Opening Pandemia’s Box on Media & Entertainment

This is an excerpt from the chapter “Corona Learnings” in the book on Wholistic Innovation that soon will be available. It deals of all aspects of society, how they link together and the impact of Covid-19 pandemic that increases the demand for innovation dramatically. The focus here is on the impact on media consumption. The author Dieter Brockmeyer is CPO of Diplomatic World (Group) and Co-Founder and Director Innovation & TIME of the Diplomatic World Institute that just launched a unique and exclusive award, Wholistic World Innovation Trophy, WIT, to be presented by Diplomatic World early in 2021 for the very first time.


Opening Pandemia’s Box on Media & Entertainment

“The Future Hollywood Feared is Happening Now”, titled New York Times in April 2020. There sure was a tough competition between the new streaming platforms like Netflix and their “blockbuster” series and the traditional Hollywood blockbuster. Hollywood remained strong with its strict cinema first strategy, but Corona turned that upside down. Cinemas were shut down and not to lose too much money studios agreed to online premieres. This is likely to stay forever now.

The media and entertainment sector were highly affected by the pandemic since people in lockdown, staying at home most of the time, consumed more media. On the other hand, entertainment production, at a historic high before the outbreak, was then slowed down dramatically. It is hard to shoot a love scene for a TV series when you should keep six feet (1.5 meters) distance from each other. Sportscasts and other live productions had to be canceled…

As a result, media platforms are running short of fresh content. However, this did not immediately affect the success of OTT (Over the Top Television) platforms or traditional TV channels during this crisis. One reason is that the content that is produced now is for the upcoming season. The shows and series scheduled for production in 2020 are for the program lineup of the following year. In the second half of the pandemic year activities were slowly picking up again, however, restrictions and hygienic rules did not allow the volume to fully compensate for the demand entirely. Some of the impact caused by the Covid-19 shutdowns may be seen with a one-year delay.

Winners of the shutdown were the OTT platforms like Netflix, Amazon Prime, Disney+ and the local platforms, while traditional linear TV channels could not benefit to the same degree. In the UK, Disney+ leaped to third place in Video on Demand (VoD), within the first month reaching 4.6 million subscribers in April 2020. However, free video streaming services like YouTube also dominate the UK market, said the integrated tech research powerhouse Omdia in a keynote at the 2020 JLB Lecture which also predicted that traditional pay-TV and OTT subscribers would converge that year.

Consulting group PwC predicts in its Covid-19 update on the media industry published in April 2020: “The large increase in time at home should be a positive driver for the uptake of OTT services, supported by the timely launch of the Disney + subscription service • The economics of straight to home distribution might be attractive for some film producers/ distributors • OTT will also benefit from the decline in cinema attendances (and some movies coming directly to OTT) as consumers use OTT as an alternate channel for new film content • However, some consumers facing financial difficulty will be more price-sensitive/ less likely to take multiple TV content packages/ platforms.”

According to the Omdia lecture, linear, that is traditional TV viewing timeshares, are falling but remains to be the most popular form. And Corona caused a boost compared to the previous year: “BBC One’s Six O’Clock News bulletin, for example, averaged 6.43 million viewers across April 2020, up more than 54% on the 4.17 million average for April 2019“, Omdia says in a news bulletin.  This is the UK example. In other markets, we get a similar picture.

As a matter of fact, Disney announced its strategic decision to shut down its profitable UK linear pay-TV channels to strengthen the video on-demand streaming service. The decision to close the Disney channels may not be entirely linked to the pandemic. However, the increased subscriber growth of Disney+ during the lockdown most likely caused this decision to be taken earlier than anticipated in the business plan. The Disney decision in this single market, in the long run, may have a direct impact on the decision in markets not only by the US major but also for other companies. It already has, as a matter of fact: In August 2020 Time Warner announced to lay off 600 staff mainly in its TV sales unit in a strategic shuffle that has been boosted by the Corona pandemic to adapt to the new streaming age.

End of July 2020 Disney had already reached over 100 million subscribers globally for its OTT service that had only been launched the previous October to compete directly with Netflix and Amazon. However, analysts say that the price for this success was high, paid with massive rebates on the subscription fees, or by cross-promotion with other Disney services. Corona-wise also subscribers of the competing OTT services were growing significantly around the globe. At the time of finishing this book, Disney had confirmed to alter its entire business strategy towards a streaming first approach. This will also have a strong impact on theatrical movies and cinemas.

A sure winner of the pandemic is the esports and gaming sector as also stated by PwC in its report. Especially kids spend even more time with their gaming devices during the lockdown, and revenue with gaming was growing significantly. In another bulletin Omdia predicts COVID-19 could shift billions of dollars from physical to virtual ad environments: “For instance, dynamic native in-game advertising that mainly allows advertisers to programmatically buy display ads natively placed in premium game titles across mobile, PC, and console, offers advertisers the opportunity to move out-of-home (OOH) campaigns from physical to virtual environments. Such advertising has already had false dawns in the past, and most OOH spend will likely return to physical outdoor environments once lockdowns are lifted, but the pandemic has certainly accelerated interest among advertisers, agencies, and even the UK government wanting to reach elusive housebound consumers.”

The demand for information was understandably high. Therefore, the use of social media, the online channels of traditional news media, and newscasts and TV channels rose significantly. However, the use of the platforms differed in quite significant ways, especially in different demographic groups.

The preferred platform differs very much by age as the Global Web Index surveyed 4000 internet users in the UK and USA in the age between 16 and 64 in a special Coronavirus Outbreak Report from the beginning of the pandemic in April 2020. As “Visual Capitalist” summarizes the major findings like the Quarantine Internet Activities, postulating an increase of up to 75 percent to “normal” times. 68 percent were going for Corona Updates. Within the Boomers only 54 percent were interested in that, 71 and 69 percent of Millennials and 67 percent of GenZ.

This illustrates quite different behavior in different age groups. The following most popular activities on the internet were listening to music (58 percent all), watching movies and shows (49 percent all). Watching funny videos and playing games reached 42 and 40 percent. The trustworthiness of news provided by organizations and platforms was another subject in that survey. The most trusted one was the World Health Organization (WHO) with above 60 percent in all age groups. Social Media was the least trusted news source. Interestingly, 27 percent of the Millennials asked in that survey trusted Social Media, but only 12 percent of GenZ and 14 percent GenX did – and only 5 percent of the Boomers. With an average of 17 percent, it is still more trusted than Magazines and Newspapers with an average of 16 percent.

In all these activities the difference in the different age groups followed a similar pattern. Therefore, the survey concludes: “Overall, younger generations are more likely to entertain themselves by playing games on their mobile or computer. Millennials also stand out as the foodie generation, as they are the ones most likely to be searching for cooking recipes or reading up on healthy eating.”… “Across the board, consumers view the World Health Organization (WHO) as the most trusted source of information for any COVID-19 related updates. This isn’t true everywhere on a regional basis, however. For example, while U.S. consumers trust WHO the most, UK consumers view their government as their most trusted news source overall.”

There are also so-called surveys that “analyze” that traditional platforms with their information based on science and official bulletins were the winners of the crisis, while social media was widely used for spreading conspiracy theories. Well, I think that is not all true. Of course, so-called mainstream media will not spread conspiracies, at least not if they are not tricked by Fake News while social media platforms are open to everybody, and the bigger the community is the more you are connected to anything that spreads, including fake or “alternative” news.

The shocking experience for us was how big the group in our society is that is responsive to this nonsense. We need to find an appropriate response to it. I think it cannot be done by restricting free speech. Free speech includes to believe and express dubious beliefs. If we restrict this, we ourselves undermine the foundation of our democracies.