April 2, 2023


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The media business faces a variety of challenges in rebuilding its economy

5 min read

Everything is on the table.

This is the overriding message received from the media giants after the parade of revenue reports for the first three months of the year. The unprecedented economic situation caused by the global coronavirus outbreak is testing Hollywood’s biggest players and accelerating the already ongoing seismic shift.

The immediate pain of the COVID-19 shock was evident by the sudden decline in advertising, the descent from a bay at Disney and Universal theme parks, and the horrific forecast for the current quarter.

Long-term effects Disney has taken a bold step, such as taking a bold step, such as steering a boozy title on a premium VOD auditorium in a studio or sitting at home on streaming platforms. Not one of next year’s dates Made more waves than moving forward on the stage. The uncertain prospect of reopening theaters in the United States could not deny Paramount Pictures an “attractive monetization opportunity”, according to Bob Bakish, president-CEO of ViacomCBS, for selling Netflix’s action-drama “The Lovebirds.”

These are two short-term decisions that point to bigger challenges ahead. Over the past few years, it has become clear that the entertainment industry is on a huge transition away from a linear-based model that studios were the ultimate gatekeepers for consumers and content creators. The challenge at the moment is to understand what needs to change as it is not entirely clear what future distribution and profit-generating systems will shape.

Lazy loaded figure

Paramount has sold the rights to the action-comedy “The Lovebirds” to Netflix’s Isa Rai and Kumel Nanjiani due to uncertainty over the drama’s reopening date.
Courtesy Netflix

What has become increasingly clear in the last quarter is the impending recession, which is inevitable but certainly exacerbated by the coronavirus, forcing a Darwinian to keep away from the weak and add more muscle to those who are strong. It also represents the rapid pace of media integration which is going well. The 2019 purchase of 21st Century Fox’s Disney was a historic union of two partial Hollywood brands. It will not end.

“Economic weakness over time accelerates changes in consumer and corporate behavior,” media analyst Michael Nathanson wrote in a recent research note. “Radio advertising, compact disc sales, newspaper advertising and DVD sales were all severely injured in the United States, not accidentally. It is no accident that disruptions from emerging technologies hastened the deaths of those suburbs during times of extreme financial stress. “

The entertainment industry is already leaning towards streaming platforms as a driver of future growth – with subscription earnings providing MVPD affiliate fees that have been the basis of corporate media revenue for over 20 years. Over the past two years, Disney and WarnerMedia have shifted their energy and excitement to Disney Plus and most HBO Max, instead of long-established channels such as Freeform or TNT. The advent of Disney FX on the Hulu platform tells the volume about the status of linear platforms for the top channels.

J.J. Abrams and Greg Berlanty, two of the industry’s top producers, have a very rich overall deal with WarnerMedia. Both are holding big projects for HBO Max, not TNT or TBS – although production has been delayed. Resource allocation blueprints are now being rewritten at Disney, Comcast and WarnerMedia to prioritize streaming initiatives that are losing money. Companies expect that in this period of investment in customer-bait core content, long-term benefits in the form of a stable sub-base will be available, despite deepening the amount of initial losses.

WarnerMedia Parent AT&T is deeply involved in planning how to prioritize recreational-related activities after the epidemic threat has subsided.

“Economic distance over time accelerates changes in customer and corporate behavior.”
Michael Nathanson, media analyst

“This experience will change a lot of things, including customer behavior and expectations,” said John Stankey, the incoming chief executive of It and T, during an April 22 earnings call. “We are evaluating our product delivery strategy, looking at the volume we need and the support level we need in a low economy. We’re reviewing our drama model and looking for ways to accelerate efforts to adapt to rapid changes in consumer behavior from epidemics. “

The fate of the ad-based business is among the toughest choices coming soon in TV headlines. Advanced ad formats are seen as the future of ad-supported digital platforms, thanks to the growing popularity of Comcast’s Peacock and Viccom CBS’s Pluto TV. The transfer of viewers across broad national platforms is being created to further challenge the notion of media localism. Just as the community and regional newspapers are being hit hard, so are local TV stations in the midst of a sudden recession.

Lachlan Murdoch, CEO of Fox Corporation, made it clear that ad sales on Fox’s 29 owned and operated local TV stations were down about 50% from the previous year’s frame. If a presidential campaign on the horizon by the end of this year does not promise the fall of political advertising, the outlook on local TVs will shine.

Virtually all live sports shutdowns collide with the ripple effect across television ecosystems in terms of advertising sales, sponsorship deals and ratings, and other product marketing platforms. (Literally: WarnerMedia planned to promote the hack from outside the HBO Max launch on May 27 for TBS / TNT / TrueTV coverage of the March Madness College Basketball Tournament.)

Sports rights are in conflict in the pay-TV world because the high costs of ESPN, Fox Sports and regional sports channels are seen as increasing MVPD service costs for subscribers, cutting fuel cords. Disney and Comcast are in a tough spot to try to build streaming platforms, including Disney’s ESPN Plus – for the future to protect their linear sports turf. The spraying cost of rights packages for big league sports is making the investment worthwhile by forcing tougher choices in the near future, especially if the leagues try to curb streaming options for rights holders, including linear platforms.

Disney’s newly installed CEO, Bob Chapek, was overwhelmed by the dilemma during a May 5 earnings call. His answer was perfect: only time will tell.

“Existing consumer trends play a big role in how we think about the value of sports rights,” Chapek said. “Strategic strategies are a bit of a stretch to give specific details about something else that we’re obviously very interested in, and we think that as they go from linear to digital, we want to create customer as well as evolution.”

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