'Funflation' hits home: Why staying in isn't the cost-saver it used to be

Summary

Rising costs of at-home entertainment, such as streaming and gaming, are affecting consumer budgets, potentially altering spending habits and impacting related stocks. This shift could influence the valuations of companies in the entertainment and technology sectors. The increased expenses associated with staying in may lead consumers to seek alternative, more budget-friendly options.

Market Context

The hike in prices for at-home entertainment could negatively impact stocks like Netflix (NFLX) and video game publishers such as Activision Blizzard (ATVI), as consumers may cut back on these services to save money. Conversely, this could be positive for companies offering free or low-cost alternatives, such as public libraries or free-to-play game developers.

Key Drivers

• Price hikes in streaming services
• Increased costs of video games and gaming platforms

Risks

• Consumers may resist price increases, opting for piracy or free alternatives, further pressuring the revenue of affected companies

Time Horizon

Medium Term