Media Industry to recover by late 2021

    Among all the gloom and doom of economic news, PwC’s latest Global Entertainment & Media Outlook report suggested the industry could be set for a rapid return to prosperity, outstripping estimated growth figures for the global economy.

    The industry accounts for around $2.1 trillion of revenues in 2019 and predicted to fall to $2 trillion in 2020. On a positive note, the recovery will be rapid, as 2021 revenues are forecasted to pass the 2019 levels, with a continuing growth trend in the following year.

    However, specific industries may find it increasingly difficult to operate. Within the exhibition sector, SVOD subscriptions have now passed box office revenues, the latter down over 60% this year. Plus, with the number of subscriptions set to continue increasing year-on-year, the medium has quickly become the norm for film and television shows. Perhaps more surprising is the perception of SVOD subscriptions, its beginning to shift to a non-discretionary expense much like utilities. In the UK, households spent 50% more on digital content in April 2020 [1].

    Advertising fuels a large portion of the media industry and while we’ve seen a sudden drop-off in the revenues for broadcasters, the sector is rallying once again as brands return to the TV. Both ITV and Channel 4 are reporting Q4 advertising revenues are looking positive and indications suggest a flat to small growth on 2019 figures [2]. Channel 4 had initiated cuts to staff and budgets to save £150m in response to Coronavirus, but CEO Alex Mahon suggested 2021 budgets are set to boom [3].

    Some companies have been able to capitalise on the current circumstances. Disney’s global business may have been impacted by shutting their parks and blockbusters put on hold, but the Disney+ streaming service has matched its 2024 forecasts several years early. By August 2020, the service is estimated to have over 60 million subscribers. It’s timing couldn’t have been more fortuitous in the UK, launching a day after a national lockdown was implemented. In the nine months to June, revenues at their Parks, Experiences and Products division had fallen by $5.6bn, but the D2C almost recoup all of that lost revenue.

    We’ve seen that the overall media and entertainment industry will return to growth rapidly, however we cannot discount the sectors which are going to suffer. Publishers and cinemas will struggle for the near future, yet once experiences are allowed once again, there is hope that we’ll see a return to stable revenues.

    [1] https://www.ft.com/content/75476d15-051a-4e51-8e57-f15b1649cbf4

    [2] https://www.campaignlive.co.uk/article/things-feel-rallying-tv-adspend-set-begin-recovery-october/1697131#responsiveNavigation

    [3] https://tbivision.com/2020/09/29/uks-channel-4-budget-to-go-up-massively-in-2021/