Pandemic could cost industry $160bn
The Covid-19 crisis could cost the global entertainment industry as much as US$160bn over the next five years, according to the latest report from Ampere Analysis.
While the most significant impact will be felt in 2020 and throughout 2021, growth will be reduced each year until 2025, according to the forecast.
The analysis is based on the forecasts for theatrical, physical video, transactional video, pay TV, public TV, TV advertising and online advertising.
Guy Bisson, Ampere’s research director, said: “There are two ways to look at the loss of value: gross revenue and relative change. Advertising is hit hardest both near term and overall, but drilling down into entertainment sectors shows that areas like theatrical are hit proportionally harder.
“The interconnected nature of the entertainment value chain means that will have a number of effects in other areas of the value chain, some of which will not be fully felt for several years to come.”
Ampere said that while the overall loss will be greatest in the advertising sector, loss relative to the size of the sector will see theatrical suffer most. The latter will lose US$24.4bn over the next five years, with revenue growth falling at least 11% more than Ampere’s previous forecasts.
Over the five-year forecast period, the entertainment sector overall (excluding advertising) is set to lose a net US$23bn of growth compared with pre-Covid-19 forecasts.
Pay TV, which has suffered from the loss of sports coverage this season, will also lose significant value in what was already a challenging market structurally, representing around 4% of its previously forecast value.
The ad market across online and TV will be the hardest hit sector in the near term and overall, with almost equal impact in both 2020 and 2021. It will lose nearly US$40bn in growth in 2021 and even more in 2021 – US$43bn. Recovery should begin in 2022 but will remain below previously forecast levels for the entire period.
The big winner will be streaming. Ampere’s latest forecasts suggest streaming will gain 12% of additional growth in revenue terms over the five-year forecast.
The implementation of lockdown worldwide has led to a surge in streaming consumption and new subscriptions, benefiting subscription video-on-demand, broadcaster video-on-demand and other catch-up services.
While Ampere expects to see some of these short-term gains reversed when lockdown is lifted, the shift toward on-demand viewing was already underway, so this acceleration caused by the pandemic is a trend Ampere expects to remain after the crisis.
Bisson added: “Streaming services are likely to come out on top here as viewers are leaning on streaming content providers heavily, just as a slew of new platforms enter the market. Yes, there will likely be a temporary post-lockdown backlash. But key to the longer-term prospects is the acceleration of consumer behavioural change which will benefit streamers.”