NEM: 2020 surprised everyone and the situation with the coronavirus is not settling. What do you think is the future for production companies in this “new normal”? What will they have to do to adapt and survive this period?
Guy Bisson: That depends on the great unknown: how long will COVID-19 be with us? Production has already resumed in a large number of territories with additional safety measures in place. But there’s a production backlog, particularly for higher-end dramas that require larger crews and sets and, often, international locations. It’s entirely possible that a small number of productions will be passed over, simply because of the double-impact of a COVID-19-induced backlog and the fact that studio facilities are at full capacity. A studio building boom is already underway to reduce this facilities bottleneck and that should help. For now, production companies will remain limited by distancing and quarantine measures in place. Adapting formats to work within these measures only goes so far. I think there will be a back-lash against so-called lockdown dramas—self filmed or made with actors in isolation—and a boom in escapism as we start to more fully exit lockdown…as always, producers will need to be alert to viewer sentiment and capitalise on it.
NEM: Who do you think is the most resilient in the TV industry that will recover from this situation fastest and who will be hit the most?
Guy Bisson: There are two ways to look at this: gross revenue impact and proportional impact. Some media sectors, like theatrical, have been hit proportionally very hard, but the overall amount on lost revenue pales compared to the lost growth for the TV or online advertising sector. Of course, every stage of the media production and distribution chain is intimately connected…so anything that hits theatrical will have knock on effects in the content to supply chain to TV a year or two down the line. We’ll be feeling those delayed impacts for several years to come. If I had to pick the single hardest hit sector, it would be ad-supported media, not least because, while COVID-19 led to an immediate drop in advertising spend, the impending recession will hit advertising again. The flip side is that advertising is very reactive, meaning it could also recover quickly when things turn around. Revenue is unlikely to fully recover to pre-COVID levels within the next few years, however. Other sectors, like pay TV, were already facing structural challenges before COVID hit and the impact of lockdown has been to accelerate certain consumer changes that were happening anyway…including a migration of viewing to non-linear and streaming. So while the COVID impact on pay TV may be only a few percent in terms of lost growth, the legacy impact could well be much greater. The most resilient sectors, and the overall ‘winners’ if one can use such a phrase, are streaming platforms, which services are so well suited to these consumption changes.
NEM: As of recent, you stated that 2020 is the year of AVOD. How will the cuts on advertisement budgets due to recession affect the growth of this business model? Are users keen on getting used to this kind of model of viewing content or will they turn to subscription-based VOD’s without ads?
Guy Bisson: Yes, I put that out in an Ampere report in the first week of January 2020…before we’d even heard of COVID-19!. Clearly a lot has changed since then. But in terms of Advertising-supported Video on Demand (AVoD) remaining a core focus for big media groups this year, that still stands and major new launches like Peacock from NBCUniversal stand testament to that. Obviously it’s not ideal to launch new ad-supported media into what looks set to be the largest recession the world has ever seen, but the reality is that the TV ecosystem, and the viewer needs and demands a mix. I think if I said now ‘every form of TV will be paid because the ad market is going to have a period of hardship’, that would clearly be a ridiculous statement, so we will continue to see a diversification of streaming business models despite the crisis and AVoD is ripe for exploitation at the moment.
NEM: Global content changed at the beginning of 2020 and we had the surge of unscripted on some of the biggest streaming platforms. What trend will prevail by the end of the year and in 2021?
Guy Bisson: We picked up on a new trend for reality on streaming platforms about two years ago and I highlighted it in a series of reports that examines content newly added to SVoD. It makes a lot of sense. From a production cost perspective it’s obviously a lot cheaper than high-end drama; it’s easier to localise to satisfy a global audience and it appeals to a younger demographic—still the core audience for SVoD, even as streaming platforms invest increasingly in drama aimed at an older demographic. COVID-19 also had an impact, in that some reality and factual content managed to continue production through lockdown where drama could not. It’s funny to talk about a trend by the end of 2021 because most of us have been in lockdown for months and, as we begin to emerge, we’re now just weeks away from entering the fourth quarter! So, not necessarily by the end of the year, but as we emerge from restrictions, a doubling down on escapist drama is the trend I’d predict.
NEM: Will streaming services dominate Pay-TV in 2020?
Guy Bisson: This partly comes down to semantics. Will streaming dominate? I would argue streaming has dominated the industry agenda for the past five years at least. But if we follow the money, clearly it’s still the smaller part of the TV sector and business compared to linear and more traditional paid TV as well. That will continue for some years to come. That said, a very large number of markets now have far more streaming TV homes than traditional pay TV homes and consumers are increasingly stacking multiple streaming services in their home entertainment bundle. Streaming is also responsible for the production boom that continues to influence the creative sector. Streaming will be even more on the agenda this year with the major studio and tech-led new launches we’re seeing. As solutions are found to aggregate streaming content I think the shift we are already seeing will definitely accelerate. But by then, rather than think in terms of streaming and ‘traditional’ platforms, the distinction will have disappeared because the streaming platforms of traditional broadcasters and pay TV operators will have grown in importance and subsumed the older forms of delivery.