Analysts: Home Entertainment ‘Virus’ Bump Could Be Short-Lived

With studios shuttered and live sports on indefinite suspension due to the threat of the coronavirus, home entertainment options ranging from broadcast and pay-TV, transactional VOD, DVD and streaming video are projected to see at least short-term bumps in viewership and revenue during the “social distancing” period, according to media analysts.

Nielsen reports “TV usage” in South Korea, Italy and the United States increased double digits during the initial weeks of the virus. Nielsen’s classification includes broadcast/pay-TV, VOD, AVOD, SVOD and the DVR.

Data from Sensor Tower found Netflix sign-ups via its app increased 57% and 34% in Italy and Spain, respectively. Streaming Elements reported live streaming via Facebook, YouTube, Twitch and other platforms jumped 66% in Italy in February. The country is on virtual lockdown after more than 2,500 people have died from the virus.

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“[SVOD] is an obvious beneficiary if consumers stay home due to coronavirus concerns, and this has been reflected in considerable stock price outperformance this week,” Dan Salmon with BMO Capital Market wrote in a March 13 note.

JC O’Hara, analyst with MKM Partners, told CNBC that consumers “stuck inside” all day during a pandemic quarantine would inevitably turn on the TV. O’Hara said streaming services such as Netflix, Hulu, Amazon Prime Video, as well as ad-supported VOD platforms, would all benefit.

Neil Begley, with Moody’s Investors Services, back in January suggested that if the virus became widespread but short of panic, home entertainment content such as TV shows and films on Netflix, Disney+, Comcast’s Peacock, AT&T’s HBO Max, among others, would rule the day.

But should the pandemic last longer, leading to a global recession as some have projected, consumer spending on home entertainment would fall to the wayside, according to analysts Laura Martin with Needham and Craig Moffett with MoffettNathanson.

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“[SVOD] will be replaced pretty quickly by the necessity of reducing monthly bills, when people will have to deal with the financial impacts of a recession,” Moffett told The New York Times. “Cord-cutting will accelerate with a vengeance.”

A long-term pandemic and fiscal gains in home entertainment would likely be offset by a fiscal hardships in households as viewers — suddenly out of job due to sever downturns in the economy — reconsider spending on non-essential items.

“Cost will become that much more urgent,” Moffett said. “There are going to be very large parts of the population out of work.”

And some of those unemployed could work in media. With ESPN and sports-themed channels unable to broadcast live content, consumers would question spending on platforms largely streaming classic reruns and endless coronavirus chatter.

Disney-owned ESPN and WarnerMedia Entertainment’s Turner are projected to lose $481 million and $210 million in NBA-related ad-revenue alone. NBCUniversal has $1.2 billion in advertising at stake for the 2020 Tokyo Summer Olympics — with President Trump now suggesting the latter could be postponed — a scenario one Games executive has called “impossible.” NBCU parent Comcast says it has insurance should the Games be canceled.

Apple CEO Tim Cook, who has already cautioned the tech giant would miss quarterly fiscal projections on iPhone sales due to the virus, told Fox Business he thinks the virus has run its course in China, epicenter to the COVID-19 outbreak.

“It feels to me that China is getting the coronavirus under control,” Cook said on March 12. “You look at the numbers, they’re coming down day by day by day. And so I’m very optimistic there.”

Indeed, China March 18 reported no new COVID-19 infections throughout the country on March 17. That news comes the day after government officials expelled media representatives from major U.S. news organizations.

 

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