How much Netflix did you watch this week? Any YouTube? What about Amazon Prime Video? Maybe some Disney+?
With 87% of all the world’s students (over a billion and a half young people) now unable to attend class because of nationwide school closures in 165 countries, families are adapting to the new “at home” reality – school at home, work at home, life at home.
Last week I wrote the “Lost School Year” about how kids, families, and educators are adjusting to learning at home. While we all need to think about how to educate our kids during this pandemic, we also need to think about how to entertain them.
Entertainment is arguably more important than ever. The 24/7 news cycle with wall-to-wall COVID-19 coverage can be maddening, even terrifying. Entertainment has always been an escape and given the current crisis, we can all use a much-needed break. Unfortunately, every industry has been impacted by COVID-19 – including the entertainment industry.
According to one estimate from The Hollywood Reporter, the global box office has already lost at least $7 billion. If the remainder of March, April and May are included, lost revenue would add another $10 billion, making a total loss of approximately $17 billion. And this number will certainly grow as the crisis continues past May. No doubt about it, Hollywood is in unchartered territory. A real-life horror movie no studio exec wants to watch, the Great Hollywood Shutdown will also impact hundreds of live-action productions for movies and TV shows that we love and have been waiting to see – from the next James Bond movie to your favorite episode of Law & Order.
As Hollywood Shuts Down, Streaming Takes Off
While movies and TV productions are being shuttered, the one bright spot in the entertainment industry is streaming. I’m a big believer that we are in the midst of a direct-to-consumer (DTC) revolution that will fundamently change every industry, company and customer experience. The pandemic is accelerating the shift to DTC, escpecially for industries that have been slow-walking it or worse, resisting it outright. Education and the mad scramble to finding DTC learning at home solutions is a case in point. Another is the entertainment industry. Media companies are now tossing out the old playbooks and adapting to consumer demand. Just look at how quickly Disney is moving, bringing Frozen 2 and the most recent Pixar movie Onward to streaming on its Disney+ service in record time.
We are about to enter the golden age of streaming. With cord cutting on the rise, consumer are switching to over-the-top (OTT) streaming options in droves. The coronavirus will only accelerate this.
The migration to a direct-to-consumer model for entertainment isn’t just a US phenomenon, by the way – it’s happening globally. As the #1 Wall Street media analyst Rich Greenfield of LightShed Partners has been predicting for years with his Twitter campaign #GoodLuckBundle, cable TV’s days are numbered and streaming will ultimately dominate.
Measurement company Nielsen’s most recent Total Audience Report showed that in Q4 2019 19% of all video content is being viewed via streaming OTT players. Of that 19%, the usual suspects dominate. 72% of all streaming is being done on Netflix (31%), YouTube (21%), Hulu (12%) and Amazon (8%). It will be interesting to see what this data looks like now that new players have entered the market such as Disney+ and Apple TV+. Of course, there are a host of new streaming players launching soon such as HBO Max (by AT&T unit WarnerMedia’s) and Peacock (by Comcast unit NBC Universal).
So now what happens to the entertainment industry with the Covid-19 pandemic? Animation to the rescue! While live-action productions require lots of people, props, and travel (both domestic and international) which aren’t feasible now, the animation industry has adjusted and has all the tools and resources to continue working from the comfort of home. That’s good news for streaming and even better news for kids!
The Future of Entertainment is Family Entertainment
A few months ago, Fast Company wrote a great article called “The Future of Kids Entertainment Will Determine The Future Of Entertainment”. This article now feels phophetic. Kids and family entertainment is the bright spot in the entertainment industry.
Netflix was smart to identify the importance of kids and family entertainment to streaming early on and has been investing aggresviely for years. The New York Times showcased how Netflix was going all out to wow children as the streaming wars intesified. Now others have woken up to this. Like Netflix, over the past couple of years, Amazon has been growing their animation budgets into the billions. Having acquired Sesame Street a few years ago, HBO is also making a big push into kids and family content. And then there’s Disney.
What Disney has done is nothing but extraordinary. After years of partnering with streaming players and seeing others lead in direct-to-consumer, Disney decided in March 2018 to restructure and reorganize the whole company around DTC. They announced they would take their content off of other platforms and exclusively invest in their own streaming service Disney+. With Disney films, Pixar, Marvel, Star Wars and more, many predicted the company that owns today’s most valuable family brands would have a winning service. And it did, signing up more 10 million subscribers on day one.
Demand for new content from consumers continues to boom, driving increasing demand from streaming providers. New players like Encantos, Moonbug, Pocket.watch, and others are creating new family brands that are digital first and are fueling YouTube, Netflix, Amazon and the other OTT players. This has also led to an increase in M&A activity as companies try to lock in talent and content. Netflix acquired the StoryBots property and Sony acquired Silvergate Media. Even toymaker Hasbro acquired EntertainmentOne for a whopping $4 billion, driven largely by their kids properties like PeppaPig and PJ Masks. Indeed, everyone is fighting over the future of streaming: kids.
Not surprisingly, all of these investments have resulted in kids loving the streaming brands. In the most recent Brand Love study conducted by market research firm Smarty Pants, YouTube is number one followed by Netflix. The study measures “brand awareness, love, and popularity” among U.S. households with children ages 6-12. This has led to a hugeboom.
It’s A Streaming World Now, Especially For Generation Alpha
As Generation Alpha spends even more time at home consuming content, digital streaming platforms will continue to play an increasingly important role in their lives. Steaming is here to stay and every major player in the entertainment industry will need to find a way to engage Gen Alpha and the ever-growing needs of families watching from home.