The Covid-19 pandemic has impacted every single industry, but the businesses that were most affected are those which solely rely on people’s social nature, ie those in the entertainment and sports industry. One can argue that the media industry is the least impacted by the current pandemic, but it’s only the digital front, namely OTT platforms such as Netflix and online gaming, that have gained anything. Nevertheless, the monetisation of these platforms has always been challenging in the Indian market, and expansion of the subscriber base post-Covid remains a big question.

Traditional platforms such as films, TV, live events — including sporting events — which depend heavily on advertising revenue, are seeing a negative impact on their operations and finances. The cancellation of all live events including sports, meant a major shortfall in revenue for the media firms, which directly affects their profitability. In India, all sporting events, including the goliath of Indian cricket — the Indian Premier League (IPL) — have been suspended indefinitely. Broadcasters are adversely affected by these cancellations. They have not only disrupted scheduled coverage but also sponsorship deals and promotional events, and this is expected to lead to significant revenue loss.

India produced around 2,000 movies in 2019 with total gross box office revenue touching $1.45 billion for the first time, a 11.6 per cent growth over 2018, according to E&Y. The revenue was forecasted to touch $1.65 billion in 2020. With lockdowns, production in both Hollywood and Bollywood has stopped and studios have pushed back releases of their tentpole movies indefinitely, including the latest James Bond film starring Daniel Craig, No Time To Die , Universal Studio’s F9: Fast & Furious , Ranveer Singh’s 83 , and Rohit Shetty’s Sooryavanshi , to name a few. This will lead to a domino effect on film production and release schedules for at least the next three years.

It is difficult to predict when movie theaters will reopen, but whenever they do, they will be operating at a reduced capacity due to social distancing norms. The best-case scenario is movie theatres operating at 50 per cent capacity, which will make it extremely hard to support high budget films, leading to huge losses — the current forecast around $1 billion.

OTT disruption

To counter the losses, many Indian production houses are striking deals with OTT platforms such as Amazon Prime Video, and Netflix. The lockdown has benefitted the streaming platforms — Netflix added a record 16 million new subscribers in the first quarter of 2020, with its share price reaching an all-time high of $454 in May 2020. Even its global competitor Amazon Prime Video, and local competitors Zee5, AltBalaji, and Disney+ Hotstar have seen their subscriber base grow by 60-80 per cent.

Amazon Prime Video surprised everyone with the announcement of Amitabh Bachchan and Ayushmann Khurana-starrer big-ticket film, Gulabo Sitabo , on its platform — a major shake-up of the status quo in Bollywood. Amazon rivals will follow suit. These deals come as a blessing for the producers who want to recover their investments and move on. By going straight to digital, producers are saving costs, including both global distribution and marketing costs.

Producers choosing streaming services over a theatrical release not only sparked a debate in the industry about digital distribution, but also aggravated the clash between cinemas and producers. But the question remains: if Netflix stops adding new shows, will the average Indian subscriber stick around or simply cancel their subscription?

Is this the new normal?

According to Crisil Ratings, the economic hardships caused by the pandemic are expected to result in an overall revenue loss of $3.32 billion in the Indian media and entertainment industry, with the global entertainment sector set to lose $160 billion in growth over the next five years. The impact of this disruption on the media companies heavily depends on multiple factors such as diversification strategy, new customer behaviour and appetite, production and distribution of content, etc.

For the sports business, if stadiums have restricted capacity, would live games be as good without the vibrant atmosphere and energy of the Indian fans? It is difficult to say when things return to normal, and more importantly, what the long-term impact of Covid-19 on the entertainment, media and sports industry will be.

Digital advantage

OTT platforms are not considered anything more than a TV channel for Bollywood, to access the same content anytime and anywhere, and hence Bollywood and its superstars will never enjoy the ₹300-crore club status on OTT platforms.

Nevertheless, it is time for the industry to deploy appropriate technological solutions, embrace the digital change and use it to its advantage — for producing quality content, distribution, virtual production techniques, and achieve production-cost economy. Cinema, being mass entertainment, will never see the same freedom in content creation as OTT.

Virtual production solutions should be integrated, from the initial planning and scripting stages to the post-production stage. The advancement of digital technology has made it possible to shoot a movie on a virtual set with photorealistic computer-animated imagery and actors performing live within the digital environment. Creative and production teams can continue to collaborate virtually and don’t need to be in the same physical space. One recent successful example of this is Disney’s live-action reboot of The Lion King .

The rise of OTT platforms also calls for a new business model for redistribution of value across the ecosystem, and hence major Indian film award shows, including Filmfare, IIFA, and National Film Awards should consider films that are directly released over OTT platforms in their nominations.

Immersive viewing experience

The business of sports needs to explore the digital front as well. Playing professional sports safely is an easy task, but making consumers pay when they can’t experience it live is harder. Immersive technologies can enable fans to experience games live, an idea that seemed wild few months ago but very feasible in current scenario. There is a possible partnership between the Indian sporting leagues and tech giants to experiment and bring the sport coverage to life through the VR headsets such as Facebook’s Oculus or Microsoft HoloLens. It is the right time for a transition from passive to active sports viewing, thereby changing the broadcasting ecosystem.

Meanwhile, in the absence of live games, sport authorities like the BCCI need to find new ways to keep fans engaged — by deepening the pool of content available to fans, either over their own digital platforms or by leveraging the OTT platforms.

Regardless of what type of entertainment content is being consumed (or not) currently, everyone is relying on their devices more than ever, creating a huge opportunity for entertainment companies to creatively rethink their strategies and attract an already involved audience, increase consumer retention, and shape the industry for a long-term gain. This is the dawn of a new era for Indian entertainment.

The writer is an MBA graduate from Harvard Business School