The Covid-19 pandemic has affected all industries, but the businesses most affected are those that rely solely on the social nature of people i.e. those in the entertainment and sports industry. Arguably the media industry is the least affected by the current pandemic, but it is only the digital front, namely OTT platforms such as Netflix and online games, that have gained something. Nonetheless, monetizing these platforms has always been difficult in the Indian market, and expanding the post-Covid subscriber base remains a big question.
Traditional platforms such as movies, television, live events – including sporting events – which rely heavily on advertising revenue, are seeing a negative impact on their operations and finances. The cancellation of all live events, including sports, resulted in a major shortfall for media companies, which directly affects their profitability. In India, all sporting events, including Indian Cricket Goliath – the Indian Premier League (IPL) – have been suspended indefinitely. Broadcasters are affected by these cancellations. They not only disrupted scheduled coverage, but also sponsorship deals and promotional events, which is expected to result in a significant loss of revenue.
India produced around 2,000 films in 2019 with total gross box office revenue for the first time reaching $ 1.45 billion, up 11.6% from 2018, according to E&Y . Revenue is expected to hit $ 1.65 billion in 2020. With the lockups, production in Hollywood and Bollywood has halted and studios have indefinitely postponed releases of their tentpole films, including the latest James Bond film with Daniel Craig, No time to die, Universal Studios F9: Fast and Furious, Ranveer Singh 83, and Rohit Shetty’s Sooryavanshi, to only cite a few. This will have a domino effect on film production and release schedules for at least the next three years.
It’s hard to predict when theaters will reopen, but every time they do, they’ll be running at reduced capacity due to social distancing standards. In the best-case scenario, theaters are running at 50% capacity, which will make it extremely difficult to support big-budget films, resulting in huge losses – the current forecast of around $ 1 billion.
To counter the losses, many Indian production houses are making deals with OTT platforms such as Amazon Prime Video and Netflix. The lockdown has benefited streaming platforms – Netflix added a record 16 million new subscribers in Q1 2020, with its share price reaching a record high of $ 454 in May 2020. Even its global competitor Amazon Prime Video and its Local competitors Zee5, AltBalaji and Disney + Hotstar saw their subscriber base increase by 60-80%.
Amazon Prime Video surprised everyone with the announcement of Amitabh Bachchan and Ayushmann Khurana-starrer big ticket movie, Gulabo Sitabo, on its platform – a major upheaval of the status quo in Bollywood. Amazon’s competitors will follow suit. These deals are a blessing for producers who want to recoup their investments and move on. By going digital, producers are saving on costs, including global distribution and marketing costs.
Producers choosing streaming services over a theatrical release not only sparked a debate in the industry over digital distribution, but also escalated the clash between theaters and producers. But the question remains: If Netflix stops adding new shows, will the average Indian subscriber stay or simply cancel their subscription?
Is this the new normal?
According to Crisil Ratings, the economic hardships caused by the pandemic are expected to result in an overall loss of revenue of $ 3.32 billion in India’s media and entertainment industry, with the global entertainment sector expected to lose $ 160 billion in growth in the over the next five years. The impact of this disruption on media companies strongly depends on several factors such as diversification strategy, behavior and appetite of new customers, production and distribution of content, etc.
For the sports industry, if the stadiums have limited capacity, would live matches be as good without the vibrant atmosphere and energy of the Indian fans? It’s hard to say when things will get back to normal, and more importantly, what the long-term impact of Covid-19 will be on the entertainment, media and sports industry.
OTT platforms are nothing more than a TV channel for Bollywood, allowing access to the same content anytime and anywhere, and therefore Bollywood and its superstars will never enjoy club status at 300. crores on OTT platforms.
Nonetheless, it is time for the industry to deploy the right technological solutions, embrace digital change and use it to its advantage – to produce quality content, distribution, virtual production techniques and save money. production costs. Cinema, being mass entertainment, will never enjoy the same freedom of content creation as OTT.
Virtual production solutions must be integrated, from the initial planning and scripting stages to the post-production stage. Advances in digital technology have made it possible to shoot a film on a virtual set with photorealistic computer-animated images and actors performing live in the digital environment. Creative and production teams can continue to collaborate virtually and do not need to be in the same physical space. A recent example of success is Disney’s live-action reboot of The Lion King.
The rise of OTT platforms also calls for a new business model for the redistribution of value across the ecosystem, and therefore major Indian film award shows including Filmfare, IIFA, and National Film Awards should consider films that are directly broadcast on OTT platforms in their nominations. .
Immersive viewing experience
The sports industry must also explore the digital front. It is easy to enjoy professional sport safely, but making consumers pay when they cannot experience it live is more difficult. Immersive technologies can allow fans to experience games live, an idea that seemed crazy a few months ago but very achievable in the current scenario. There is a possible partnership between Indian sports leagues and tech giants to experiment and bring sports coverage to life through VR headsets such as Facebook’s Oculus or Microsoft’s HoloLens. Now is the right time to switch from passive sports viewing to active viewing, changing the broadcast ecosystem.
Meanwhile, in the absence of live games, sports authorities like BCCI must find new ways to keep fans engaged – by deepening the pool of content available to fans, either on their own digital platforms, or by taking advantage of OTT platforms.
Regardless of what type of entertainment content is currently being consumed (or not), everyone is relying on their devices more than ever before, creating a huge opportunity for entertainment companies to creatively rethink their strategies and attract an audience already. involved, to increase consumer retention and shape the industry for long term gain. It is the dawn of a new era for Indian entertainment.
The writer graduated with an MBA from Harvard Business School