Last week we commented briefly on the impact of COVID-19 on telecommunications. This week, it’s media.
We think sports rights holders, including subscription services focussed on sport, will be hit hard. Our recent Australia consumer survey found that nearly 75% of subscribers to a sport streaming service would consider cancelling their service or demanding a rebate if live sport was not available to watch. Sports streaming companies are clearly reviewing how to address these events with their customers and have started to respond with concessional offers. Optus has stated that it will suspend Optus Sport monthly subscription fees until the end of May 2020.
The situation in advertising also looks grim. Seven said “the escalating uncertainty relating to COVID-19, a material fall in advertising market activity, and the suspension or postponement of productions and events” combined to mean the organisation no longer had visibility over future advertising bookings. We are in uncharted waters.
But there will also be opportunities as the country gradually goes into lockdown. With cinemas and live entertainment shut down indefinitely, both traditional and online services like FTA TV and radio, Netflix and Stan should see audience growth.
Subscription services with access to content libraries like Netflix and Stan will do well out of this. But advertising spending will be cut as many small and medium-sized businesses are either already shut down or threatened with shutdown, and focus on survival.
So advertising channels will also be hit hard. But FTA advertising may be impacted less than digital if the big brands soldier on with their traditional mass market advertising, while the SME advertisers who are the backbone of the online advertising market go into hibernation.