Impact of COVID-19 on the media and entertainment.
In the media and entertainment, there are many companies that have experienced the impact of the COVID-19 pandemic and are still growing.
In addition to their strengths in content and solutions, these companies are particularly strong in direct sales models that connect directly with customers via digital platforms.
In reviewing their portfolios, media and entertainment companies must consider what kind of digital technology to implement the digital platform (distribution for contents , billing, customer service, etc.),
where to incorporate technology, and how to strengthen it.
How to proceed will be a big point of contention.
Potential Impact
Demand for content is increasing, but production systems and advertising revenue are issues
Demand for all forms of media, such as TV shows, movies, short videos, music streaming, and online games,
is soaring, especially as a result of self-restraint (prohibited overseas) and the spread of remote work.
After that, the use of video on demand (VOD) content such as Netflix and live online at home increased.
On the other hand, rising global energy prices, soaring raw material costs, and labor shortages are the main causes of soaring prices,
putting pressure on personal consumption and household finances.
The TV industry and many online platforms are expecting sales to decline.
Advertisers are starting to produce content that reflects the current situation.
As the situation worsens and consumers become more critical of insensitive advertising,
the message in advertising will become even more important.
DX strategy and M&A
What is the DX strategy? DX (Digital Transformation) is to “transform the business better by introducing IT technology and establish a competitive advantage in the market”.
Possibility of increased M&A
In order to secure differentiated assets, it is thought that new light will shine on M&A to realize the DX strategy. Companies with access to capital may rush to acquire innovative startups.
Startups are expected to face challenges such as liquidity, declining valuations, and funding difficulties (both venture capital and private investors). Hiring freezes and layoffs are also possible to maintain cash flow.
Questions for top management to consider
- How do you maintain customer satisfaction as online demand soars?
- How to create new and attractive content while the production system is restricted. What technologies can be used to build an effective production system?
- How can you use your digital channels differently to build a connection with your audience?
- How should content and advertising respond to this ever-changing era? How can we help advertisers who are critical to funding their content?
- How should the cost structure be revised to offset medium-term revenue declines?
- How can you maximize efficiency and automation in all aspects of your business? (customers, employees, etc.)
- How are privacy standards changing? And how will it affect your company’s compliance policies?