Netflix cracking down on password sharing, reddit’s API changes, every streaming platform raising their prices, YouTube fighting against adblockers and potentially charging creators for visibility… the list goes on and on, and it seems to be coming from every direction all at once.
Am I missing some huge financial change in the tech investment sphere that has affected Silicon Valley (ie. freakout due to the SVB collapse)?
Or is this just a case of companies seeing each other get away with squeezing consumers, and following suit?
All of them are built on venture capital and borrowing money used to be “free” so investors were fine with borrowing with 0% interest and spending them on all the shiny tech projects. Now with interest rate being 5.25% they all of them all demanding return on their investment and companies that never in their lifetime were profitable are forced to come up with a way to make that money.
I recently read a pretty interesting take that a lot of this started because Silicon Valley Bank failed, and now all these companies have to do something they haven’t really had a necessity to do before — to make profit.
And all of them aren’t run by business geniuses as previously believed, on the contrary, most of the leaders are so disconnected from reality that they genuinely have no idea what people want in a service, they can’t take feedback or advice because “they know better”, and all the other stuff that comes with that.
So they do what they think is right, while missing the whole point of the product they are so desperately trying to make profitable.
Look at spez’s “we’ll stay profit-focused until profits arrive” and Musk’s rush to get at least some ROI on his $44 bn middle age crisis toy.
Interest rates are rising up globally, to fight global inflation, and the general feeling of a recession.
This is having several impacts in several ways. Mostly it comes down to VC (venture capital) and lending money being harder to get.
During the good time VC’s threw the net wide and invested in everything they could, knowing that only a select few would truly pay off. Well, it time for those investments to put up or shut up.
This is further having an impact on stock market and public companies. Previously potential has been seen as king. Looking for the next big thing, having lots of users etc. Now being actually profitable and surviving is going to be king.
Think of Tesla as riding this line nearly perfectly (and I’m no Elon fanboy). It rode the potential wave hard, it’s stock price soared, they were the first player in electric cars. They would have an edge on everyone! Then they started plummeting as markets saw the looming interest rates. Then they posted some profitable years, and are soaring again.
Aside from the VC funding that others have mentioned, being a publicly listed company means that there is a never-ending pursuit for increasing profits. Investors who buy stocks want to see a positive return. The problem with some tech platforms is that their product / service offering is already ideal, so their choices are to either spend money to innovative and build something new (risky!) or simply raise prices. Subscription pricing is ideal because it provides a consistent revenue base and allows the company to forecast what revenue is likely to be in the future.
They raised the price by 1 whole dollar after however many years and y’all are acting like it’s the tech apocalypse. This is hardly on the same scale as what Netflix is doing.
What’s going on with tech, recently?
Netflix cracking down on password sharing, reddit’s API changes, every streaming platform raising their prices, YouTube fighting against adblockers and potentially charging creators for visibility… the list goes on and on, and it seems to be coming from every direction all at once.
Am I missing some huge financial change in the tech investment sphere that has affected Silicon Valley (ie. freakout due to the SVB collapse)?
Or is this just a case of companies seeing each other get away with squeezing consumers, and following suit?
All of them are built on venture capital and borrowing money used to be “free” so investors were fine with borrowing with 0% interest and spending them on all the shiny tech projects. Now with interest rate being 5.25% they all of them all demanding return on their investment and companies that never in their lifetime were profitable are forced to come up with a way to make that money.
I’d love to read more about this, do you have a reference??
I fear it’s the last option.
I mean, who doesn’t hate Diablo Immortal, but the sheep play it in masses and it seems to pay off.
As long as most people don’t care, then the providers won’t bother.
I recently read a pretty interesting take that a lot of this started because Silicon Valley Bank failed, and now all these companies have to do something they haven’t really had a necessity to do before — to make profit.
And all of them aren’t run by business geniuses as previously believed, on the contrary, most of the leaders are so disconnected from reality that they genuinely have no idea what people want in a service, they can’t take feedback or advice because “they know better”, and all the other stuff that comes with that.
So they do what they think is right, while missing the whole point of the product they are so desperately trying to make profitable.
Look at spez’s “we’ll stay profit-focused until profits arrive” and Musk’s rush to get at least some ROI on his $44 bn middle age crisis toy.
Interest rates are rising up globally, to fight global inflation, and the general feeling of a recession.
This is having several impacts in several ways. Mostly it comes down to VC (venture capital) and lending money being harder to get.
During the good time VC’s threw the net wide and invested in everything they could, knowing that only a select few would truly pay off. Well, it time for those investments to put up or shut up.
This is further having an impact on stock market and public companies. Previously potential has been seen as king. Looking for the next big thing, having lots of users etc. Now being actually profitable and surviving is going to be king.
Think of Tesla as riding this line nearly perfectly (and I’m no Elon fanboy). It rode the potential wave hard, it’s stock price soared, they were the first player in electric cars. They would have an edge on everyone! Then they started plummeting as markets saw the looming interest rates. Then they posted some profitable years, and are soaring again.
Aside from the VC funding that others have mentioned, being a publicly listed company means that there is a never-ending pursuit for increasing profits. Investors who buy stocks want to see a positive return. The problem with some tech platforms is that their product / service offering is already ideal, so their choices are to either spend money to innovative and build something new (risky!) or simply raise prices. Subscription pricing is ideal because it provides a consistent revenue base and allows the company to forecast what revenue is likely to be in the future.
They raised the price by 1 whole dollar after however many years and y’all are acting like it’s the tech apocalypse. This is hardly on the same scale as what Netflix is doing.