Impact of Covid 19 on the media and entertainment industry
– By Prashanti Malisetti, Founder and CEO, Pixel Pictures
We know that COVID-19 has impacted all aspects of life and business. The media and entertainment industry were no exception. Unlike some sectors where work from home was still an option and operations could be managed remotely during the lockdown, M&E sector was totally shut for recordings, shootings, etc.
The industry worth INR 1.82 trillion in 2019 (according to FICCI), is now staring at INR 25,000 crore loss (CRISIL). The media and entertainment industry comprises’ of Film Production and Exhibition, Print Media and Television (TV) Broadcasting segments, besides Distribution Platform Operators (DPOs) and Over-the-top (OTT) Platforms and the overall impact of lockdown on the industry has been a mixed bag of despair, loss, hope, and opportunities.
Cinema halls remain shut even to this day in most parts of the country. Advertising spends have sharply dropped in the last quarter. While box office and event management companies have faced a huge blow, OTT platforms are more in vogue than ever before.
Box Office Changes
Cinema halls/multiplexes were amongst the first businesses to shut and would possibly be the last ones to witness relaxations. This segment will likely witness a complete loss of revenue in Q1 FY2021.
However, a few producers and content creators have quickly adapted to the changed scenario and direct released their movies on OTT platforms. Angrezi Medium, Dil Bechara, and Shakuntala Devi are some of such movies that have been a big hit amongst viewers. While this is not a viable option for all movies, and nothing can replace a movie theatre experience for an audience, OTT releases are definitely a relief. Partly as a result of the economic downturn in 2008, we have seen an influx of “high-concept” movies, like Peepli live and DevD without typical masala — some laughs, a few tears, an extended family drama, action, love and happy ending. However, the viewers weren’t as fragmented as today. Now, I believe a good section of the audience is ready for a narrative that travels a straight line and tells just one story. This is the absolute best time for writers and content creators to tailor make such stories for OTT platforms.
Even in these times of uncertainty on when the theatres would open, or if the movie would have a theatrical release, shootings have slowly resumed and many movies are ready to go on the floor. Though Covid-19 hasn’t completely scarred a film maker’s spirit, the sad reality is, under these circumstances, it is unlikely that movies will be released in theatres, and even after the theatres’ resume operations post the lockdown, occupancy is expected to remain sub-par as consumers, as a means of caution are likely to stay away from crowded places. Corporate advertisement spends will witness a decline, adversely impacting the revenues of the film exhibitors.
Overall, ICRA estimates a 60-65% degrowth in revenues in FY2021 for the entities engaged in the film exhibition industry. Furthermore, a low footfall once cinema halls resume operations will result in lower box -office collections, adversely impacting the revenues of the film producers.
In what is considered to be the darkest times for M&E, OTT media services appear to be a glimmer of hope. There has been increased usage of these platforms over the last few months. Multiple platforms are providing subscription-free usage of their services to induce habit formation (KPMG), in the hope that this will lead to greater subscribers as we return to normalcy. Many users, who may have never experienced OTT services before, are opening themselves up and exploring them.
However, among other things, this trend has emphasized the permanence of digitization. Going forward, it is likely that advertisers turn their focus even more to the Internet.
The changes in screening platforms and the growth of OTT means content creators have more flexibility to design the required content, catering to various audience sets. This trend is not particularly new. It just was helped along by the lockdown.
In the past year, we have seen incredible investment into shows on Netflix, Amazon Prime and Disney Hotstar, who are producing India-specific content. Reruns of old content also saw a surge on OTT platforms.
The ability of the audience to choose what they want to tune in to and watch it at their own pace creates a whole new dimension for content creators. Rustic village-themed shows, Indian gangsters in the hinterland, slick city dwellers or the typical Indian middle class – all of them find space to co-exist on OTT.
The trouble of course is that budgets have fallen. The KPMG study predicts a 4-12 delay post ‘normalcy’ for monetization to be renewed.
Like the movie industry, the Events industry is also badly hit by the pandemic. Since it is completely based on gatherings, the business has been greatly affected. Events such as award shows, meetings, conferences, exhibitions, competitions, music festivals, etc. are on hold and there is no guarantee when it will be back to normal. A survey conducted by the Events and Entertainment Management Association (EEMA) with 170 companies, found that more than 50 percent of organizations had 90 percent of their business cancelled between March and July. More than 100 companies, of those surveyed, had faced a revenue reduction of INR 1 crore. The event industry provides livelihoods to 10 million people directly, and 50 million by way of allied sectors. According to the KPMG report business to business events will pick up before business to consumer ones, expecting a 12-16-week delay post ‘normalcy’ for content supply and consumption of events to be renewed.
During the lockdown, the industry has gone through a harrowing experience. No doubt. But as the lockdown is easing, and the new normal setting in, we are heading towards recovery. Even though it’d be an absolute slow process, the spirit of the film maker doesn’t cease to exist or pause. After all, it is often art and media that provides relief and support to the entire world.