Last week, the cast and executives behind HBO’s Succession gathered for a lavish party celebrating the premiere of the hit show’s final season. At Manhattan’s Lincoln Center, the cast danced to Carly Rae Jepsen’s “Call Me Maybe” while guests sipped on a custom whiskey cocktail named “F*CK OFF” — a reference to the cantankerous character Logan Roy.
It is a triumphant moment for parent company Warner Bros Discovery, which has spent the past year in a wrenching cost-cutting drive. The new season has received rapturous reviews from critics, while the first episode drew 2.3mn viewers — a series high.
But Succession’s ending may also be a bookend to a remarkable era of Hollywood: the phenomenon known as “peak TV”, a time inextricably linked to the wider US economy and financial system.
Succession was greenlit five years ago, a headier time when easy monetary policy and soaring stock markets spurred an unprecedented flow of money into Hollywood. With Wall Street cheering them on, America’s largest studios threw tens of billions of dollars towards producing new shows and movies in a land-grab for streaming subscribers. It was halcyon days for any half-decent script idea, and allowed consumers to enjoy more television than ever before at a fraction of the costs of traditional TV.
That extravagance came to an abrupt stop last year, seemingly in lockstep with the beginning of the US Federal Reserve bank’s most aggressive streak of rate rises in decades. On March 16, the Fed lifted its benchmark interest rate by a quarter of a percentage point, kicking off a series of hikes. A month later, Netflix revealed it had lost customers for the first time in more than a decade, prompting a dramatic decline in the stock valuations of the world’s largest entertainment companies.
After several years of inundating audiences with more television than they could ever possibly watch, Hollywood’s gusto has been replaced with austerity, even timidity. All the big media groups are slowing their spending growth. Shows are being cancelled, including ones that had started production.
John Landgraf, the veteran television executive who coined the term “peak TV”, said in January that he expected the number of US scripted shows to drop by between 20 and 30 per cent this year, which would bring it back to levels of 2015-16.
This is already evident in the first couple of months of the year. In January and February, 452 television shows were ordered in the US, down 23 per cent from the same period a year ago, according to data from Ampere.
In this sense, the Fed’s monetary tightening has trickled down from economic policymakers in Washington, to the stars in Hollywood and Americans at home on their sofas. “If those macro effects weren’t there you’d probably still have streaming services spending more and more,” said Tom Harrington, analyst at Enders.
For consumers, this means we will be paying more money for less content, as streaming services raise their prices. The avalanche of shows of the past few years were being served to us at subsidised prices by streaming platforms making record losses.
Warner has been among the most aggressive in the industry in slashing costs, as chief executive David Zaslav aims for a long-term profit margin of more than 20 per cent.
One former chief executive of a major studio said “the financial gods have come home to roost”. “It didn’t require a PhD in economics to understand that eventually, you couldn’t have negative cash flow, spend all this money and keep having the market reward you.”
But the dust has not yet settled. And “peak TV” never necessarily meant better TV. In fact, when Landgraf spoke about “peak TV” in 2015, he was firing off a warning: “There is simply too much television.”
Perhaps the worst aspect of this new era for streaming is an impatience with shows that do not instantly draw viewership or acclaim. Some shows are being cancelled before they make it to air. Even ones with big names attached to them, such as Demimonde, a sci-fi series by JJ Abrams, the creator of Lost, which HBO Max shelved last summer.
Succession had a slow start. When it debuted in 2018, reviews for the first couple of episodes were rather negative. At the New York premiere party in May of that year, it was unclear if the show — which would later scoop up more than a dozen Emmy awards — would get picked up for a second season, according to people familiar with the matter. HBO stuck with it. Imagine if it hadn’t?
anna.nicolaou@ft.com
