INTRODUCTION
Being no exception, the media and entertainment industry like every other sector has been significantly affected on account of the pandemic. With implementation of both nationwide lockdown to state wise lockdowns, there has been closure of all units of physical business. Theaters were among the first businesses to close and even after certain relaxations were provided, theaters continued to be closed. Even after the lockdowns are lifted, the call for social distancing might become a norm and the ripple effects will have serious implications for the people in the entertainment industry who survive on production and distribution of music and movies and the allied live events.
With people spending more time at home, there are more entertainment hours to fill. In this context, the ‘at-home-entertainment’ providers are engaging users more, finding new and larger audiences and even expanding themselves. Financial ramifications will likely be felt by production houses, music labels, filmmakers, artists, theatre owners among others for months or even years in the long run. The TV sector had seen an increase in consumption with no steady revenue. News channels contributed to this growth.
Revenue generation in OTT platforms has increased from 65 in FY16 to 218 in FY 20 (INR in Billion). The print sector has faced a decline from 333 in FY19 to 306 in FY20. Likewise the TV sector has increased from 183 in FY16 to 262 in FY20. The advertising revenues CARG has been positioned for FY16-20 on 32% for OTT, 9% for TV, 1% for print,
MAJOR LEGAL ISSUES
- Unable to enforce contracts. The parties must review and if possible, revise the agreements suitable to their requirements and the restrictions in place.
- Charges on cancellation of bookings of pre-planned events, live events and other activities and the subsequent consumer related issues.
- Companies seek to expand the ambit of business interruption coverage which earlier just provided for physical damage to business. Now, they want the pandemic to be covered within insurance claims.
- Cutting the cost of casual workers has impacted their livelihood.
- Employment conditions and contracts.
- Irregular pay and unprecedented circumstances. To avoid legal claims, companies are advised to exercise caution before suspending staff payments, giving stand-down orders or terminating employment arrangements. Companies are advised to encourage employees and staff to work from home till the risk of the communicable virus is relatively lower and grant sick leaves/paid leaves to affected persons.
POSITIVE IMPACT
Though everyone has faced backlash due to this pandemic, digital OTT platforms flourish through seeing steady growth in their business model. As per a KPMG report, with people confined to their houses, the consumption of content on these platforms has seen a surge both in terms of hours spent and newer audiences. Major productions are now looking at digital releases of movies on OTT platforms as box office revenues will no doubt shrink due to the strong likelihood of people avoiding crowding facilities for a while.
Irrespective of the pandemic and the lockdown, music is still being streamed and performed on various platforms and the music continues generating royalties. When the income in other areas has decreased, royalty income can be of great help to the artists, provided they have registered
for the copyrights. All the parties must review their contracts to find loopholes and/or alter the clauses.
KEY RECOMMENDATIONS
Crisis management and response
- Allocate resources based on scenario planning.
- Communicate clearly and transparently with each group of stakeholders after determining their priorities.
- Explore alternative ways to connect with stakeholders, such as virtual concerts or live events broadcast online via social media.
- Monitor public sentiment across key markets and demographics.
- Where possible, follow social distancing guidelines while staying open for business.
- Determine what types of events are covered by insurance — and the type of coverage — in the current situation. Understand critical variables driving insurance coverage and potential recoverability for cancelled events.
- Identify opportunities to minimize financial exposure and maximize recovery.
- Stay informed throughout the claim recovery process. Prepare to negotiate and reach settlements on claims or contract disputes.
Workforce
- Triage workforce needs to determine which employees can work remotely without compromising productivity.
- Looking ahead, plan for operating models that support remote workers as a result of this large-scale shift to remote work.
- Prioritize cybersafe remote technology capabilities to transition workers to remote work.
- Maintain productivity by providing supporting tools for virtual communication, collaboration and documentation for remote workers.
- Confirm the safety of employees who may need to continue working on- site by continually updating and communicating risk-mitigation. Guidelines.
- Explore compensation options for employees who are unable to work because of illness or closures.
- Review HR policies to confirm they are appropriate in the current environment.
Operations and supply chain
- Limit the financial impact of the disruption by activating a crisis response plan.
- Consider OTT releases versus windowing.
- Plan ahead to help meet potential resurgent demand, post-crisis.
- Serve up digital content in discoverable formats.
Financial reporting
- Evaluate financial reporting requirements and audit impact.
- Revisit key assumptions in financial projections. Model scenarios with both aggressive and conservative timelines to be ready to act when the recovery gets under way.
- Communicate current and potential future impacts to shareholders.
Tax and trade
- Craft a contingency plan to help meet tax compliance obligations on time.
- Pressure-test tech-enabled functionality to understand timely access to required information.
- Conduct additional modelling to assess how changes to income statements may affect forecasts.
CONCLUSION
As per the study by EY, the media industry would grow 25 percent this year to reach Rs 1.73 trillion, covering up for the loss suffered in 2020. The study says the market would cross the Rs 2.2-trillion-mark by 2023, growing at a compounded annual growth rate of 17 percent. A pandemic affecting the entire GDP of an economy is striving to recover from the same. This applies to other sectors as well. Though a handful have seen the brighter side of the pandemic, it has all been a dark time that was pushed through with whatever that was available. Indeed, the media and the entertainment industry has helped everyone to cope with the pandemic and stabilize our mental health.
REFERENCES
- Ravina Grewal Rajpal and Nishat Ali, India: Pandemic’s Effect On The Media & Entertainment Industry: A Legal Perspective, Jan 5, 2021 https://www.mondaq.com/india/music-and-the-arts/1022036/pandemic39s-effect-on-the-media-entertainment-industry-a-legal-perspective
- Guest Author, The Media and Entertainment industry post Covid-19: The best and worst of times, Dec 30, 2020 https://www.businessinsider.in/advertising/media/article/the-media-and-entertainment-industry-post-covid-19-the-best-and-worst-of-times/articleshow/80022616.cms
- PTI, Biggest shutdown of the entertainment industry due to covid-19, June 11, 2021 https://www.outlookindia.com/newsscroll/biggest-shutdown-of-the-entertainment-industry-due-to-covid19/2100152
- https://home.kpmg/in/en/home/insights/2020/09/media-and-entertainment-report-kpmg-india-2020-year-off-script/market-size-media-and-entertainment-india.html
