As the media and entertainment industry gradually unlocks from months of quarantine, it’s preparing to reenter a world that’s been permanently changed. Above and beyond social distancing and sanitary measures, the film and TV business faces an uncertain future stretching from the foundations of production to the economics of consumption.
However, there are some navigational markers CEOs and CFOs can use to guide their strategic decisions. In the aftermath of the pandemic, Avid predicts that the future of media and entertainment is poised to see large changes:
- An acceleration of existing trends toward subscription models for production technology
- A changing mindset toward distributed workflows and cloud applications
- A growth in niche content from OTT providers
While challenging, the prognosis isn’t gloomy. In fact, the media and entertainment community has an opportunity to reimagine how it creates, produces, and delivers great content.
Growth in Subscription Models for Production Technology
Already well underway prior to COVID-19, the transition across the media and entertainment industry to cloud-based subscription services has accelerated in response to the crisis.
Data from the IABM’s Coronavirus Impact Tracker found evidence that demand for legacy types of software such as permanent licenses could decline significantly. In fact, this trend may accelerate suppliers’ transition to as-a-service offerings.
This holds true for even the biggest media organizations, which have begun migrating to enterprise subscription commercial models such as enterprise license agreements, Avid’s Chief Revenue Officer Tom Cordiner said in a video interview.
“There are lots of benefits for them in doing that,” Cordiner explains. “They’ve got a lot more flexibility in how they deploy their technology, so they can maximize use of their licenses for both their colleagues in-station or in-facility but also those working increasingly remotely.”
He adds, “Subscriptions also give them faster access to new releases and it’s a much easier, more streamlined license activation or ordering process. I certainly see that as a trend that will continue. The economics are just so much more compelling for our customers, and it’s happening right now.”
The desire for subscription models could mirror the transition to business models based on operating expenditure, according to Josh Stinehour, principal analyst at research consultancy Devoncroft Partners. “Part of the tail wind for operating expenditure is the inescapable impact of the current circumstances on capital expenditures for the next 18–24 months,” Stinehour says. “It is simply going to be a new technology budget reality.”
Rise in Remote Distributed Workflows
Arguably the biggest change wrought by the industry’s collective experience is an enlightened attitude toward the benefits and practicalities of remote workflows. Where media technology buyers were inclined to take a wait-and-see approach when investing in new cloud and remote production, those risk-averse preferences are shifting radically as a result of the external shock.
The IABM Tracker certainly underlines this, highlighting increased investment in virtualization and remote production. Most buyers suggest that, after the pandemic, they can’t imagine things going back to the way they were before.
“Our customers are racing to adopt many new modes of working,” confirms Cordiner. These ways range from streamlined business continuity and disaster recovery workflows to remote distributed editing, finishing, review, and approvals, to Edit on Demand, using the collaborative power of production asset management for editing and content repurposing in the cloud.
“I think [technology vendors] can play a key role in helping customers adapt and thrive in this new world,” Cordiner says. “Some of our customers are taking very bold steps and going right in right now. Some are a little more cautious and testing workflows, starting small but then rapidly scaling.”
Devoncroft has tracked cloud adoption within the media sector for the past decade and now suggests that the circumstances of the first half of 2020 will represent yet another milestone for cloud. “The most difficult aspect of changing workflows is convincing users to alter behavior,” says Stinehour. “[COVID-19] has changed behavior to a degree no amount of [argument] could have ever accomplished.”
Increasingly Niche OTT Options
The pandemic and subsequent lockdown led to an increase in content consumption and new subscriptions. This surge benefited subscription video-on demand (SVOD), catch-up services, and even linear TV viewing figures.
As lockdowns lift across the world, analysts expect some of these gains to reverse. However, the acceleration of consumer behavioral change looks set to benefit streamers. An Ampere Analysis report featured on Rapid TV News forecasts that streaming may gain 12% of additional growth in revenue by 2025.
“The drive to reach consumers directly . . . is going to continue to be front of mind as the dominant strategy for all media companies,” Cordiner says.
They will do this, he suggests, either by sheer scale of content (the model pursued by Comcast, Disney, Netflix, Amazon, and Apple) or by catering to people’s passions with more niche OTT options.
Examples include BritBox, an OTT platform for British TV shows from UK broadcasters ITV and BBC; the June launch of Barça TV+, a new SVOD from Spanish La Liga champions FC Barcelona; and the launch of Nowave—a French-based SVOD specializing in rarely seen art house movies.
Netflix and Amazon Prime Video are also ramping up local content in international markets. The US, India, and China have the highest proportion of audiences regularly watching local content, according to an Ampere Analysis report featured on Digital TV Europe. In markets like the UK, popular local content can outperform even some blockbuster international titles, the analyst found.
Direct-to-consumer strategies are geared toward the long-term future of media and entertainment alongside a mix of revenue models. Together with subscription and advertising-led models, increased transactional VOD is likely to follow some studios’ recent experimentation with collapsing traditional release windows. There will, of course, be tiered or hybrid offerings of these monetization strategies to give consumers even more choices.
Whatever the strategy, audiences need more content—and quickly—according to Cordiner. He advises that every platform will need to keep its value high with fresh programming to satisfy the demands of increased viewing and prevent content-hungry viewers from churning away to something else.