By: Guy Bisson
COVID-19 has had an immediate impact on every segment of the entertainment value chain, and for many sectors, the worst is yet to come. Estimates from Ampere Analysis suggest COVID-19 will wipe out USS$160 billion of entertainment industry growth globally over the next five years (when TV and online advertising are included). But children’s entertainment looks like it will be one of the least affected sectors.
The impact and outlook for entertainment under COVID-19 is mixed precisely because of how interconnected the value chain is. That means simple and immediate outcomes, and longer-term complex outcomes of the crisis vary by sector and type of content. Think about it: Cinemas closed around the world and the immediate outcome is the theatrical business takes an immediate revenue hit. But the complex impact is an increased degree of experimentation: Movies are being released straight to premium on-demand; some theatrical releases are delayed; there’s a log jam of movies looking for exhibition slots early next year; and a possible slowdown in movie production until the glut is cleared.
While we predict that theatrical releases will remain a key part of the value chain (and value creation) once the world returns to a bit more normal, kids’ movie titles are particularly well suited to straight to premium on-demand and subscription streaming releases. We, at Ampere Analysis, know from our consumer research that homes with kids (particularly young kids) are higher adopters of new technology (tablets, streaming devices), rent and buy more digital content and are more likely to subscribe to streaming services. Children are the ultimate early adopters both of new tech and new business models. That’s a big plus in lockdown and beyond.
Content production has also been badly affected by COVID-19. Production shutdowns around the world seem likely to lead to a content gap early next year that may never be properly filled. Scripted live-action content has been disproportionately hit because it involves large groups coming together on set. But here also, children’s media has a natural protection.
Animated content creation, which makes up the lion’s share of production for younger children, is largely unaffected by lockdown, because animation production can continue easily in the cloud. This business-shielding is reflected in Ampere’s commissioning database, which shows that new commissions for children’s content (in contrast to most other types of production) have been largely unaffected by the coronavirus crisis. The number of new kids’ TV show commissions month-on-month between January and March 2019 and January and March 2020 is almost identical and, indeed, April 2020 saw a large increase in kids’ commissioning over the same month last year. In fact there were 2.6 times more children’s content commissions in April 2020 versus April 2019, according to Ampere research.
While we can expect some scaling back of kids’ TV commissioning, there’s an underlying non-COVID-19 trend that should continue to drive this upswing going forward. Kids content is one of the “holy trinity” content genres for streaming services (along with comedy and drama), and with the roll-out of studio direct platforms these genres are sure to continue to remain key to streaming commissioners and buyers, even through the impending economic downturn.
Ampere’s analysis of value lost in the entertainment sector as a result of COVID-19 shows that the one sector to potentially benefit from the crisis is streaming TV. Again, kids are both influential and key to the current upswing in streaming and the on-going legacy that will see the streaming TV sector gain around 12% additional value from the crisis over the next five years.
If the unexpectedly strong growth of Disney+ isn’t proof enough (Disney fortuitously launched just in time to actually benefit from lockdown), then work through the drivers: With more than one-third of the world’s population under some form of lockdown, adults are locked up at home with kids that need entertaining, watching at times of day when they would normally be at school. Linear TV is not well geared up for this sudden change, content streamed on-demand most certainly is. Disney+ reached 33 million subscribers by the end of March just as COVID-19 lockdowns were beginning. Just over a month later, on May 4, it had reached 54.5 million as lockdown had become widespread. Ampere consumer survey data shows that Disney+ subscribers are 56% more likely to have a young child at home than the average household.
One of the most important legacies of the COVID-19 crisis is certain to be an acceleration of trends that were already underway anyway. Key to those will be the retention of some of the behavioral shifts that were happening anyway but have been forcibly imposed by lockdown, and in this—I don’t need to tell you—children lead the way.
Guy Bisson is executive director of Ampere Analysis.