How COVID-19 will change the 'New Normal' for Film & Advertising
Updated: Jun 6
The COVID-19 outbreak which began in Wuhan, China in December 2019, caused by a newly discovered coronavirus, has currently, as we're all aware, brought the world to halt.
The severity of the worldwide chaos that was caused by this virus, is something that humanity has never endured in the past. We are all, collectively, watching the world suffer in ways that we had never imagined. With no current cure to the virus, we only have a single way of prevention from the disease that is currently being practiced worldwide, i.e, social distancing.
Airports, shopping malls, gyms, schools and universities, and even borders, all closed. Only questions on everyone's mind. What is the world going to be like, once all of this is over? Will all of this ever be over? Will we ever go back into living lives that we have grown accustomed to?
In the past couple of days, I have received some terrible news. The loss of a relative, a friend losing their parent, plenty of friends losing their jobs, and several organizations declaring bankruptcy - all because of the COVID-19. The pandemic that has shaken the world.
So what do we know so far about what to expect once we get out of this lockdown? And how is this going to affect the film and media industry? To be honest, I'm pretty sure that no person on the face of this planet currently has a clear idea of what exactly it's going to be like. But we would like to share the information that we have collected so far and we hope that by the end of this blog, you will be aware of the impact the COVID-19 pandemic has currently had on the film & media industry, and what changes to look forward to, in the future.
The impact of COVID-19 on the Global Economy in a nutshell
The global situation caused by the coronavirus and the lockdown that has been put in place to prevent it's spread has directly placed immense pressure on the global economy. We have come face to face with an extremely severe and serious recession. According to Mark Zandi, chief economist at Moody's Analytics, “This is an economic tsunami".
Social distancing is economic distancing. We are telling people to cease going to stores, to restaurants, to workplaces. We are insisting they stop supplying their labor, making their goods. To slow a pandemic, we are forcing a recession, perhaps a depression. - Ezra Klien, Vox
According to the BBC, the world economy is now facing a much stronger economic crisis than the Great Depression. “Many of the European countries that are among the worst affected by the pandemic, such as Italy and Spain, already had weak fiscal positions before the outbreak,” said Agathe Demarais, the EIU’s global forecasting director. 800,000 jobs were eliminated in At the height of the Great Depression in March 2009; a total of about 8.6 million jobs were lost during the entire depression. Last month alone more than 20 million jobs have been cut, and more than 33 million jobs have been lost since the start of the 2020 crisis.
As Covid-19 is painfully demonstrating, our interconnected global economy both helps spread new infectious diseases – and, with its long supply chains, is uniquely vulnerable to the disruption that they can cause. - Bryan Walsh, BBC
According to The New York Times, the pandemic is a public health emergency. As long as human interaction remains dangerous business cannot return to normal responsibly. So what was normal before can no longer be usual. People may be less inclined to jam even after the virus is contained in crowded restaurants and concert halls. In the Employment Situation Summary released in April 2020 by the U.S Bureau of Labor Statistics, in April, total non-farm payroll employment decreased by 20.5 million and unemployment rose to 14.7 percent. Marketing and revenue are decreasing dramatically as consumers continue saving money due to uncertainty and joblessness. In the United States, more than six million have claimed unemployment, and in the worst-case scenario, the Federal Reserve estimates the unemployment rate can hit 32 percent. These numbers illustrate the impact of and attempt to control the coronavirus (COVID-19) pandemic.
What changes are we seeing in advertising?
Traditional activities have been postponed, such as international conventions, sports competitions, and festivals, and financial economies have been in free fall. Organizations like Unilever, Spotify, and Google allow employees to work from home. Now marketers are asking themselves, “how permanent are these changes?”
The massive rise in the number of people staying indoors has contributed to a cultural revolution in which customers have moved to spend more hours online than before. Companies now catering to the 'sofa-surfers' have proven themselves to be at the forefront and in some instances have also seen sales grow. Traditional retailers have innovated internet goods in an attempt to adapt to this modern way of life. Current research has found that 61 percent of advertisers are adapting their tactics for short-term coverage. Only 9 percent, though, make long-term improvements.
The Interactive Advertising Bureau (IAB), a trade group of media and marketing industries in the digital economy, conducted a study of 205 people from publishers, media platforms and advertising companies regarding how U.S. advertising revenue is being impacted by the pandemic. They reported on April 15 that both buyers and sellers of advertising expect advertising revenues to be down considerably for the period March through June of this year. - Mike Vorhaus, Forbes
Advertising expenditure is being canceled, delayed, and increased in some limited cases, all in response to COVID-19 and the stay-at-home orders issued throughout most of the world. Yet not all markets and firms suffer the same impact. In some sectors businesses also shine bright lights for the advertising industry.
There is a small change from physical media to the internet, as the advertisers made it known in the same study that they should prefer a more multimedia approach. Marketers having a spending cut would benefit from switching to inexpensive and more versatile platforms such as programmatic ads where the reach of customers and the potential opportunities are greater.
Digital television advertising, social media, and streaming content are platforms that in the short-term technology strategy would most likely increase. Out-of-home ads like metro signs would be even less visible as most people sit at home. Event promotion has come to an abrupt end, so we'll probably see the marketing investment ceasing or changing to web advertising.
For all, this is a different time, not to mention the customers. Now that we live indoors more than just a few months ago, we see a different kind of online behavior. Consumers are online at times during the coronavirus which may not be accustomed to by advertisers. Online shopping and activity could shift to midday when activity is low in normal circumstances. As there is a constant stream of breaking news, the online activity could be higher too. Advertising would be cheaper because some companies slash ad expenses. If a possibility exists, capitalization will have clear positive effects on this. With many impacted firms cutting their marketing budgets, we're seeing a decrease in CPM and CPC rates of up to 47 percent (due to a fall in competition). This is an ideal opportunity for some marketers to acquire new customers at a lower cost than previously.
Advertising thrives on ROI and the customers simply aren’t spending at the moment. According to Statista, the advertising industry is looking at a $26 billion loss in revenue as of early March 2020 due to the coronavirus outbreak. That’s a 10% decline in revenue and a huge impact on U.S. ad spend. Ad spend declines up to 50% are expected across all channels, according to advertising professionals. Traditional out-of-home advertising is impacted the most with a 51% ad spend decline in March/April. Digital media is hanging around 40%, while the best estimates go to social media and paid search, with 33% and 30% decline, respectively. - Search Engine Watch
Throughout the COVID-19 crisis, KLAVIYO surveyed its network of 30,000 businesses each day. The most recent survey released at the time of writing was for Friday 27 March. A staggering number of businesses already had ambitious growth projections at that time. Ironically, more than 28 percent of respondents keep saying revenues were growing. This is higher than the day before when 24 percent of respondents saw their sales rise. There's a distinct trend, though, in the kinds of things people spend their money on. They transfer their spending to essentials, and a small number of non-essentials that certain people might find important to their well-being.
Irrespective of changes in spending, 73 percent of advertisers said they are modifying or developing new creative assets. Among those who update creatively, 58 per cent said they intend to include coronavirus, COVID-19, or otherwise represent the crisis in their advertising. At Google's parent, Alphabet Inc., total revenue for the first quarter grew 13 percent from the previous year to $41.2 billion, while ad sales for Facebook Inc rose 17 percent to $17.44 billion. Advertisers certainly don't want to be tone-deaf but it raises the question of whether consumers will become corona-weary or even corona-blind to a flood of ads talking about "these uncertain times." It would be safe to say there is a significant growth in digital advertising (especially, if it's the right kind of advertising).
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The Impact on the Global Film Industry and Production
The enormous and profitable Chinese film industry was almost instantly affected when film theaters were closed across the country and new releases were postponed. Hollywood soon began to feel the effects, too, and the impact of coronavirus on the global film and entertainment industries will certainly increase with the passing of time. The consequences of the pandemic on these industries could range from lower attendance at film festivals and film distributions to be delayed or cancelled releases of films and postponed concert dates to shortened on-location film shoots. Studios, actors, theater owners and others would undoubtedly suffer financial consequences for months or even years.
Disney, WarnerBros, Pixar, MCU, and plenty more renowned production giants have halted productions and delayed the releases of their films due to the coronavirus. Other films and TV productions have been halted, delayed, or shut down entirely. Coronavirus has a devastating effect on those in the film business as the world's box offices face the loss of billions, and filming stoppages have left thousands of people without work in the mostly freelance industry.
According to Doug Larmour, in an interview for EuroNews, the classic movie chain is in trouble - but it has been in trouble forever. That's perfect for those who own the subscription service, ‘but it's not the $10 bucks you're spending at the theater’. The big problem is that nobody is shooting anything at the moment. Productions are starting again in Sweden and Denmark, but there is no one working in the United Kingdom, the United States and most of continental Europe.
Iceland announced that it would open the country to stringent monitoring and tracking measures for international film crews starting May 15. Anyone that enters the country will be given a range of quarantine and monitoring solutions and will be required to follow strict on-set health criteria. Further restrictions are expected to be eased on June 15.
In an interview with Variety, Tyler Perry was asked about how production would go on in Hollywood. Being one of the first few to restart productions, he aimed to resume on July 8th, 2020. Perry will be among the very first in Hollywood to bring into practice a profusion of untested concepts that the film community was thinking with how to get back to work in COVID-19 times.
Everybody on the set is going to wear face masks, and group scenes are going to be kept until after the scheduled fourth day after everyone has been screened again. Meals will be served on the main sound-stage in multiple "catering cages," to optimize social space. When asked how much all these mitigation steps would bring to the manufacturing price tag, the self-made mogul admits, “It’s an enormous undertaking and an enormous cost to the budget.”
Any remote work continues behind the scenes and several countries are considering allowing the resumption of shoots. Meanwhile, those in movie production are hard thinking about what's next. Film agencies concentrated on things like polishing scripts and communicating with writers, actors and directors whose lives were too busy before the pandemic struck to spare time while in solitary confinement.
Nothing has done more damage to the economy in the Middle East and North Africa over the last 100 years than the ongoing coronavirus pandemic. As streaming services have risen to become the dominant source for film consumption, the landscape has been transformed. The long-term damage to the film industry is likely to be transformative.
There has been much discussion about how streaming services may come even more to the fore during the pandemic, as cinemas and festivals shut down. - Joseph Fahim, Middle East Eye
With cinemas closed down, video-on-demand streaming services have become the best option for the distribution of content. If you're looking to distribute your content on a VOD platform, get in touch with our team by clicking here.
I don't think that [cinema] will ever go away but it will change... It may be that more films go straight to streaming and you just rent it - Zygi Kamasa, Chief Executive of Lionsgate UK, to SkyNews
The coronavirus is expected as likely to join the list of viruses that cause several deaths every year - which means that it would be safe to say that it's not going away for a long time. With the COVID-19 becoming a part of the new normal, it's understood that production costs are likely to step up and production crew is going to face bigger challenges in executing the same level and quality of work while appropriately being able to maintain social distancing.
COVID-19 has changed world travel and set the globe at a standstill. Nearly 90 percent of the world 's population currently resides in countries with travel limits for the first time in history. So far, not many airports around the world are open to commercial flights.
Therefore, there still isn't much that can be said about what different situations we or any other company that produces motion pictures will get into when it comes to filming abroad or flying crew members in. This can directly affect the functionality and costs of productions in the future; do we have to conduct shoots abroad or fly in the crew. What can definitely be expected is that the price of flight tickets may increase as it is possible that commercial flights may operate on half-load in comparison to full flights.
Traveling again may be possible but it won't be the same. Even if borders are reopened, travelers must be confident that they can safely board an aircraft and enter the country of destination. New protocols and systems for health safety will have to be put in place, but they haven't yet been defined.
The New Normal
World leaders and scientists also place a great deal of hope on finding a COVID-19 vaccine quickly. Despite any cause for hope, a successful cure is still impossible until well into 2021, ensuring all of us will continue to get accustomed to a somewhat new lifestyle, even though any limitations are relaxed. As other countries begin to lift strict COVID-19 quarantine measures slowly, some elements of pandemic life will not so soon disappear. Masks and social distancing are here to stay, experts say, and as cinemas, gyms and restaurants reopen, their capacity will be halved. This and other interventions will become part of the new standard worldwide, at least until a COVID-19 vaccine is created.
While a growing number of countries are mandating mask wearing, there remain holdouts – and many people are simply refusing to do what they are told. Jeremy Howard of the University of San Francisco discusses that he and hundreds of other scholars encourage all governments to let their residents wear fabric masks in all public areas.
Some governments have been fining people who don’t wear masks in public or keep sufficient space with others, to combat social distancing scofflaws.- Bryan Keogh, The Conversation
The Government of Kuwait has decided to impose a fine of 5000KWD for anyone who is seen not wearing a mask in public.
As the complete lockdown in Kuwait has been set until the 30th of May, and the numbers of the confirmed cases rise, we hope that things get better soon. Here at Cinemagic, we continuously improve and optimize the work environment to adapt to industrial changes.