Reports COVID-19

Post-Pandemic Programming Surviving and Thriving in the Recession

Report by Mark Mulligan, Tim Mulligan, Karol Severin, Alistair Taylor, Keith Jopling and Hanna Kahlert
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The 20,000 Foot XXX caused dislocation and disruption to the global entertainment business. Now, the recession and the prospect of further pandemic peaks have created an unprecedented outlook for entertainment companies. Many of the shifts that occurred during lockdown will define the new market dynamics. The old rulebooks are being rewritten, and new approaches to entertainment business models and experiences will be crucial to move from the holding pattern of ‘survive’ to the growth mode of ‘thrive’. Approaches that worked for decades will no longer work, while new innovations will gain traction in a mid-term market that will necessitate an entirely new approach across all entertainment industries. We term this Post-Pandemic Programming.

Key Insights

  • Companies with exposure to physical interactions were those most likely to have experienced revenue declines
  • In-home, digital entertainment and services prospered during lockdown
  • One of the areas to see strong lockdown growth was home improvements: Home Depot saw its XXX 2020 revenues increase by XXX billion, nearly three quarters of the revenue Disney and Live Nation lost
  • Even with cost-cutting measures in place, many companies had to overspend and/or heavily discount to grow revenue during lockdown
  • Music and video streaming subscriptions both proved resilient during lockdown but will be vulnerable during a recession, principally because both are – most of the time – contract free
  • Leisure and entertainment companies are banking on consumers rushing to return to pre-lockdown behaviours once the worst of XXX is over, but this pent-up demand may take time to manifest as returned consumer spending 
  • With the mid-term outlook shaped by both pandemic and recession cycles, now is the time for entertainment businesses and their investors to assess which formats and business models should be prioritised during this coming period and which should be given reduced focus
  • Being online and virtual has much less impact on consumer spending than whether the proposition is contract-free (e.g. streaming) or instead whether the consumer is locked into a long-term contract for which paying off the balance would be an expense 
  • Availability of strong free alternatives to paid formats is a key recessionary risk factor
  • Business models and formats that have both pandemic and recession risks will be particularly vulnerable in the coming period, such as live entertainment, brand activations and commercial radio
  • As margins constrict, consumers will begin to re-manage their allocation of time, money and attention to that which matters most in this new normal moving forward

Companies and brands mentioned in this report: AEG, AMC Cinemas, Alphabet, Amazon, Amazon Music, Amazon Prime, America’s Got Talent, Animal Crossing, Apple, Apple Arcade, BTS, Bang Bang Con, Blu-ray, Comcast, Deezer free, Dice.fm, Disney, Disney Land, Disney+, Driift, Eleven Sports, Erykah Badu, Facebook, Home Depot, Live Nation, LiveScore, Maestro, Melody VR, Mulan, NBA, Napster, National Hockey League, Netflix, Nintendo, Pandora, Peacock, Playstation, Playstation Now, Playstation Plus, Pluto TV, Side Door, Sky, Snap Inc., Soundcloud, Spotify free, Stadia, Stagelt, The New York Times, Trolls XXX Trolls XXX Tubi, Twitch, Verizon Fios, Xbox, Xbox Game Pass, Xbox Live, YouTube, Zoom

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