Media analysts discuss pandemic impacts

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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, with comments as to what it means for the entertainment industry now, and for a post-lockdown future.

Gaming keeps on winning: Piers Harding-Rolls, Head of Games Research

  • Analysis of the latest earnings of large games publisher, Activision Blizzard, demonstrates strong performance for the sector during the lockdown. In Q1 its net bookings were up 21 per cent YoY versus the first quarter of 2019. With people spending more time at home playing games, it has been proactively growing its audience.
  • Compared to the TV industry, the games sector has a wider scope for flexible content approaches, games can be constantly updated and tweaked to engage with different audiences.
  • Although aspects of game production such as voiceovers, motion capture, and the more physical elements where close proximity is needed have been limited by the lockdown, generally there has been a smoother transition to working from home than many other entertainment sectors.
  • In terms of gaming’s relationship with advertising, it has been more of a mixed picture. Activision Blizzard’s King division Q1 advertising revenue growth was up 75 per cent but it had seen a significant slowdown in growth in April. This has affected mobile gaming the most as it relies more on advertising for its revenue, but overall the games sector is comparatively underexposed to a general fall in advertising revenue. Also, user acquisition costs have fallen to help offset a slowdown in ad revenue.

Hit in advertising is affecting European broadcasters: Léa Cunat, Senior Analyst

  • The commercial TV groups in some of the big European markets have taken a big hit on ad revenue as a result of the lockdown.
  • In France, TF1 and M6 have each seen a 9 per cent drop in their TV ad revenue for the first quarter versus last year’s Q1 results due to the postponement and cancellation of advertising campaigns.
  • In Spain, Atresmedia’s TV ad revenue was €180 million in the quarter, an 11 per cent drop from Q1 2019. Its digital ad revenue has been slightly less impacted with a growth of 2 per cent YoY.
  • Pan-Scandinavian group Nordic Entertainment reported a drop of more than 13 per cent of broadcasting and streaming sales at SEK835m. However, it also operates pay TV and digital services so the group is less exposed to advertising.
  • Its subscription sales grew in the quarter, up 5 per cent YoY, mainly due to a growing subscriber intake for the streaming service Viaplay, which launched in Iceland in April.
  • European Broadcasters will be cutting their budgets to make up for the loss in ad revenue, which will impact programming spend.
  • Although spend on sports rights could increase next year, that’s more because major competitions have been either cancelled or postponed to 2021. Longer terms, European commercial groups are expected to continue focusing on producing original content and move away from large volume acquired content deals, especially in the case of US shows.

Scripted commissioning falls by 40 per cent: Fred Black, Senior Analyst

  • The production shutdown for scripted content has had a knock-on effect on the commissions of new scripted content. It’s down around 40 per cent on what we’d expect over this period.
  • When production starts again, big premium titles are more likely to experience further delays. Productions requiring big crews and overseas travel are completely unable to progress.
  • Overall commissioning of unscripted has been less impacted. In fact, it is actually slightly up on what we would expect to see over this period if compared to last year. A large part of this is propped up by COVID-specific commissions, such as self-shot content, or content that relies on archive footage.
  • However, when we remove those titles and just examine the normal commissions, unscripted since the start of March is down about 27 per cent. The advantage unscripted has is that you can produce Reality and Entertainment content more quickly. So the bounce-back after the COVID-19 restrictions are lifted is likely to be a lot quicker.
  • There will be an impact seen this summer with programmes such as The Bachelorette or Love Island being postponed or cancelled both sides of the Atlantic.
  • Ampere predicts that the supply of new unscripted shows should be returning to normal by the Autumn.
  • In America this week, we would normally have expected to see the upfront presentations from the free-to-air networks, however most of these have been delayed due to COVID-19.
  • Advertisers that usually purchase their spots on the back of that presentation have been left guessing at what broadcast schedules are going to look like in September/October.

“As the pandemic continues, the impact on the entertainment industry evolves and deepens,” notes Guy Bisson, 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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