Nielsen: Asia Offers Post COVID-19 Media Snapshot

In the timeline of the coronavirus pandemic, China, Hong Kong, Taiwan, Japan and South Korea were among the first to feel the effects of social distancing and quarantining.

The regions are now the first to see a possible light at the end of the tunnel. Nielsen, which released new data showing that, similarly to the United States, in-home media consumption increased about 60% during the crisis, and from an advertising perspective, brands and agencies will need to both adjust which products are being marketed, as well as the tone in which they’re delivering their messages to consumers.

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During the first three weeks of the pandemic, Taiwan’s TV audience grew by 1 million viewers, for a total viewing population of approximately 21 million. News channels and programs were the primary beneficiaries of the increased penetration, followed by children’s programming.

In Hong Kong, as more consumers stayed home, Nielsen found that TV ratings for all day and all time periods increased by 43% in February compared with the same time period in 2019, while primetime ratings during the same period increased by 44%.

“The impact of COVID-19 is absolutely substantial,” said David Yeung, VP of marketing communications, consumer group, at HKT Limited, said in a statement. “Almost all industries have been badly hit, with lots of closure for retail outlets, restaurants, etc. The key to survival is to adapt to the changing business environment very quickly and to ensure threats are turned into opportunities by tapping into technology and data.”

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While China’s traditional communist-driven social safety nets have been challenged by a rising middle class and increased dependence on commerce with the West, As Zod Fang, head of GroupM Knowledge, GroupM China, said the government is increasing new policies to stimulate the economy and consumer consumption as the region emerges from the pandemic.

“This will lead to greater demand,” Fang said. “Therefore, brands need to get prepared. Work with agencies to have an overall plan including sourcing, logistics, marketing and sales to fully seize the opportunity.”

China did try to jumpstart the domestic theatrical market on March 24 in Shanghai — a move it quickly reversed, shuttering 600 theaters with no explanation given.

The China Film Group, the state-backed distributor that controls all movie release dates in the country, had reportedly planned to re-release box office hits Wolf Warrior 2 and The Wandering Earth, in addition Disney/Marvel The Avengers franchise movies.

All that’s back on hold for now.

CEO: AMC Theatres Hoping for Mid-June Re-Opening

AMC Theatres, the world’s largest exhibitor with 1,000 theaters and 11,000 screens, hopes to re-open domestic screens by mid-June, CEO Adam Aron told CNBC.

Speaking March 31, Aron said the industry remained on “uncharted times in our lifetimes,” while admitting to wishful thinking as the chain has seen revenue plummet to zero as local and state governments banned group gatherings of 10 or more people.

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“The summer has always been one of the biggest movie seasons of the year … and Christmas,” Aron said. “I would love to think that America will be enjoying summer movie season again. But nobody knows.”

Aron said America needs to get on the “other side of this virus” as a country. “So many businesses have been temporarily shuttered. People want to get out of the house and get back to normal. But that’s not going to happen in the next few days or the next few weeks.”

China had initiated limited theatrical openings only to reverse the decision the next day when new cases of coronavirus popped up. Beijing’s Film Bureau ordered the 600 re-opened Shanghai theaters shuttered on March 27.

Aron said China’s reopening just 60 days after the virus broke out seemed “a little too tight,” when compared with AMC’s decision to shutter all screens on March 17 for six to 12 weeks.

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The CEO said he saluted Congress for passing the $2.2 trillion relief bill, which he said would provide relief for AMC employees and “our communities.”

Aron believes the entertainment industry will bounce back quickly because “people want to be entertained.”

“The country is going to come back,” he said. “America will be normal again. We’re just going through an interruption. How quickly nobody knows. We’re all going to learn together.”

 

Report: Asia Pacific SVOD Subs to Reach 417 Million by 2025

Despite the negative impact from the coronavirus and the Chinese economic downturn, Asia Pacific will have 417 million streaming video-on-demand subscriptions by 2025, up from 269 million in 2019, according to new data from Digital TV Research.

The London-based company said China would have 269 million SVOD subs in 2025 — or 65% of the region’s total. India will supply a further 45 million — more than double its 2019 total.

Three Chinese companies will top the DTR’s Asia Pacific SVOD subscriber rankings in 2025 — with two recording 100 million subscribers. Netflix and Amazon Prime Video, which do not operate independently in China, will take fourth and fifth places respectively.

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“The top five platforms [Tencent Video, Iqiyi, Netflix, Disney+ and Youku Tudou] will account for two-thirds of the region’s SVOD revenue by 2025,” analyst Simon Murray said in a statement.

Netflix’s revenue will more than double between 2019 and 2025 to $3.19 billion. Disney+ will generate $1 billion in 2025. Asia Pacific SVOD total revenue will reach $18.25 billion in 2025; up by $8 billion on 2019.

“These forecasts are lower than our previous edition,” Murray said.

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Analyst: TikTok to Surpass 50 Million Users in U.S. by 2021

After nearly doubling its U.S. user base last year, growth for TikTok, a Chinese video-sharing social networking service, will slow in the coming years as competition heats up and concerns grow among marketers, according to new data from eMarketer.

TikTok’s domestic U.S. user base will grow 21.9% in 2020 to 45.4 million people. By 2021, it will surpass 50 million (52.2 million). This follows 97.5% growth in 2019, as the short-form video platform drew in a huge number of users, especially children and teens. Growth will slow to single digits in 2022 as the app becomes heavily saturated among core younger users.

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“TikTok had a breakout year in 2019, and it is incredibly popular among teens at this point,” analyst Debra Aho Williamson said in a statement. “Some are spending multiple hours per day on the app, which is a testament to the incredible stickiness of its scrolling video format. But it has yet to develop a strong following among older generations.”

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This year, 21.6% of U.S. social network users, or more than one in five, will use TikTok at least once a month. Despite having lower penetration than more established competitors, it’s one of the few social apps whose penetration is growing.

 

Futuresource: Coronavirus to Cut Global CE Revenue 5% This Year

With ongoing global concern about the potential coronavirus (COVID-19) pandemic, new data from Futuresource Consulting suggests the consumer electronics market could see a 2% to 5% full-year drop in retail value worldwide.

Most consumer electronics products are manufactured in China, the epicenter for the coronavirus, which has seen manufacturing and consumer demand scuttled. The Chinese CE market accounted for 22% of the $1 trillion industry in 2019, according to Futuresource.

At the same time, Johns Hopkins University said more than 100,000 coronavirus cases have been reported globally with the vast majority of infections and deaths (3,015) occurring in China.

“Having already faced disruption in 2019 due to the Sino-American trade war, COVID-19 has further highlighted the risks associated with over-reliance on Chinese manufacturing,” London-based Futuresource said in a statement.

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The research firm said while the full effects of coronavirus remain to be seen,  short and long-term effects on consumer electronics and media entertainment industries will be significant.

Specifically, supply chain disruption to hardware vendors reliant on Chinese manufacturing will struggle, with delays in the supply chain leading to product delivery difficulties and poor Q1 fiscal performance that could extend into Q2.

Futuresource expects the second half of the year to offset the difficulties with pent-up consumer demand translating into seasonality as opposed to an overall yearly decline.

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Meanwhile, digital media platforms such as SVOD, AVOD and transactional are benefiting from the crisis, with digital video, music, and gaming all seeing spikes in engagement, according to Futuresource.

Retail trends toward e-commerce are also accelerating, while collaboration technology and software is also a beneficiary of the crisis. Besides being a short-term effect, this could have implications in the long run, as consumers are likely to continue engaging with these platforms after the virus is contained.

“In a very short time period, COVID-19 has had a disruptive impact on individuals, countries and major companies alike,” Futuresource wrote. “[We] will continue to monitor the progression of the outbreak and provide further updates as the situation develops.”

 

Best Buy CFO: Coronavirus ‘Very Fluid Situation’ Impacting First Half-Year Results

Best Buy Feb. 27 said it expects interruptions from the global coronavirus outbreak to impact first half-year store results.

Like many retailers, Best Buy generates much of its product inventory from China, which, as the epicenter of the COVID-19 virus, has seen many manufacturing facilities shuttered over worker safety concerns.

“This is a very fluid situation, which makes it difficult to determine exact financial impacts from disruptions in supply chain,” CFO Matt Bilunas said in a statement.

The CFO said the retailer views the situation as a relatively short-term disruption that would not impact Best Buy’s long-term strategy and initiatives.

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“Our guidance ranges for both Q1 and the full-year 2021 [upwards of 2%] reflect our best estimates of the impacts at this time,” Bilunas said.

Separately, the nation’s largest CE retailer disclosed that fourth-quarter (ended Feb. 1) same-store entertainment sales in the United States fell nearly 22% to $1.1 billion compared to a 2.7% increase to $1.3 billion in the previous-year period.

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The entertainment segment includes DVD/Blu-ray Disc movies, video game hardware and software, books, music CDs and computer software.

The nation’s largest consumer electronics retailer said entertainment represented 8% of $13.8 billion domestic revenue, down from 10% of $13.5 billion in Q4 of 2019.

Internationally, same-store entertainment sales dropped nearly 17% to $94 million from a 2.7% drop to $117 million during the previous-year period. Entertainment represented 7% of international revenue compared to 9% in 2019.

Overall, domestic revenue increased 2.6% versus last year. The increase was driven by comparable sales growth of 3.4%, partially offset by the loss of revenue from store closures in the past year.

The largest comparable sales growth drivers were headphones, computing, appliances, mobile phones and tablets. These drivers were partially offset by declines in the gaming category.

Domestic online revenue of $3.52 billion increased 18.7% on a comparable basis due to higher average order values, increased traffic and higher conversion rates. As a percentage of total domestic revenue, online revenue increased to 25.4% versus 21.9% last year.

Apple Cites Coronavirus for Revised Fiscal Outlook

Apple has become one of the first tech/media companies to attribute revised fiscal projections due to the ongoing health crisis in China.

Cupertino, Calif.-based Apple Feb. 17 issued a regulatory filing citing the Coronavirus (COVID-19) for slowdown in production of iPhones, Mac computers, iPad and Apple Watch, among other products.

In a statement, Apple said its quarterly guidance issued on Jan. 28 reflected the “best information” available at the time as well as its best estimates about the pace of return to work following the end of the extended Chinese New Year holiday on Feb. 10 — the latter due to government concern about the spread of the respiratory virus that has killed more than 1,000 people.

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“Work is starting to resume around the country, but we are experiencing a slower return to normal conditions than we had anticipated,” the company wrote. “As a result, we do not expect to meet the revenue guidance we provided for the March quarter.”

Specifically, Apple said its worldwide iPhone supply would be temporarily constrained due to the shutdown of manufacturing partner sites located outside the Hubei province.

“While all of these facilities have reopened — they are ramping up more slowly than we had anticipated,” the company wrote. “The health and well-being of every person who helps make these products possible is our paramount priority, and we are working in close consultation with our suppliers and public health experts as this ramp continues.”

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In addition, Apple said demand for its products in China has been negatively affected as consumers there worry more about the spread and containment of the virus than buying the latest consumer electronics device.

“All of our stores in China and many of our partner stores have been closed,” Apple said. “Additionally, stores that are open have been operating at reduced hours and with very low customer traffic.”

The company said retail operations are “gradually reopening” and would continue to do so as “steadily and safely as we can.”

Apple said its corporate offices and contact centers in China are open, and that online stores have remained open throughout the health epidemic.

 

Tubi to Launch in Mexico With TV Azteca

Ad-supported VOD service Tubi Jan. 21 announced it will expand its service into Mexico later this year in collaboration with TV Azteca, one of the largest producers of Spanish-language television programming in the world. As part of the deal, TV Azteca will offer advertising sales for Tubi in Mexico and promote the service to its audience via online and other platforms.

In addition, some of TV Azteca’s titles will be made available to Tubi viewers in Mexico, including “Exatlón Mexico,” “MasterChef,” and “Lo que La Gente Cuente,” among others.

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Separately, Tubi is partnering with Chinese TV manufacturer Hisense  and its Vidaa platform to be the exclusive connected TV partner in Mexico. As part of its partnership, Tubi will be pre-loaded and placed on the Vidaa TV homepage with content also listed in the “Vidaa Free” section of the platform — as well as their dedicated “free content” button found on their remotes. Tubi will also be supported in-store with retail promotion this year.

“We’re thrilled to collaborate with a world-class partner and, together with TV Azteca, launch a new free streaming home to some of Mexico’s most celebrated television franchises,” Tubi CEO Farhad Massoudi said in a statement. “Our expansion into Latin America is just beginning and we look forward to announcing additional territories in the future.”

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“As part of TV Azteca’s transformation towards the future, we are looking forward to enhancing our distribution and make the best television productions available to a broader audience via Tubi,” said Alberto Ciurana, chief content & distribution officer for TV Azteca.

“Providing users with access to the best free content locally in every market and from all over the world is one of the key goals of our platform, and Tubi is a great partner for this,” said Guy Edri, EVP of business development for Hisense’s Vidaa platform.

In September 2019, Tubi announced viewers streamed more than 132 million hours of content — a 40% increase since May — and the service will launch in the U.K. in 2020. In addition to Hisense televisions, Tubi is available on Android and iOS mobile devices, Amazon Echo Show, Google Nest Hub Max, Comcast Xfinity X1, Cox Contour, and on OTT devices such as Amazon Fire TV, Vizio TVs, Sony TVs, Samsung TVs, Roku, Apple TV, Chromecast, Android TV, Xbox One, and PlayStation 4. Consumers can also watch Tubi content on the Web at www.tubi.tv.

China’s iQIYI Streaming Service Bows First Theatrical Feature Film

China’s online media giant iQIYI announced that Spycies, a family-friendly animated film, will launch in theaters across China on Jan. 11, with subsequent releases slated in Europe, North America and Southeast Asia.

Spycies revolves around a complex action-adventure between “Spy Cat” Vladimir and “Hacker Mouse” Hector set in a modern animal kingdom.

The production team reportedly created and produced more than 40 species, over 90 animal characters, and more than 60 scenes. The movie features endangered animals such as white rhinos and snow leopards, nationally protected animals such as lorises, and extinct animals such as mammoths.

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The design of distinctive fur animations for each species in the movie was based on research of the animals’ actual physical characteristics including fur pattern, material, length, and density.

“With the superb animation effects, exciting storyline and family-friendly themes, this film will undoubtedly succeed in delighting parents and children alike,” Ya Ning, president of iQIYI Pictures, said in a statement.

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In 2018, Spycies was nominated by the Cannes International Film Festival’s “Annecy Goes Cannes” unit based on the Annecy International Animated Film Festival’s judging panel recommendation. Leveraging its premium IP across multiple entertainment formats, iQIYI is developing merchandise such as mystery toy boxes, steam eye masks, luggage cases, and snacks around the Spycies brand.

Cinedigm Acquires Stake in Chinese Entertainment Company

Home entertainment distributor Cinedigm has signed a stock purchase to acquire about 29% of Chinese entertainment company Starrise Media Holdings Limited. In exchange for the stake, Cinedigm is giving a total of 54,850,103 shares of Class A Common Stock worth about $44.5 million. The company expects to close the acquisition in the first quarter.

Cinedigm, which is majority-owned by Hong Kong based investment firm Bison Holding Co., says the deal would help its presence and leverage in both the Chinese and North American markets.

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“These are the two biggest entertainment markets in the world,” Chris McGurk, CEO of Cinedigm, said in a statement. “Following the close of this transaction, Cinedigm will be uniquely well positioned to grow our content distribution and OTT streaming businesses in both key territories.”

The company expects to obtain the approval of the acquisition by a majority stockholders, in addition to any regulatory issues — the latter no small matter in today’s hyper-charged trade environment between the Trump Administration and China.

“This proposed transaction is a strong additional measure of support for Cinedigm by Bison Capital, our largest shareholder,” said CEO Gary Loffredo. “We look forward to working with Bison to identify additional opportunities to build our business, particularly in the fast growing AVOD OTT streaming segment as well as further strengthening our balance sheet.”

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Cinedigm has already been working with Bison to develop strategies and forge partnerships to release entertainment content and develop OTT channels in China while, reciprocally, releasing Chinese content and new OTT channels in North America, such as the recently launched Chinese language content channel, Bambu.

In calendar year 2018, Starrise reported about $139 million in total revenue and gross profit of $31 million, a 97% increase from 2017 revenue and 196% increase in gross profit. In the first half of calendar year 2019, the Starrise reported revenue of about $67 million and gross profit of $19 million, a 11% increase in revenue and 104% increase in gross profit.

Starrise’s film/TV business segment mainly invests in film, television and other short-form content. It distributes film content theatrically and to all key media platforms in China and is committed to significantly growing its investment in entertainment content for the rapidly expanding Chinese theatrical and digital marketplaces.

Recent prominent film investments by Starrise include The Wandering Earth, one of the most successful Chinese films ever released, generating almost $700 million at the box office in China in 2019 and The Grandmaster of Kung Fu, a successful Internet-released action movie.