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Media analysts discuss Covid-19 impacts

May 8, 2020

Analysts at research firm Ampere Analysis are publishing a regular podcast discussing the impact of the Coronavirus pandemic on the entertainment industry. Here is a top line summary of the most recent discussing what it means for the entertainment industry now, and for a post-lockdown future.

Ups and downs for US operators in Q1: Daniel Gadher, Research Manager

  • Analysis of the Q1 results of telco AT&T and cable provider Comcast show ups and downs.
  • On the plus side, broadband growth for Comcast grew by close to half a million subscribers in Q1, a record for them.
  • On the down side, there have been noticeable losses for NBC and Turner due to exposure to the advertising market.
  • The combination of economic pressures on households and the average higher cost for pay TV in the US versus European markets is driving consumers to cheaper alternatives. As a result, we’ve seen an acceleration in cord cutting across multiple pay TV operators- AT&T’s losses for DirecTV were substantial over the last quarter.
  • In the European markets, advertising revenues over the first part of the year was quite strong. However, towards the end of March we started to see advertising revenues decline with the onset of the Covid-19 pandemic.
  • In the UK, ITV’s online advertising operations were up 26 per cent year-on-year, while their linear advertising was down 1.5 per cent. In April, online and linear advertising revenues were down 42 per cent, which brings the year down 9 per cent, and networks like ITV will be anticipating greater falls in linear advertising.
  • Because of the uneven impact of the lockdown geographically, some of the southern European countries like Spain and Italy have been slightly harder hit when we look at their results from the decline in advertising revenue.

Google and Facebook’s Q1 results show resilience: Hannah Walsh, Senior Analyst

  • Facebook and Alphabet recently published their Q1 reports.
  • Facebook ended Q1 on $17.7 billion total revenue. Ad revenue – a large portion of their revenue – has grown 17 per cent year-on-year.
  • Alphabet ended Q1 at $41.2 billion total revenue. Google Search and other advertising was up 9 per cent year-on-year. And YouTube saw a huge 33 per cent growth year-on-year in its ad revenue, ending the quarter on $4 billion.
  • When we reviewed the impact of lockdown in March, YouTube saw a huge 33 per cent growth year-on-year in its ad revenue, ending the quarter on $4 billion.
  • When we review the impact of lockdown in March and April, YouTube’s viewership grew, but its ad revenue growth dropped to single figures by the end of March.
  • This was mainly driven by the decline in brand advertising campaigns as media buyers cut back spend. YouTube’s direct response advertising continued its strong growth throughout the quarter, providing resilience to the pandemic’s impact on the online ad market.
  • Due to Covid-19, Ampere has revised online ad revenue projections to just 5 per cent growth year-on-year, down from the 13 per cent growth posted in 2019. This remains far higher than our forecast for the TV ad market, which we’ve revised down to an 11 per cent decline for the year.
  • Facebook announced weakness across all geographies. However, in terms of ad revenue, it reported a 21 per cent increase in APAC and a 16 per cent increase in all the other regions.
  • Facebook has seen stabilisation in its ad revenue for April where ad revenue is flat year-on-year. Alphabet are yet to give an insight on how ad revenue will look in April.

Germany’s response to lockdown commissioning: Alice Thorpe, Analyst

  • For commissioners, it’s a case of necessity being the mother of invention, with TV networks forced to be creative when conceiving of new content.
  • The UK is leading the way in terms of the volume of these newly commissioned Covid formats, with Germany the second-largest commissioner, ahead of the US.
  • German broadcasters’ turnaround has been particularly impressive. We’ve seen 89 per cent of these new formats already released in Germany, versus around 30 per cent of those commissioned in the same period in the UK.
  • Entertainment, Documentary, and Comedy shows make up the bulk of commissions in Germany, where we’ve seen the widest variety of content types. Popular programmes have included cooking at home shows where the recipe is shared online beforehand and viewers cook along, as well as brain training and interactive game shows.
  • The video conference call interview formats, which we have also seen used in the UK and US, have proved less popular in Germany and typically have not lasted more than a few episodes.
  • Some of the cooking and fitness formats may have the potential to continue after the lockdown due to their success and the affordability of production. This will be key. For example, ProSieben has already announced it plans to cut programming spend by 50 million euros for the coming year to cope with the impact of the pandemic.

“As the pandemic continues, the impact on the entertainment industry evolves and deepens,” advises Richard Broughton, Research Director at Ampere Analysis. “Our team is working hard crunching new figures and incorporating the latest facts, in order to update our forecasts and assessments of the media market’s prospects, which we’ll share in future podcasts and report.”

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