Reports Media & Marketing

Recession Impact How an Economic Downturn Could Reshape Digital Media

Report by Alistair Taylor, Amanda Stears, Karol Severin, Keith Jopling, Mark Mulligan, Tim Mulligan and Zach Fuller
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The 20,000 Foot View:  Ten years on from the credit crunch, the global economy could be poised to enter another economic recession. Many of the underlying causes of the credit crunch remain in place, due to governments lacking the appetite for the structural reform required to right the faults in the global financial system that catalysed the slowdown. Many of those adverse factors remain unchecked, and with growing volatility in geopolitics a perfect storm could be brewing. A succession of potential unintended consequences could reshape a digital economy that has grown in an era of abundance and easy access to capital. This report does not tackle the underlying causes of a potential recession – we will leave that to the economists. Instead we explore how digital media can be impacted, how it can weather the coming storm and how it should prepare for a post-recession economy.

Key Insights

  • Millennials have been the fuel for the digital media engine, but these young professionals could be the ones who have greatest job insecurity in a downturn
  • The combined impact of lower spending power and high ticket prices could hit live music hard
  • Streaming video and music subscriptions will be vulnerable because they are contract-free and the free alternatives are so good; news subscriptions will be similarly impacted
  • Ad-supported video on demand (AVOD) services like Viacom’s Pluto TV and Sony’s Crackle could be big 
  • streaming video winners
  • Games console replacement cycles could be hit, building the case for rental models
  • De-risking of investor balance sheets could result in a slowdown in both early and later stage investment into media and tech
  • Investors may assume more direct roles in portfolio companies to protect their investments
  • Multi-format subscriptions and bundles will be well placed to thrive in recessionary environments, with Amazon set to be a big winner
  • The combination of bundle economics and early cancellation fees could see traditional pay-TV companies regain some market share from streaming insurgents
  • Advertisers seeking better ROI may trigger an accelerated shift to digital advertising

Companies and brands mentioned in this report: Amazon, Amazon Prime, Apple, Arcade, Crackle, DAZN, Disney, Disney+, the Economist, ESPN, ESPN+, the Financial Times, FloSports, Fortnite, Google, Hulu, Microsoft, Microsoft All Access, Netflix, the New York Times, Playstation, PlayStation Plus, Pluto, Softbank, Spotify, Stadia, the Telegraph, Uber Eats, Viacom, Xbox, Xbox Live, Yo, YouTube 

Recession impact research: This report is the first of a long-term series of research reports from MIDiA that will explore the potential impacts of an economic recession on the digital media landscape. Additionally, MIDiA reports will also now feature Recession Impact sections at the end of standard reports. The next report in this series will present new data on how consumers expect to change their media spending in a recession.

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