COVID-19 forever changed many aspects of our lives this past year, and our collective media and entertainment choices certainly were no exception.
The global pandemic fueled a massive industry divide where in-home entertainment choices thrived, while many out-of-home entertainment players, quite literally, died. Whereas Netflix living-room streaming reached new heights, many live music venues and movie theaters shuttered. It was an unjust tale of two industry sectors in a year that many would like to forget.
Will 2021 signal “better days” for all and not just the few? Here are 10 predictions in what we hope to be at least the beginnings of a post-pandemic world.
Prediction 1: The Great Reopening
The world significantly opens up as the year progresses due to new vaccines and a masked Biden Administration that takes the pandemic seriously. Consumers venture out of their homes again to share out-of-home entertainment experiences, including movies, theater, theme parks, sports and concerts. But COVID-19 remains top of mind much of the year, which means they take baby steps out of their front doors and continue to over-prioritize couch-laden streaming and gaming. Netflix, Amazon Prime Video and Disney Plus especially benefit from these continued trends, as Apple TV Plus, HBO Max and NBCUniversal’s Peacock seek to find their mojo. Given the frenetic streaming wars and pent-up demand for fresh premium content, expect Hollywood production to explode as all of these mega-players spend their carry-overed massive content budgets to produce their own differentiated brand of “Must See TV.”
Prediction 2: Big M&A Comes Back
Amid the chaos, pain and utter destruction wreaked by COVID-19’s global lockdown, opportunistic players step in to make acquisitions at distressed valuations. Big-ticket M&A returns. Don’t be surprised if Comcast sheds NBCUniversal to focus on its unsexy, but far more lucrative, broadband business or if AT&T jettisons at least part of the Time Warner media business that it acquired only two years ago. In AT&T’s case, the telco just announced a deal to sell Crunchyroll anime division to Sony’s Funimation for nearly $1.2 billion. Plenty of potential buyers exist for both, especially the new media tech titans. Apple, which has underperformed with Apple TV Plus (an understatement) is a logical buyer, emulating its strategy of buying Beats Music when it couldn’t make Apple Music “work” on its own. Amazon is too — adding live news (maybe CNN) to its other live content, most notably the NFL. And on the music side of the house, expect decimated small clubs and venues to be rolled up. Industry impresario Marc Geiger is on the prowl already.
Prediction 3: Tech Regulation Comes to the Fore
As one hand giveth via M&A, a much larger one (the government) taketh away. Expect 2020’s spark of antitrust activity — most recently in lawsuits the FTC and state attorneys general filed against Facebook, looking to break up the social giant — to generate a conflagration of real action in 2021, a foregone reality accelerated by the new Biden Administration. Virtually all FAANG companies, which are the media powerhouses of our time, feel the bite. The feds prioritize Facebook and Google for scrutiny. Amazon and Apple are next. All simply exert too much control in our individual lives and over society in general. In that regard, expect a bold blue wave of long overdue regulation to inject a dose of civic responsibility and conscience into the social media giants. After all, society cannot live on content-consumption-maximizing, hate-inducing and society-dividing algorithms alone. Corporate responsibility — and plain-old fashioned humanity — find their ways back into the CEO lexicon.
Prediction 4: New Bundling Models Advance
Media and tech business models continue to fundamentally evolve. The shift from single transactions to subscription-based recurring revenue bundles accelerates. Amazon Prime showed the way, and Apple One — a new convert — adds both hardware (iPhones, Macs) and ad-free search to its services bundle. Not to be outdone by its tech-savvy brethren, Disney adds new perks (theme park passes, merchandise and, yes, even Disney cruises) to Disney Plus, its new flagship subscription designed to create an ongoing direct relationship with its customers that generates predictable revenues that Wall Street loves. Video streaming is just Disney Plus’ beginning. Netflix ultimately sees the light and adds new benefits — perhaps MoviePass-like unlimited theater tickets — to create higher-priced subscription tiers that stem its history of cash flow negativity.
Prediction 5: Film Business Shifts Homeward
Hollywood’s exclusive theatrical release windows for major films, which closed during the pandemic, are here to stay. After the direct-to-streaming premium releases like “Mulan” and “Trolls World Tour,” WarnerMedia stunned the industry with the news that the full Warner Bros. 2021 film slate will hit HBO Max day-and-date with theatrical. Expect more family-friendly and adult-driven feature films to be released for in-home streaming on Day One as part of Hollywood’s new normal. Theaters become the home to superhero, franchise-driven event films that cater to highly social teen and 20-something audiences, a reality that had begun pre-pandemic. This new world order means fewer theaters and broader immersive, multi-hour event experiences that cannot be replicated by at-home streaming. Both Amazon and Netflix actively look to pick off indie theaters to add moviegoing to their overall subscription benefits and enhance prestige to their films.
Prediction 6: Comeback for In-Person Events
Speaking of theaters, out-of-home entertainment in all its forms (movies, concerts, theater, sports, theme parks, location-based and experiential entertainment) stage an early comeback in the latter half of the year. We are humans after all and demand real world communal engagement in an increasingly insular, heads-down digital world. And once the pandemic ultimately passes (or is at least controlled via vaccines and verifiable negative COVID-19 testing), the overall sector benefits from massive pent-up demand. But certain related aspects are forever changed, and tech-driven enhancements transform (and enhance) those experiences via touchless transactions, remote food, beverage and merchandise ordering, and on-site traffic congestion and crowd mitigation. And let’s add vaccination status and verification of negative COVID testing to that list.
Prediction 7: Virtual Engagement Booms
As a result of successful early adoption by artists and celebrities of virtual direct fan engagement in a pandemic-driven world of shuttered physical venues, those artists increasingly make themselves available to superfans to augment their income. Virtual engagement, which enables unlimited performances and interactions from a single location in a single day (even homes), goes beyond live streaming. Personalized Cameo messaging and game-changing “Fortnite” immersive concerts (like Travis Scott’s in April 2020) point the way. This new generation of virtual engagement augments, but does not replace, the power of real world live performances and reveals a largely untapped mega-market of superfans who are happy to spend to get “up close and personal.” They also give artists a hedge for future pandemic threats that now inevitably find their way into artist force majeure clauses.