DIRECT MEDIA United Solutions
By: Danko Kardović, Research Manager, DIRECT MEDIA United Solutions
In the first part of this TV analysis we dealt with the impact of the pandemic on television, focusing on details concerning the actual viewership of live television as well as the streaming platforms.
If you want a reminder, you can read the introduction to the events on the global TV scene here.
Meanwhile, we are still summarizing other important events in the world of television which were triggered or initiated by the Covid-19 pandemic.
The year 2020 will certainly mark the loss of money due to the cancellation of almost all sports events. The loss of money will be felt by the sports clubs themselves, but also by the holders of the rights to broadcast sports matches. All football leagues in Europe have been suspended, except for the Belarusian League, and the Champions League and Europa League have also been suspended. The NBA matches, American Baseball League, NCAA, Formula 1 have been suspended as well… The Olympic Games have been postponed to 2021, and the same situation has befallen the European Football Championship, which has also been moved from 2020 to next year. The costs of moving the European Championship and the Olympic Games are measured in hundreds of millions of Euros. It is estimated that ITV alone, which shares the rights to broadcast European Championship football matches with the BBC in the UK, will lose between 40 and 50 million pounds due to the loss of money from commercials and the cost of the program that will have to replace the postponed matches. In early March, NBC announced that it had sold almost 90% of its advertising space related to the broadcast of the Olympic Games in the United States for a record 1.25 billion dollars. The question is how much of that money will remain in NBC now that the 2021 Olympics have been postponed. Analysts estimate that the NBA league suspension alone will cost AT&T and Disney over a billion dollars. Estimates are also coming from the Great Britain that if the current situation with the pandemic were to be extended until August, Sky and BT would lose over a billion euros. There have already been cases in which providers are not able to make payments for delayed sports broadcasts. Canal + refused to pay the due installment of 110 million Euros to the French professional football league LPF for the sports rights to broadcast the matches of the French Ligue 1. The payment was supposed to be made on April 5. According to the latest information, Canal + has agreed to make the payment to the French professional football league, but a much smaller amount than the due installment. Dazn, the sports streaming platform, has also announced that it will not pay for the broadcasting rights for sports competitions that have been postponed due to the pandemic. Dazn’s position is that it will pay for everything it has broadcast so far, but that it will not pay in advance for matches and competitions that have been paused, i.e. postponed for the time being.
Also, many sports clubs were forced to reduce the salaries of their football players, so that they could go through the crisis as painlessly as possible. It is estimated that the football club Barcelona alone will lose over 100 million in revenues by June. Clubs will certainly ‘suffer’ for not paying of the provider’s money.
Sky, the provider in the Great Britain has stopped charging its ‘commercial customers’ (pubs, cafes) the subscription to sports packages, while allowing individuals to pause the subscription to their packages. Many providers, including Nent have reduced the price of subscription to sports packages for their subscribers.
The Chinese word weiji means crisis and consists of two characters. “Wei” means danger, and “ji” means opportunity. Each crisis leaves behind many losers, but also a couple of real winners who managed to take advantage of the opportunities that the crisis brings. One of the winners of this crisis will certainly be Disney, and especially the streaming platform Disney+. Disney+ was launched in eight European countries on March 24. Disney+ was also launched in India and France in early April, with a slight delay due to the pandemic. Disney has signed exclusive multi-year strategic partnership agreements with providers, media companies and mobile operators in all European countries (Moviestar, O2, Telecom Italia, Deutche Telekom, Canal +…). Disney has been negotiating with European partners for months; Disney puts its trust in the fact that these operators/media companies know the local markets much better and that Disney + will have a larger number of subscribers than if Disney acted alone in those markets. Many operators such as O2 and Deutsche Telekom will offer Disney + six months for free to their new users and customers with higher subscriptions. In early February, Disney came out with official data and announced that it had 28.6 million subscribers on its Disney + platform. Only on March 24, the day when this platform premiered in European countries, this number increased by over 5 million new users, which is a very good start. In early April, Disney came out with new data. At the beginning of April, Disney + had 50 million subscribers, and it will be interesting to see how many new subscribers it will get in India, the second most populated country on the planet. Disney’s plan was for Disney + to have 60 to 90 million subscribers by 2024 and for the platform to start making a profit by the end of 2024. It will be very interesting to see how many subscribers will remain after the expiration of promotional periods that are now offered when Disney + is entering new markets. Disney certainly benefits from various measures like curfews and school closures introduced by many countries. Disney is a strong brand that is well known to most of the inhabitants of our planet, and the ‘strong’ offer of content on the streaming platform simply ‘forces’ parents to become subscribers, especially in times of quarantine. Disney does not need strong advertising campaigns and it also benefits from the lower price of subscription to their service.
Interesting is the research conducted by Ampere Analysis before the pandemic. According to the Consumer media tracker survey, over half of Internet users in the United States who have children have subscribed to Disney +. This number will certainly be even higher during the pandemic.
Regardless of the extent to which we are affected now by the state of emergency, the measures that are being taken, no matter how much our habits have changed, soon all this will be behind us and life will return to ‘normal’. Certainly some things will change and will not be the same as before, but a lot of things will go back to normal. During the pandemic many interesting things happened in the field of video content, UEFA expanded its streaming platform Uefa.tv to three more new platforms/providers: Apple TV, Android TV and Amazon Fire TV. There are currently no live broadcasts of matches on UEFA’s streaming platform due to the pandemic, but UEFA is filling the platform with recordings of legendary matches as well as with a lot of additional content. Amazon has extended its contract with the NFL for another three years, and the Amazon Prime platform will broadcast American football matches. YouTube TV and Sinclair have reached an agreement that will allow viewers to continue watching Fox sports channels via YouTube TV, while SPI/FilmBox and Huawei have formed a strategic partnership and FilmBox On Demand will be available on the Huawei Video platform in 23 countries. ViacomCBS was bought by Israeli Ananey Communications. Motorsport and Ferrari have launched a new channel together. It is also very interesting news that the Russian Premier League has become the first major league in the world to use YouTube membership as the main channel for distributing its rights outside the Russian market.
Instead of the conclusion
The increase in the viewership of the info program as well as the children’s program cannot compensate for the decrease in viewership of the sports program at the media companies and providers. It is expected that the growth trend of ‘cord cutting’ (cancellation of TV subscriptions) will be stopped only for a short time during the pandemic and that it will continue as soon as the pandemic has ended. Provider/media concerns are that many subscribers will cancel their sports packages in case of longer duration of the pandemic. It is true that most of these subscribers will return again when sports matches continue, but most likely in the future subscribers will take cheaper packages compared to those to which they are now subscribed.
It will be very important to see how advertisers, who have already slowly but definitely reduced their budgets on live television and switched it to OTT and digital will react to this crisis. The growing viewership of streaming platforms during the pandemic will affect the decisions of advertisers where to direct their budgets in the future. Streaming platforms very cleverly ‘opened’ their content for new users for free and they extended the free trial period. Disney+ already has 50 million subscribers and it did not delay the promotion of its platform in Europe during the pandemic, but strongly stepped into new markets. We will see how the new HBO Max and Peackok platforms will be launched and how this will affect big advertisers. HBO Max will start on May 27 and Peackok started on April 15 for Comcast users, while the official premiere for everyone else will be on July 15. It will be very interesting to see if these dates will be moved forward a bit. Disney+ has launched its platform in Europe at the right time, while after the end of the pandemic people are expected to spend more time outside and that watching television will no longer be in the foreground, as was the case with March and April. HBO has so far moved the reunion shoot of the series ‘Friends’ cast which was supposed to be one of the trump cards of the HBO Max platform, while Peacock was left without important content for its platform due to the postponement of the 2021 Olympics. It was also announced that some premiere content that is planned to be on the platform this year (series, movies) will be postponed to 2021. NBCUniversal published a list of ten sponsors who have booked premiere advertising time on Peacock. Well-known names like Capital One, L’Oréal USA, Molson Coors, Subaru and Verizon announce the bright future of the streaming platform.
Netflix’s response will also be interesting. Netflix saw an increase in the value of its shares in mid-April and surpassed its rival Disney in market value. Netflix was worth $ 196 billion in mid-April. Netflix released data for the first quarter of 2020. It had a record quarter for the company with 15.8 million new subscribers. Netflix now has nearly 183 million subscribers worldwide. It opened an office in Paris and began its ‘expansion’ on the European continent in the context of focusing on localization. Special emphasis is placed on markets where English is not spoken; local titles/productions are still quite poorly represented in the offer of this streaming platform. Currently, Netflix puts the biggest focus on the German, French, Spanish and Italian markets. It is also deepening its collaboration with Sky in the European markets.
All in all, if we thought this spring was “hot” for all participants in the global TV race, it is quite certain that the summer will be even warmer in terms of summing up the costs of the pandemic and analyzing how each TV giant faced these challenges.
The research team of DIRECT MEDIA United Solutions will follow the development of the situation further and summarize all the most important events in one place.
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