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The TV, streaming and digital video industry is already undergoing a seismic shift. The coronavirus outbreak stands to accelerate that shift in some respects and reshape it in others.
It’s hard to imagine a pandemic coming at a more critical time for the TV, streaming and digital video industry. With March Madness, the NBA and NHL Playoffs, the Masters and the start of the MLB season, this is (or would be) one of the biggest sports periods of the year. The annual TV and digital video upfront advertising negotiations are underway (not the in-person presentations, though). The streaming wars are heating up with HBO Max, Peacock and Quibi slated to debut within the next two months. And TV networks and streaming services have a bunch of projects in production, including pilot episodes of next season’s TV shows.
All of that has been or will be affected by coronavirus. Some effects will be only temporary — sports will return eventually and people will watch and advertisers will pay to reach them — but others may be more lasting. Here are the potential ripple effects that have dominated the conversations I’ve been having with people across the industry and that I expect to track in this newsletter over the next many months.
The long-term impact most difficult to discern is what effect all the shutdowns of TV and movie productions will have. It may also have the biggest ripple effect of all.
The current glut of original programming could turn into a dearth of new shows, depending on how long it takes to restart productions. As TV networks and streaming services look to resupply as fast as they can to appease audiences and advertisers, they could initially turn to unscripted series that are quicker to turn around and cheaper to produce. They may also opt to release new episodes weekly instead of all at once as a form of rationing to fill gaps in their programming schedules.
In the interim, this pause in production will have consequences on those producing programs. Companies producing shows for TV and streaming lose money when productions are put on hold and could lose more if those projects are eventually canceled. Companies whose businesses depend on producing ad-supported videos for YouTube, Facebook, etc. could see revenue dry up as their programming pipelines empty. And the freelancers who work on these shoots may need to find other work if productions don’t resume by summer and their rainy-day funds diminish.
Advertisers were already moving money from traditional TV to streaming, and the coronavirus outbreak will likely accelerate that, based on conversations with ad agency executives.
TV’s current sports hiatus is already leading advertisers to redirect dollars to TV networks’ digital inventory as networks such as CBS, ESPN and TNT attempt to make up for the lost reach and hang on to ad revenue. But even beyond offsetting the loss of live sports, advertisers that have bought some streaming ads in the past are looking to move more money into this market as people huddle in their homes and are more likely to spend time streaming shows.
Advertisers’ shift to streaming could come with drawbacks. Ad buyers have already seen streaming as a way to spend less money because streaming ads can be targeted to specific audience segments. So even as advertisers shift to streaming, they may not pour as much money into the market as ad sellers may expect. And, with companies pressured to protect their bottom lines in the event of a recession, for a time advertisers could redirect their dollars away from TV and streaming to platforms like Google and Amazon that are more likely to directly lead to product sales.
The streaming wars only really began last year once Disney+ officially launched, but the battle for people’s subscription budgets is already entering a new phase. With more people at home looking for options to entertain themselves, streamers see an opportunity to insert themselves in people’s media diets.
Smaller subscription-based streaming services, in particular, seem to be pouncing on the present opportunity. Sundance Now and Acorn TV have extended their free trial windows to 30 days, seemingly in hopes that if people get in the habit now of watching their services, those people will continue to tune in and subscribe after they return to work. Meanwhile, CuriosityStream plans to get more aggressive in its email marketing, offer discounted deals for subscribers and put some episodes of series in front of its paywall to attract subscribers for the nonfiction streamer, said CuriosityStream CEO and president Clint Stinchcomb.
However, the pandemic’s economic ripple effect could have an adverse impact on subscription-based streamers. People are already losing work because of coronavirus, and those fortunate enough to keep their jobs may be spooked enough by the specter of recession to tighten up their discretionary spending.
Cutting the final cord
The current sports hiatus will test the truism that live sports is what is keeping so many people tethered to traditional TV. Additionally, the budgetary concerns that could constrict people’s streaming subscriptions could also lead them to cancel their pay-TV accounts.
Even if sports fans do cancel their pay-TV subscriptions, they will likely subscribe again once sports return. But, they may not subscribe to the same pay-TV services. Some people may see the lower monthly price of streaming pay-TV services like Hulu’s and YouTube’s and the ease with which they can subscribe one month and cancel the next, and they may opt to sign up for those services instead of a traditional cable or satellite TV service.
“Having a lack of sports vacuum followed by what might be a recession might have a lot of people looking at their cable bills,” said Adam Simon, svp and executive director of strategy at UM’s IPG Media Lab.