Market Loop - Energy crisis alarm bells grows louder

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11th August 2022

Bite-sized business news from the UK and beyond

Good morning Italy, the birthplace of pizza, is saying arrivederci to Domino’s Pizza. The US takeaway giant opened its first Italian franchise in 2015 and expanded to 33 locations. But yesterday it was announced that all the stores have now closed. Who would have guessed that the people of Italy, where pizza is an internationally recognised national treasure, wouldn’t take to a mass-produced, over-the-top American version of the country’s national dish offered by a multinational chain?

Today's stories

Energy crisis alarm bells grows louder
Netflix makes gaming play to keep subscribers

ENERGY
Energy crisis alarm bells grows louder

What happened?
Yesterday MoneySavingExpert Martin Lewis called rocketing energy bills a ‘national crisis’ and condemned the government for failing to implement urgent support. It came on the day that a survey found that many people are already behind on energy bill payments with almost a quarter of households owing £206.

How did we get here?
Over the past year energy prices have soared, first due to a post-lockdown boom in demand and now made worse by uncertainty in supplies from Russia following its invasion of Ukraine.

As a result the average UK household has seen their bills rise from around £1,100 in January then almost doubled to just under £2,000 in April. The announcement for the October regulated price cap is due later this month and forecast to be around £3,500. Earlier this week energy consultancy firm Cornwall insights estimated that the January 2023 price cap could rise to £4,200.

Campaigners predict that 9.2m households will be in fuel poverty this autumn, increasing to 10.5m from January.

What’s the government doing?
Earlier in the year the government announced a £15bn package to give households a £400 discount on their energy bills with more for the poorest families. But this was based on expectations of the price cap reaching £2,800 in October, far below the latest projections. The outgoing prime minister Boris Johnson says he won’t be unveiling anymore support schemes before he goes as he believes it’s the job of his successor.

The two contenders for PM have different ideas to reduce bills: Rishi Sunak has suggested a suspension of VAT of £160, whereas Liz Truss has suggested removing green charges which total £153. But given how large the increase in bills will be along with rising prices elsewhere in the economy, the new PM will be under pressure to do more.

Zooming out: Across the channel France has taken extreme action to help consumers. French households have been almost completely protected as the state-owned energy provider EDF has been forced to limit price rises to just 4%.

Other stories to keep you in the loop

US inflation lands lower than expected calming markets
Supermarkets not passing on lower fuel price says RAC
Student loan interest rates cut again as inflation and cost of living soar
Deliveroo losses soar to £147m as cost of living crisis bites
Coinbase $1.1bn loss kills crypto market rally
Tui reveals £63m hit from recent travel chaos
SoftBank set to book $34bn gain by slashing Alibaba stake
London doctors raise £20m to help tackle NHS staffing crisis

MEDIA
Netflix makes gaming play to keep subscribers

Did you know that Netflix has games? You’re not alone if you answered no: this week it was revealed that less than 1% of its 221m subscribers engage with its gaming platform.

The streaming giant is making gaming an increasingly central part of its offering as it seeks to reverse a recent slip in subscribers. Netflix lost nearly 1m users from April to June, marking its second straight quarter with declining subscribers.

Last year the company announced its venture into the $93bn global mobile games market as competition with its streaming rivals intensified.

Despite a cold reception from users, it's doubling down by acquiring three gaming studios and aiming to have 50 games on its platform this year.

But the gaming industry is facing a slowdown that’s seen companies fall from pandemic highs. During lockdowns, sales soared as consumers had nothing better to do than play games. Now, people are spending money out of the house. Major game-makers EA and Nintendo posted disappointing earnings reports last quarter, as did companies that sell gaming hardware, like Nvidia.

The global games market is expected to grow by 2.1% this year, which is sluggish compared to 24.6% growth seen in 2020.

Zooming out: Netflix isn’t the only company growing its gaming library to compete for subscribers. Apple Arcade, launched in September 2019, now boasts over 200 titles. Amazon’s Prime Gaming bundles games, in-game offerings and a Twitch.tv subscription as part of Amazon Prime. Google provides access to hundreds of games through its Play Pass, and Meta has invested heavily in its Oculus Quest VR headset and platform.

Stat of the day

In 2014 Serena Williams started her own venture capital firm which today has stakes in 16 companies that are valued at least $1bn

Interesting links from around the web

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Do recruiters view tenure at a company as loyalty or laziness?
11 simple tips for staying cool without air conditioning

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Market Loop - Energy crisis alarm bells grows louder

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