A report from the European Audiovisual Observatory (EAO) estimates that the European audiovisual industry will have to weather a loss of revenue approximating €10 billion, or US$12 billion, in 2020 due to the impact of the coronavirus.
The study, entitled Modelling audiovisual sector revenue flows in the EU and test case on impact of COVID-19 on industry revenues, was penned by the organization’s head of market information Gilles Fontaine. It estimates that while the SVOD sector will be spared from significant year-on-year losses, all other sectors of the European audiovisual business, from TV ad revenue to pay-TV to box office, will experience revenue shortfalls across the European Union’s 27 markets — shortfalls that will continue into 2021.
The EAO states within the report that it is a working paper, and the “draft scenario” analyzing the impact of the COVID-19 crisis on the European audiovisual industry is intended to be seen as a “big picture macro-economic evaluation.”
Focusing solely on revenues, the study estimates the amount pulled in by the sector for 2019 to be €90.8 billion ($107 billion), with the model used for the study incorporating five types of revenue sources: public funding; TV advertising; pay-services subscriptions (linear TV and SVOD); theatrical gross box office and home video. The study estimates that total will fall to €80.9 billion (approximately $95 billion) in 2020.
Among the declines will be a fall in TV ad revenue of 20%, according to the study’s estimates, and a 5% loss in pay-TV subscription revenue. For TV ad revenue, the outlook brightens a bit for 2021, with the loss over 2019′s figures coming in at 8%.
The picture, however, is rosier for the SVOD business in Europe, with revenues projected by the report to increase by 30%, with the growth accelerated by the lockdown and the continued impact of cord-cutting. Fontaine predicts this business will grow by 60% in 2021, in comparison with 2019 revenues.
Predictably, the outlook for the European cinema box office sector is grim, with the study estimating a 70% loss for 2020, year-on-year from 2019. Furthermore, with strong constraints on theater capacities, reluctance of people to return to cinemas and potential additional lockdown periods, the study predicts that a level of revenue even close to pre-pandemic numbers won’t be reached until the end of 2021.
The study also predicts, through its modelling, the impact on European original content financing revenues. Excluding sports and news, the combined loss of revenues over 2020 and 2021 compared to the 2019 numbers adds up to €3.5 billion.