Netflix is undefeated
Daily Data: When discretionary isn't really discretionary (but it's not exactly valorous either)
In today’s dispatch:
a discretionary item that’s not so discretionary
where others churn, one stays sticky
they said what they meant, and they meant what they said, and it’s right there in the alternative data
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Daily Data: Netflix is undefeated
Simple binaries, are helpful, even if they’re not entirely true.
Take discretionary v. non-discretionary spend. The simple binary says that when money gets tight, the non-discretionary stuff gets priority.
It’s true, but it’s also a bit tautological, in a “survival of the fittest” kind of way. A cellphone isn’t really a necessity, but cellphone bills are among the very last bills that people stop paying. Having a cellphone is a discretionary good that, in our hierarchy of goods, sits really, really high.
It’s also true of coffee, in that people might cut back on a lot of things, but cutting back on their morning coffee is probably not gonna happen, until a lot of other things go.
Streaming spend goes up
It’s also, also true (apparently) of streaming.
We really like our streaming.
Spend on streaming services is growing more quickly than other discretionary stuff (via BofA):
The difference really took off March ‘23, which is also when the effects of “demand destruction” reached their apex (and consumers pulled back across the board).
And boy howdy can you see the slowdown in discretionary spending, which is strange for our “booming” economy (which is not, in fact, booming).
When it comes to spending more on streaming, it matters little how wealthy you are, but it does matter a little:
Higher income households are spending slightly more, but otherwise, streaming is price-inelastic bare necessity, shared equally by rich and poor.1
I’m not sure that’s what I would have predicted, and I think some part of it is just upward repricing of previously under-priced entertainment, but we shall see.
With the benefit of hindsight though, TV is pretty important to people, and streaming is rapidly replacing (and recreating) TV, so it checks out, at least to that extent.
Netflix especially is undefeated.
From the always excellent
, the love of streaming isn’t shared equally.Keep reading with a 7-day free trial
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