BackCovid-19 could alter media, entertainment landscape, digital to benefit: KPMG
There has been a perceptible increase in media consumption, especially in the last few weeks due to the lockdownThe segments most affected by the lockdown have been those that rely on a social gathering of people – films and events
PremiumNEW DELHI: The covid-19 pandemic and the consequent disruption of lives across the world could have serious impact on media and entertainment, posing challenges for traditional media but leading to a long-term upward shift in the integration of digital technologies into everyday lives, according to a report by professional services KPMG titled COVID-19: The many shades of a crisis- A media and entertainment sector perspective.
According to the report, if the spread of covid-19 is largely contained by April-May, India’s economy could grow in the range of 5.3-5.7% in FY21. If there is a global recession with a containment of spread in India, the country could witness 4-4.5% growth for FY21 and if the virus proliferates in India accompanied by a global recession, GDP growth could fall below 3%.
But amid all this, there has been a perceptible increase in media consumption – TV, digital and gaming - especially during the last few weeks as people have remained homebound, according to the report. Monetisation of this trend could prove challenging as the media and entertainment sector in India derives a majority of its revenues from the advertising spend of other industries. The recessionary impact on FMCG, financial services, automotive and e-commerce, for instance, could have a knockon effect. On the other hand, subscription revenues for the sector could improve over the medium term, as people are exposed and get accustomed to a greater variety of content during this lockdown period. But the long-term impact of this depends on the availability of fresh content once the restrictions are lifted.
The segments most affected by the lockdown have been those that rely on a social gathering of people – films and events – and the recovery here might take longer than anticipated.
TV has been the one big beneficiary of the lockdown. Overall viewing has increased but that is accompanied by absence of fresh content. Monetisation has dropped substantially with advertisers scaling back on spends.
Print too faces serious monetisation challenges as advertisers scale back expenditures. The medium, however, has witnessed higher credibility in the face of proliferation of fake news on social media and circulation could pick up in near term once restrictions are lifted also resulting in improved ad monetisation.
Films, too have borne the brunt of cinema hall closures and the recovery process may be different across demographics based on specific covid-19 experiences and perceived risk from social gathering. Besides medium-term release pipelines may be hit due to crowding of projects and restart of on-hold projects. Lights are also out on live events with multiple plans cancelled and industry’s losses estimated at around ₹30 billion.
The silver lining in all of this has been the secular rise in OTT consumption in the period and across demographics and devices. While content pipeline has dried up because of halting of production and ad-spends are currently down, greater digital allocations by brands are likely post recovery.
There has also been a noticeable increase in time spent on online gaming since mid-March but the monetisation gap remains due to lowering of ad-spends.
While medium to long-term effects will remain, the report says that the need of the hour is for companies to focus on technology integration, process efficiencies and reduction of lead times. Aspects such as remote collaboration for creative ideation and scripting could last well beyond covid-19 and alter the way the industry creates content forever. Companies could place an increasing amount of reliance on artificial intelligence and machine learning to predict consumer behaviour in these uncertain times.
Further, the larger cities may not see an adverse impact in media consumption across most segments. However, the same trend may not play out in smaller cities and rural areas. The lockdown and subsequent halt in economic activity has seen a major reverse migration of population, for whom the focus now is on mere sustenance. Media spends for this socioeconomic class, especially around TV and films, could see a considerable decline.
“The covid-19 experience is likely to result in a long-term upward shift in the integration of digital technologies into our everyday lives, with India’s ‘digital billion’ trajectory likely to accelerate materially," Girish Menon, partner and leader, media and entertainment, KPMG India, said in a statement. “We expect greater affinity to be seen for at-home entertainment with subscription models, cord-shaving and streaming to larger screens seeing exponential pick-up in the near to medium term. Outdoor entertainment options including – films, events, theme parks – particularly in covid-19 hotspots could see lingering risk aversion even in the medium term. Organisations might need to be risk focused and innovate existing business models and processes to survive and emerge stronger."
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