M+E Europe

EES 2021: COVID-19 Accelerated Some M&E Trends

The COVID-19 pandemic accelerated some media and entertainment employment and revenue trends, while having an especially devastating impact on sports, according to Nelson Granados, professor of information systems and technology management at Pepperdine Graziadio Business School and executive director of the Institute for Entertainment, Media, Sports, and Culture (IEMSC).

IEMSC and IBISWorld data showed that U.S. media and entertainment industry employment saw “steady growth” before the pandemic and was up 2.5 percent from 2018 to 2019, he said July 21, during the session “Post-COVID M&E Outlook and Trends” at the Entertainment Evolution Symposium (EES).

The data “still shows employment increasing for 2020,” albeit by just 1.1 percent overall across all M&E-related sectors, although “a lot of us were much more pessimistic than that; we thought there was actually going to be a reduction,” he noted.

M&E employment this year is projected to be up 5.5 percent, he said, attributing the fairly optimistic forecast to there being “a lot of pent-up demand [and] a lot of competition for content.”

M&E industry employment was “driven by three of the main sectors” in 2020, he said, pointing to the data showing video streaming  was up 25.6 percent, social media was up 21.6 percent and video games were up 16.2 percent. Consumers gravitated to those sectors during the pandemic, he noted.

Meanwhile, internet publishing employment was up 4.1 percent and every other M&E sector was down.

In terms of the compound annual growth rate (CAGR) for U.S. employment growth by sector from 2016-2021, video games were up 4.8 percent. It’s “going to be the biggest employer in the industry for the first time,” Granados said of the video game sector.

Meanwhile, social media was up 22.9 percent, while video streaming was up 26.4 percent.

The M&E Revenue Story

“The picture for revenues is somewhat similar,” according to Granados. U.S. M&E industry revenue declined in 2020 for the first time since 2016, by 1.7 percent, he noted.

Still, “a lot of us were forecasting much more dire” results for the industry last year than what ended up happening, he said, attributing the better-than-expected performance to the same sectors that drove 2020 M&E employment.

There is, meanwhile, a “pretty rosy” revenue forecast for 2021, with M&E revenues expected to be up 9.4 percent, he said, projecting the industry will catch up to the growth seen before 2020.

U.S. video games revenues were up 24 percent in 2020, while video streaming was up 22.38 percent and social media was up 16.8 percent. Internet publishing was up 5.4 percent and revenues in every other M&E sector declined.

Sports revenue, as in employment, was the weakest in revenues among the M&E sectors as live sports stopped for a chunk of 2020.

The Consumer and Ad Spending Story

U.S. consumer and ad spending CAGR was “steady” at 4.5 percent from 2015-2019. But there was then a “blip” in 2020, as it declined the exact same amount, according to Granados.

The main direct effect from the pandemic was the shutdown — or at least a significant decrease in capacity — for live events (Broadway, cinema, concerts, live to tape, and sports).

In-direct effects included an increase in piracy and a decline in ad spending, while “consumers were willing to spend less” due to the pandemic, Granados said. Ad revenues were down 5 percent. There were also sector-specific effects, including a stop in production and a decrease in downstream revenues to digital.

Distributors took a “double hit” as there was less willingness to pay and more competition for content, according to Granados.

Past trends accelerated as digital channels drove industry growth and eSports saw double-digit growth on a still relatively small base.

The Entertainment Evolution Symposium event was produced by the Hollywood IT Society (HITS), Pepperdine’s Graziadio Business School, and MESA. The event was sponsored by Whip Media, PacketFabric, 5th Kind, Qumulo, EIDR, Klio and the Trusted Partner Network.