launch in Europe last week – +5 million downloads the first day. In the wake of the Conrona pandemic, concerns are now being raised that layoffs and unemployment rates will increase pressure in the industry. It may very well be that streaming services are approaching market maturity with increasing competition as well as a slowing stacking factor.

From a local Nordic perspective these questions are highly relevant. Soon Mediavision will publish this spring’s edition of Insight: TV & Streaming and Insight: Media & Markets, with SVOD figures for both consumption and subscriptions. We can conclude, that even if streaming is experiencing a surge right now, there are several reasons for concern going forward.