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The United States based media group Buzzfeed has decided to end operations in the United Kingdom. The outbreak has till now claimed over 33k lives in the United Kingdom and devastated most of the sectors. The media sector is one of the other major victims of the Novel Coronavirus. Though, its different thing that the company has been consistently missing its revenue targets by 20 per cent. The move to close the UK operations is a strategic decision made by the company; however, it has stated that the company would continue to cover the news which gains traction and can be marketed in the United States.
As businesses struggle to survive due to catastrophe caused by the Novel Coronavirus, the media industry has not been spared too. At a time when people are left with no choice other than seeking out news and information more than ever before, the industry players are facing unprecedented challenges or rather an existential crisis. With revenue streams drying outs, cost-cutting measures have already been implemented, budgets are under review, and the employees are being laid-off.
Major brands which contributed to the revenue streams of the media industry have paused, deferred or reallocated their advertisement expenses. The company’s business model was based on an online platform, which was primarily based on revenue streams coming from advertising. As the global economy comes to a sudden halt in just over a hundred days, the revenue streams of the company have dried up. The company also tried to switch to the crowdfunding business model, wherein the company expected support from the visitors through donations but could not succeed.
The media company reportedly has decided to wind up operations in Australia and the UK. Buzzfeed embarked its journey with trending and popular content and later transformed into a competition for the media industry in the countries under operation.
The company was already under pressure in the pre-Covid era; however, the outbreak of the pandemic ensured that the writing is on the wall for Buzzfeed in the United Kingdom. As all the economic activities came to a halt amid the lockdown induced by the Novel Coronavirus, the advertising revenue was one of the earliest recede, leaving Buzzfeed high and dry. The US media group was only six years old in the local news market, while the company’s international operations were already making losses and it had laid off several employees prior to Covid-19 outbreak.
In January, Buzzfeed laid-off nearly two hundred people in the United Kingdom. When the unprecedented crisis induced by the novel coronavirus triggered a slump in advertising revenues, it led to the collapse of an already struggling business model. According to media sources, the furloughed employees of the company under the coronavirus job retention scheme are unlikely to return to work, though Buzzfeed would retain minimum staff to cover selective news for the global audience. The company would communicate with its employees regarding the tough decision it has made. The shrinking of the group’s operation would be a major blow to its objective of impactful journalism and its plans to invest nearly 16 million dollars in the next two years.
The Coronavirus has severely impacted the conventional media, which majorly survive on advertising revenue and the number of subscriptions. The magazines were bundled together with newspaper subscriptions as a part of their marketing strategy. As the industry matured to digital platforms, revenue from advertising remained a key growth driver. As most of the world economies are on the verge of entering recession by the end of this year induced by the Novel Coronavirus, the businesses are trying to preserve cash and reduce costs and there has been an immediate pause on advertising expenses.
The lockdown induced by the novel coronavirus has completely devastated the supply chain of the conventional media. From the printing press to distributors and from distributors to retailers, the entire network has collapsed amid the unprecedented crisis.
The business model of the conventional media houses has been jeopardised with the economy coming to a sudden halt due to the pandemic. In addition, the media houses are still required to meet obligations such as wages or rents. In these unprecedented times, there is no clarity on media houses being a part of lockdown easing plans devised by the British government. In the last two decades, the media houses have been going through a transformation from print media to online platforms. If one goes through his email account, Facebook, Instagram and any of that, these platforms are jam-packed with content marketing. Now, these platforms are considered quite effective by the new age marketers to target the right audience for their products through business intelligence tools.
In modern times, this is one of the effective ways to move the business forward in a cluttered and noisy marketplace. In addition, people are heavily reliant for almost everything on the internet, from grocery to entertainment people access the internet. Last year nearly 87 per cent adults in the UK had access to the internet. 57 per cent of the senior citizens also used the internet. With easy access to the internet, people access all kind of content with a click of a button.
The demand for Covid-19 updates has resulted in increased news engagement. People in isolation are constantly stumbling upon websites and mobile applications for coronavirus updates. However, conventional business models are facing an existential crisis now.
Therefore, the online content industry as a business has emerged as a big replacement with its major revenue coming from online advertisements. Amid the crisis in the industry, it is also an opportunity for new and creative ways of gathering and reporting as well as producing news and to redefine new age journalism in the post corona era. One another positive for the media industry amid the lockdown is that customer engagement has gone up manifolds. Recently, Netflix revealed that it had added 16 million in subscribers in the first quarter. Just like in the services sector, work from home is practised by all the employees. Similarly, in the media houses, the journalists are working from home offices in the present scenario. They do not need a physical newsroom which would help them in reducing costs.
As far as the conventional media is concerned, the industry needs to look beyond advertising revenues as a growth driver and devise new ways of sustainability and getting revenue through different streams.
