The Content Bubble Is About to Pop

by Doc – Owner, Founder, Sometimes Talks About Non-Amiibo Things

I had the blessing of earning my Economics and Finance degrees from 2017 to 2021. I distinctly remember walking into class on my first day of Freshman year and taking note that yet again, a market index or mutual fund had hit new record values. Business was booming, and the massive increases in consumer consumption with little corporate investment made for a frothy economy with plenty of room for excess.

Much of this excess made its way into entertainment goods, especially among the youth. Computerized novelty products like cryptocurrency, NFTs, content creation subscriptions (including both Twitch and OnlyFans) and other forms of entertainment spending became incredibly popular thanks to the very large amounts of excess income that the younger generations were enjoying. This trend only accelerated when the COVID pandemic hit, shifting demand almost entirely away from “productive” products to entertainment products. Many YouTube channels reached peak viewership in the first months of the lockdowns, and made record revenues.

This is all about to go away.

As best as I can tell, the days of the frothy, excessive American economy are done. While the Biden administration hasn’t acknowledged the true depth of the inflation that has been omnipresent in the economy for over a year, the data is starting to paint a very clear picture: the United States is entering a major economic recession, and it’s not clear how long it will last or what steps can be taken to prevent it. We’ve inflated ourselves into nothingness.

When an economy hits a recession, the consumer’s immediate response is to cut as much luxury spending as possible. This includes cutting the costs of cable TV, of faster internet, of spa days, and yes – even Twitch subscriptions. As content consumers have to take on more hours at work and spend less money paying for content, the viewership, ad revenue and subscription revenue of the creators will decrease significantly. The overall market for content creation will shrink, and the smaller creators will have to either continue making content full-time while going bankrupt, or to throw in the towel and get a stable job, if they can.

If you’re a content creator, and you believe that your revenue channels are safe from this, don’t be naive. Even if you manage to maintain an unmoved viewership base, companies feeling the effects of the recession will be limiting their advertising budget, which means your advertisement bids in the automated Twitch and Google/YouTube bid systems are less competitive. Less competitive ad bids means advertisements cost less, and that means…

…that means you make less ad revenue by a significant margin. So you can either hunker down and try to tough it out, or you can take the safer approach to make ends meet.

Either way, good luck over these next few years.

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