What Are the Concerns of The Entertainment Industry in Its Struggle Against Covid-19?

Despite the increase in numbers and ratings for a number of media groups, as people sit at their homes because of the lockdowns that have been imposed all across the world, to ease of the spread of Covid-19. As the home stuck people browse through TV channels, movies, original shows, over the top (OTT) Platforms and explore through other media services, there are a number of challenges that are being faced by the businesses that are running as a part of the Media and Entertainment Industry.

Walt Disney, which is one of the world’s largest entertainment businesses, that owns amusement parks, media companies, movie studios, tv channels as well as running the OTT streaming platform called Disney Plus, announced on 19th April 2020 that it will not be paying approximately 100,000 of its employees, which amounts to approximately 50 per cent of all of the company’s employees. As per some of the executives of the company, this decision has been made so that the company can conserve certain amounts of cash for its future operations. Reports have suggested that by not paying these 50 per cent employees, the company will be able to save around US $500 million per month, from its Amusement Park and Hotel businesses. This announcement has also put the company in a little bit of a dicey position, as critics have pointed out that the company has not made a decision to slash any executive bonuses, and is also continuing on its decision to pay a dividend amounting to US $1.5 billion, that is due in the month of July 2020, but will put a large number of employees dependent on the US government’s public support scheme during this Covid-19 phase.

How are the various segments of the industry performing during the Pandemic?

  • Television – With people sitting at home and spending almost entirety of their days in front of television, the Television Rating Points (TRPs) are skyrocketing. Presently, there are more everyday viewers in front of television, especially in the UK, as compared to any of the last five years, as per a number of media reports. But with this sudden increase in the number of viewers, both television companies as well as traditional cable TV channels have found it challenging to bring in new content to these viewers. This has been primarily due to the lockdown in place, not allowing for new content to be created. Hence, these companies are also not able to show new advertisements, which means no major change in revenue. Another factor that has been driving this situation is the reduction in marketing budget of various companies, due to the recession that is forthcoming as per experts, as well as an uncertain business environment, one of the biggest reason why these channels are not able to bring new advertisements to show to the increasing number of viewers. It is expected that there would not be shooting for any new content untill about the month of June.
  • Sports – The United Kingdom is obsessed with Sports, especially football. And with the country’s topflight Premier League, or any of the other lower-tier competitions are not being played due to the restrictions on people gathering at any place, it becomes a huge disappointment. The fans are unable to experience any new live games on television either, as all sporting events across Europe, and in fact, the world has stopped. Another major hit has been taken by the football clubs in England, as they are losing out on large amounts of Television and commercial revenue with each passing day. While some big clubs are still able to manage and support their communities as well, for some of the smaller clubs in the lower leagues, it has become a matter of survival. Clubs like Liverpool Football Club and Tottenham Hotspur Football club recently faced a lot of criticism after putting their non-playing staff on furloughs to gain the advantage of the government’s wage benefits, with people saying that the bigger clubs with huge revenues and profits should not be engaging in such practices. Liverpool FC has since reversed this decision.
  • Print Media – The British print media (especially newspaper agencies) is under a lot of scrutinies and face a huge threat of having to close down permanently, as more and more readers are moving online to read the news. With so many graphic and video-based news sources available, it has already been a difficult time for the print media industry, but the Covid-19 and the restrictions around it have furthered the negative impact on this space. Advertising, as discussed above, has also reduced, which is leading to these companies make losses, that they might never recover from.
  • Cinema and Cinema Chains – The global movie industry is also facing a significant threat. Scheduled releases of some of the biggest movies this year has had to be altered, and it is believed that the big studios, such as Walt Disney Studios and Universal will make losses this year from their cinema divisions if this situation continues. Disney, as mentioned detailed above, has put almost half of its workforce on government’s wage scheme and is struggling to deal with this situation. Cinema Chains all across the world have ceased their operations, which means that most of these companies will not meet their estimated guidance by the end of the year. Most of the studios are also looking to release some of their movies on OTT Platforms so that the timing of the release is maintained, and the viewers can have access to some kind of entertainment during this period.
  • Streaming Platforms – Over the top (OTT) streaming services such as the likes of Netflix, Hulu, Amazon Prime Video and Disney Plus are having the time of their lives. As is the case with television, the number of subscribers for these services has never been higher and continues to grow as we write. With television not being able to produce any new content, and the access of large movie, tv and animation libraries of these services, some people have spent their entire days sitting in front of their devices and going through the content available. As a result, the share price of Netflix reportedly continues to increase during this period, while Amazon’s OTT business is still driving the company’s profitability during this period, despite heavy losses from its core Ecommerce business. Same is the case for Disney Plus, which continues to work well for the Walt Disney Co., with its recent launch in the United Kingdom and India, which is one of the biggest countries in terms of viewers and subscribers.
  • Gaming, Social Media and other Digital Content – It has already been established how people, all across the world have been restricted to their homes, so as to limit the community spreading of Covid-19. This situation has also led to a massive rise in the gaming industry, with people opting to play and buy online games. Some of the companies, primarily due to this reason, are offering massive discounts of up to even 80 per cent. People have also been browsing social media, and a simple google trends search explains how a greater number of people are using services like Instagram, Facebook and YouTube as compared to the month of January 2020, just prior to the Covid-19 pandemic. Even the number of daily visitors and users for these social media services have increased, and with people working from the comfort of their homes, the video conferencing services on these platforms as well as other VC companies are also looking at a massive growth.

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