The Media and Entertainment industry post Covid-19: The best and worst of times

• The year 2020 has been one of turbulence and disruption that will have a far-reaching impact on consumer behaviour.
• Markand Adhikari, Chairman and Managing Director, SAB Group writes how the year drawing to a close will change the media and entertainment industry.

The year that is drawing to a close has changed the world forever. For each of us, life is going to be marked in two periods - ‘pre-COVID’ era and ‘post-COVID’ era. After the Spanish Flu of 1918, the world had forgotten pandemics and when one broke out, we were not prepared at all.

As lockdowns and mobility restrictions came into force to counter the spread of the virus, various sectors were forced to hastily work out their business continuity plans. The only solace was that the digital connectivity had matured enough in recent years to keep life going amid shutdown. Thus, many sectors could figure out ways to ensure continuity. Remote learning and continued education is one example. The other is, of course, the entertainment and media sector, which, like any other business, has also faced unprecedented turbulence in 2020.

COVID-19 Impact on Media and Entertainment Industry
Television channels, as utility service, had to go on, and their viewership witnessed a spike, as people were largely confined to their homes and the TV set (or the mobile phone screen) was their only point of contact with the outside world, and thus the only source of news as well as diversion.

The consumption of content, thus, increased greatly. Unfortunately, this did not result in a similar increase in revenue. This is ironic. With the overall economy taking a hit, there were wage cuts and job losses, reducing the overall purchasing power of consumers. As a result, their spending was restricted to the most essential items alone which means that at least during the period of the extended lockdown, from April to early July, there was no point in any marketing activities, including advertising. Thus, while viewership increased, content consumption increased, for entertainment and media industry expenses increased, but its revenues hit rock bottom.

As the lockdown was gradually lifted, restrictions were eased and life began to limp back to normality in July, the revenue streams started picking up again – though very slowly. Further, with the onset of the festive season, general entertainment channels reached pre-COVID levels in terms of revenue, but most niche channels have not yet reached the same point. However, one big exception has been the news segment: for obvious reasons, news channels have benefitted from the lockdown because more and more people turned to them more and more often for updates on the coronavirus and lockdown measures.

Post COVID-19 Media and Entertainment Industry
As the world adjusts to a new normal, consumer behaviour is rapidly evolving. There is ever-increasing demand for at-home digital media like OTT platforms which are now expanding to new demographics and locations. This will continue to magnify post-COVID. Further, even once the crisis subsides; it would take some time for consumers to adopt external consumptions models again.

Therefore, technological advancements would play a pivotal role in bringing outdoor entertainment directly to consumers at their home.

The future is digital. We will not just see the addition of new users but also increasing the retainership of existing digital consumers. Online gaming consumption and demand for OTT originals is only going to increase as technological advances greatly aid them. The best part is that their model is subscription-driven and not dependent upon advertisers. Though television is very much here to stay, OTT is going to gain a lot of traction in the mid-term.

Further, the dependency of M&E companies on technology will likely increase to leverage cost-efficiency and create revenue enhancement opportunities. As monetisation and revenue in terms of ad-spend, continues to grapple, profit protection and cash management with greater technology integration will gain strategic significance for M&E companies. The industry is likely to remain focused on sustenance at current levels along with a renewed emphasis on flexibility which would accelerate the move to a variable cost model and reduced fixed costs. While the long-term implications of COVID-19 are yet to emerge, the above mentioned developments will likely come into focus in the M&E industry as the post-COVID reality becomes clearer.

Summing Up!
If we take a long-term view, COVID-19 has put the world behind by at least two to three years, and returning to the normal will take as much time. Moreover, it may not be normal as earlier, but a ‘new normal’. A year is a long time, and many fears and many habits have become a part of us, and it will be difficult to dislodge them for long. Many people may continue taking precautions even after successful administration of the vaccine, which will further impact consumer decisions and behaviour.