The media and entertainment business was thriving as we entered the new decade in 2020 B.C. (“Before Coronavirus”).
All segments — movies, television, mobile video, music, games, esports, immersive (VR and AR), live and experiential entertainment — expanded over the past decade. Massively. To be sure, new platforms like streaming and mobile cannibalized some of the earlier ones (like cable TV) to fuel that expansion. But overall, creators and consumers benefited.
Technology drove much of that soaring growth and fundamentally transformed the traditional media and entertainment business in the process. Literally changing the power and leaders in it. A new streaming-first world presented the biggest challenge to traditional studios, birthing a new class of tech-driven media companies that disrupted decades-old business models. That caused slow-moving former “winners” to either relent and be swallowed up by new largely tech-born media champions, or slowly wither away a la the ghosts of Blockbuster past. The smart ones chose the former path.
By 2020 B.C., the industry was characterized by fundamental realignment at the hands of game-changing mega-acquisitions. AT&T bought Time Warner; Disney beat out Comcast to acquire 21st Century Fox’s entertainment assets; Comcast struck back to control Sky; and Viacom and CBS remarried. Slow-moving traditional media companies relented after concluding that size really does matter in the new streaming-first world order.
Netflix had become the poster child for new entertainment. The company changed consumer behavior and gave us all a reason to just “chill” (much to the chagrin of theater owners), setting new rules for programming (binge-viewing) and monetization (all-you-can-eat subscriptions). Netflix alone had planned to spend more than $17 billion this year on new shows and movies for all of us in this brave new world. That’s great for both consumers (more content, more choice) and the creative community (more creativity, more work). Netflix and all the others vying for our attention drove a new “Golden Age of Hollywood.”
And then the pandemic hit.
Now Netflix, like essentially everyone else in Hollywood, has shut down all productions. That means that its TV and movie supply chain dries up immediately, just like supply chains for countless other major industries. And consumers will feel it. That will mean fewer original shows on Netflix and in all other distribution channels later this year.
But at least initially — until consumers have exhausted Netflix’s supply of “fresh” content — the streaming leader actually benefits from our quarantined, living room ways. So will other streamers, including Amazon Prime Video (the No. 2 player), Disney Plus, Apple TV Plus and those that are coming soon (HBO Max and Peacock).
Others in the business, like those in the creative community itself, are simply out of work. And even when it’s safe to go back into the water, it will take substantial time to retool and recover and get back to baseline.
The out-of-home entertainment segment — theatrical, live and experiential entertainment — takes the biggest hit from the pandemic onslaught. “Hit” isn’t the right word: Rather, it’s an immediate body slam. The pandemic pulled plugs around the world on major live sporting events, music festivals, concerts, and shows – not to mention the entire movie theater business. Major studios have now fully opened traditional release windows to capitalize on the new housebound realities. Now that genie is out of the bottle.
The coronavirus also threatens the health of traditional broadcasters and cable TV. In a streaming-first world, content that demands to be live – live news and sports in particular – is their lifeblood. Consider the impact on NBC without the 2020 Summer Olympics and cable TV without ESPN’s live sports. All major leagues are now on hiatus indefinitely. Will that accelerate cord cutting by cash-strapped consumers? Yes, it could. For live news, people can now get their fix via standalone apps.
Speaking of apps, social media will thrive during these dark days. Facebook (together, with its Instagram and WhatsApp family) continues to be the dominant weaver of our virtual social fabric. But in the past few years, Facebook brand has been tarnished. Critics charge that the giant looked the other way as it enabled “fake news” — a phenomenon that became, and continues to be, a dominant downward-spiraling media story.
Music does its best to calm our fraying nerves during these tumultuous times, as the recording industry entered the new decade singing yet another joyful tune of streaming-led double-digit growth. Streaming music’s overwhelming dominance erased two decades of industry doom and gloom.
And there is no reason to believe that today’s coronavirus realities will cause us to hit our Spotify “pause” buttons. After all, we listen to music – escape with it – during bad times as well as good. Perhaps even more so. Of all forms of entertainment, music holds unique power to inspire and ease pain, both individually and collectively. So the recorded music industry – excluding its live music segment – should benefit from this pandemic, as strange as that may seem.
Meanwhile, the video-game market more than tripled the size of Hollywood box office worldwide to reach $150 billion in 2019, and fueled the growth of the related billion-dollar-plus esports industry that is expected to double in the next couple of years. These Gen Y and Z in-home entertainment choices should be just fine both during and after the coronavirus epidemic. Like recorded music and streaming video, demand for games and esports likely increases as our now home-schooled kids increasingly turn to those choices as their great escape. In-home immersive entertainment (VR and AR) should benefit as well.
Also as we arrived in 2020 B.C., the industry finally confronted and exorcised its own personal demons and banished some of its leading players who for years had acted with impunity. Most notably, longtime mogul Harvey Weinstein was sentenced to 23 years in prison for sexual assault. #MeToo is changing the face (and faces) of the media and entertainment business, quite literally. That means more diverse voices, telling more diverse stories, to more diverse audiences – once that storytelling can begin again.
Amidst all of this tumult, if ever there were a need for quality, binge-worthy escapist entertainment, these were those times. Thankfully, we have a lot of great content with which to hunker down during a surreal election year.
At some point, we will all once again step outside, and the business of media and entertainment will return to its overall long-term trend of industry positivity and prosperity. Not because we choose to ignore the coronavirus’s potential lasting and painful individual impacts. Rather, because past is prologue, and human creativity and ingenuity that leverages the transformational power of new technology have overcome black swans before to speed recovery and advancement.
We consumers will demand it here. Storytelling is simply too essential to us.
It is not a luxury. It’s a real human need.
Peter Csathy is founder and chairman of Creatv Media, a media, entertainment and technology business development, M&A, advisory and creative services firm.