The global entertainment sector is set to lose USD$160 billion of growth as a result of the Covid-19 pandemic over the next five years, according to the latest forecast revisions from Ampere Analysis. While the biggest impact will be felt in 2020 and throughout 2021, growth will be reduced each year for the duration of the five year forecast period.
“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,” said Guy Bisson, Research Director as Ampere Analysis.
● THE WINNERS AND LOSERS
While gross loss (the total amount of loss growth in dollar terms) will be greatest for the advertising sector, it is also important to look at the relative impact pegged to the size of the sector. On that basis, theatrical will be hardest hit, set to lose $24.4b billion over the next five years, with its revenue growth down more than 11% over Ampere’s previous forecasts for the next five years.
Over the period the entertainment sector overall (excluding advertising) is set to lose a net $23 billion of growth compared to pre-Covid-19 forecasts. But proportionally, entertainment is the most robust of the two sectors, losing just 1.2% of previously forecast value over the five year period. The sector is helped by a boost to the streaming market, which will see additional growth and counter some of the loss.
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 advertising market across online and TV is the hardest hit sector near term and overall, with almost equal impact in both 2020 and 2021 (the ad market will lose nearly $40 billion of growth in 2021 and even more in 2021, with $43 billion). Recovery will begin in 2022 but remain below previously forecast levels for the entire period.
The intimately interconnected nature of the entertainment value chain and its content windows mean many effects will be felt for years to come. While closing cinemas has an immediate impact on theatrical income, the longer-term effects mean a glut of movies vying for release windows next year could ultimately lead to a slowdown in film production that impacts content acquisition and distribution further down the line.
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 period.
● AN ACCELERATED SHIFT TOWARD STREAMING
One core impact of the crisis has been to accelerate trends that where already underway before Covid-19 emerged as a global threat. The implementation of lockdown across the world has led to a huge surge in streaming consumption and new subscriptions, benefiting subscription video-on demand (SVOD), broadcaster video on-demand (BVOD) 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 current pandemic is a trend Ampere fully expects to remain after the crisis.
“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,” Bisson concluded.
Streaming services are likely to come out on top here as viewers are leaning on streaming content providers heavily” Guy Bisson Research Director as Ampere Analysis
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