Covid-19: US media content production, distribution to be permanently changed
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Joseph O'Halloran
| 27 April 2020

A far-reaching industry analysis by MoffettNathanson has warned that after heading into 2020 with the fundamental pillars of US media starting to crack, these foundations will crumble as customer behaviour permanently shifts to streaming models on the back of the coronavirus crisis.

In its investigation, the leading media analyst firm accepts that there is a lack of clarity on when the Covid-19 lockdowns will come to an end by suggest that fundamentally the impact of the virus will be felt in both the traditional TV ecosystem and the film industry as content producers re-examine the economics of producing linear TV content and feature films.

MoffettNathanson noted that in its 20-year career it had witnessed three recessions and a national tragedy and that when facing unplanned declines in revenue, spending decisions have to be quickly re-examined as individuals and corporations re-assess the relative money for value hierarchies in their world. It adds that the one constant has been the continual disruption of emerging technologies that work in tandem with negative economic headwinds to play havoc with once seemingly stable industries.

Looking at the ramifications of Covid-19 on the media industry, MoffettNathanson believes there will be four huge changes to the US TV industry: cord-cutting will likely accelerate; the pivot to OTT will accelerate; the bundle will serve consumers looking for live content; the next round of new sports contracts will make things worse.

As a result of all of these dynamics in play, the analyst predicts that Disney will be the only company with what it calls ‘a big enough lifeboat’ and the organisational will to come out of the imminent secular changes in a strong position while Fox’s focus on live news and sports remains the right strategy. It also predicts that as a result the top streaming platforms – Netflix, Amazon and Disney – will emerge with the lion’s share of scripted content creation.

In addition MoffettNathanson predicts that there will likely be fewer movie screens in the US even fewer DVDs purchased and, thus, fewer films made for those long-optimised and windowed release cycles. It says that in essence, those studios with subscription video-on-demand (SVOD) platforms will have to move more quickly to accelerate their Pay 1 windows, which will harm the economics of other studios without such advantages.