A report from investment bank Morgan Stanley looks at the impact Covid has had on the film industry and with movie-going restarting assesses future industry prospects. But there’s one powerful message from the bank; the streamers are winning.
“The movie business is dead, long live the movie business,” says Morgan Stanley. “Since the onset of the pandemic, we have seen film production and theatres shutter and restart. This has coincided with an accelerating strategic pivot towards streaming by major media companies.”
The distribution pattern has changed dramatically over the Covid period. Despite fans returning to cinemas – helped by a pent-up demand for blockbusters such as the latest Marvel and James Bond offerings – there’s little doubt that the need to generate cash during the pandemic from streamers has probably changed the industry forever.
The bank says that this has resulted in two categories of studio. One group who are selling their output to just about anybody: Morgan Stanley places Sony, Lionsgate, MGM and Eros/STX into this category.
Others, such as Disney, Paramount+, Netflix, Amazon and Apple all have increasingly robust streaming operations.
The bank also says that the value of a studio’s archives has risen in value.
Morgan Stanley reiterates its “Overweight” rating on Disney+ and Netflix, and suggests that WarnerMedia could be an unappreciated asset for Discovery (and it has a $32 price target on Discovery which would represent a 33 per cent upside for investors).