The entertainment industry has significantly suffered the impacts of the COVID-19 pandemic as both the consumption and production of content necessitate the participation of many people in smaller spaces. The international entertainment industry comprises various entertainment sectors such as live events, movie theaters, amusement parks, trade shows, online video content streaming, theatrical creations, and sports.
The principal factors for the growth in this industry just before the COVID-19 pandemic included the increased acceptance of online video content streaming, especially on Amazon Prime, Netflix, among others. The rise in the multiscreen cinema chain and their expansion in semi-urban regions, along with the growing number of Chinese investors in Hollywood, were additional growth-boosting factors of the entertainment sector before the pandemic. However, the major factors that have affected the entertainment industry post-COVID-19 pandemic include the shutdown of cinema theatres and the theatrical stage production, among others.
Impacts on Major Segments of the Entertainment Industry
The outbreak of COVID-19 had a severe impact on the major segments of the industry, which include amusement parks, online video content streaming, theatrical productions, live events, trade shows, and sports. All the upcoming events have been canceled or delayed, due to which most of the entertainment companies suffered huge losses. This is expected to have a major impact on the high dividend stocks in the entertainment industry.
Challenges in Production
With most people stuck in their homes, the demand for content is increasing, but companies in the industry are facing challenges in production and raising advertising revenues. The demand for all forms of media, including TV programs, music streaming, short videos, and online gaming, is high, especially on demographics under home restriction, curfews, and lockdowns.
According to Deloitte, content supply may be limited to a few months for some formats, such as day drama. This is because the new TV series being launched were those completed prior to production sets being shut down. They estimate that by mid-September, there will be limited content to launch.
Although some companies have been adversely affected by the pandemic, some companies, especially network providers and those providing online services, are reaping a fortune. While the online video content streaming sector is witnessing a significant upsurge, video streaming companies such as Netflix and Amazon Prime are coming up with new solutions to reach their audience who are now stuck in their homes. For instance, Netflix recently launched Netflix Party, which now allows Netflix users to access content in groups and watch them together.
Impact on the Sports and Travel Sectors
Stocks of leisure centric and location-specific consumer businesses and companies that depend on sports, theme parks, restaurants, and airlines, could remain subdued due to the impacts of the pandemic, which has resulted in travel restrictions and the ban of public gatherings.
The sports sector has also felt the heat of the pandemic. Matches were being canceled or postponed, disrupting organizers, governing bodies, and the athletes. The non-stop live sports content we were previously accustomed to having has been disrupted as well. Owners, sponsors, and broadcasters are trying to navigate the implications of event modifications and cancellations.
Impacts on Employment
The film industry has incurred about $5 billion globally in losses due to the coronavirus outbreak. Numerous Hollywood productions were indefinitely suspended, which left the cinemas and theatres empty and abandoned. The International Alliance of Theatrical Stage Employees (IATSE) estimates that about 120,000 jobs were lost in the entertainment industry due to the pandemic. Most of these employees were theatre employees.
Unemployment levels in the entertainment sector shot to unparalleled highs. There are doubts as to whether the industry will be a recipient of the federal stimulus package since many policymakers claimed that the entertainment market was not a major driver of the economy. Others argue that the industry does not significantly contribute to economic growth compared to the manufacturing and financial sectors.
The recovery of the entertainment industry will require the media and entertainment companies to remain determined and confidently keep moving forward. But to thrive, companies will definitely need to break old business models and build fresh ones that sustain a return to growth. Most content creators are distinguished for their extremely rich heritage and connection to today’s romanticized era. This crisis presents an opportunity to reserve the best of the dying era while progressively moving forward to design and create content for a renewed industry.