Coronavirus has changed everything for TV

The coronavirus pandemic is proving to be an accelerator of many existing behavioural trends, from the death of the high street to the increase of flexible working arrangements.

The content-consumption shift towards OTT services and streamers has also increased in intensity over the last few months. The consequences of this, including in the film distribution market, could well be profound.

With populations confined to their homes, consumption of film and TV has increased dramatically. The success seen by the streamers has been well publicised already.

Disney+ had been enjoying a successful US launch last year anyway, but as the service expanded internationally in March, the Covid-19 backdrop provided a huge boost to subscriber numbers.

From a standing start, there are now an estimated 4.3 million UK Disney+ subscribers – a large portion of which are likely to be working parents desperate to keep their kids distracted with something to watch.

However, while there are now around 55 million subscribers using the service globally, this number is distorted by a deal in the US which gives Verizon customers free access.

It is telling that Hamilton – purchased last year for an estimated $75m (£58.2m) and intended for theatrical release in autumn 2021 – was recently released on Disney+

Netflix smashed its Q1 subscriber target, bringing in almost 16 million subscribers globally, verses their pre-pandemic forecast of seven million. The second quarter saw another impressive performance, with over 10 million new subscribers against a forecasted seven million.

The result is that even if the ‘Covid boost’ on subscriber numbers dissipates in the second half of this year, Netflix will still easily beat its 2020 growth target. Netflix is still the market leader, and it seems unlikely that this position will change in the short term.

Content squeeze

New content is essential for streamers and, with so much original content this year, Netflix has continued to drip feed new content onto its platform across the year, with the film Extraction being particularly popular.

Disney+, on the other hand, has had to pause production on its big budget Marvel TV shows, which may lead to the service losing freshness by the end of the year.

It is telling that Hamilton – purchased last year for an estimated $75m (£58.2m) and intended for theatrical release in autumn 2021 – was recently released on the platform to keep subscribers interested. Other new US entrants such as HBO Max will face the same issue in the supply of new content.

It is essential to understand the complete disruption of the theatrical film market caused by Covid-19 and the boost that this will continue to give the streaming market.

With cinemas closed globally, many films have been bypassing theatrical distribution and going straight to digital platforms. This is even the case for the major studios, with the like of Trolls World Tour skipping cinemas entirely.

Not only that, but the release strategy of forcing consumers to rent the film for £15.99 was a resounding financial success, obviously profiting from less margin being paid out to the cinemas.

This has not been well received by cinema chains, who understand the long-term negative effects on them of this changing distribution model.

With studios lacking confidence about releasing blockbuster films in this environment and cinemas waiting for a big hit to justify reopening, a curious game of chicken is currently being played out.

In the meantime, the likes of Netflix and Amazon have been purchasing films that were scheduled to be released theatrically this year and promoting them as ‘original’ content. The reinforces the hold that streamers have over people’s viewing habits.

It is essential to understand the complete disruption of the theatrical film market caused by Covid-19 and the boost that this will continue to give the streaming market

What of the effects on linear TV? For years now, the rise of the streamers has been at the expense of the linear channels and Covid-19 has accelerated this trend.

While content consumption generally has substantially increased and TV channels have recorded some of their best ratings in years, it feels like streaming services are winning out.

The events that linear television is made for – the UEFA European Championship or Glastonbury, for example – have been postponed for the year, entertainment shows with live audiences have haltered and are very slow in their returns and much content of the remaining slated content has been delayed until 2021.

At the same time advertising-led revenue models have been hit hard. Large IP owners are pulling content towards their own platforms: Disney channels have been pulled from Sky and Virgin, as Broadcast revealed in June, and is now exclusive only to Disney+, for example.

Not only this, but social media – whether it’s the fun content creation of TikTok or the special interest videos of YouTube – is engaging young people more than ever before.

Additionally, there has been substantial increase in video gaming. Linear TV is having to fight for viewers in a way that it has not had to before: the challenge it faces should not be underestimated.

The pandemic has had such a substantial effect on society that many new behaviours already feel ingrained into us – switching onto Netflix before channel surfing may be one of them.

Perhaps people have stopped watching linear television without even realising. This could have deep consequences for traditional broadcasters moving forward.

• Tom Dods is relationship director, technology, media and telecoms at Barclays. Please contact him on +44 (0)7766 364 337 or email him here