Black Nights 2022 – Industry@Tallinn & Baltic Event
Industry Report: Distribution, Exhibition and Streaming
Ampere Analysis' Lottie Towler unveils the latest trends in content production and streaming in a critical year for the global audiovisual industry
The analyst covered a variety of topics, including the effects of the Russian-Ukrainian war, the global box office, the new paths taken by VoD giants and the production landscape in the CEE region
On 21 November, Black Nights' Industry@Tallinn & Baltic Event hosted an insightful talk by Lottie Towler of British research firm Ampere Analysis. Her presentation, titled “Shakeup on the Eastern Front”, zoomed in on the changes the audiovisual business is facing in light of the Russia-Ukraine war, the cost-of-living crisis and the recession, to name just a handful of factors.
“Change is a constant in our industry, but in the past 18 months streaming has changed more than ever before”, explained Towler, before moving on to the first focus of her talk: the market impact of the Russian-Ukrainian war. The first consequence is Russian content being pulled out of the market, since hours of available Russian content has decreased by an average of 25% since the start of the invasion. Almost all of this fall has been recorded in CEE countries and, to a lesser extent, in the Asia/Pacific region, since the availability of Russian content was already quite low elsewhere. In CEE countries, this trend is mostly driven by local players from the Baltic market, such as Go3 and Tet+.
This removed content is primarily scripted, and it includes both series and features, in particular children/family, comedy, crime and thriller genres. This gap has, however, been filled by the acquisition of new, unscripted productions, or more US-produced content. Much of this content is older, as it’s typically cheaper to buy, and it helps expand the catalogue rather quickly. “There are [more] opportunities for European children/family and comedy content to fill this gap”, Towler added.
On the subject of SVoD players, Towler explained that the impact has been minimal: “Russian content isn’t key. [...] Instead, these services are focusing on investing in local content production.” Figures show that the proportion of original commissions by Netflix, Amazon, HBO and Disney in the CEE region grew from 0.4% in 2019 to 4.6% in 2022, accounting for roughly 50 of the new titles announced in the past year. In the context of this study, original commissions are titles which these global streamers have exclusive rights to distribute outside of their original market, such as the Croatian series The Paper.
There are also considerable challenges ahead for the media market, in light of soaring inflation and the high cost-of-living. To a certain extent, the areas affected are advertising, VoD, content expenditure, pay TV and the theatrical sector. On a more positive note, downturns in the TV ads sector are expected to be less severe than in previous crises (including the 2008 recession). In 2022, European TV advertising revenues decreased by 4%, while online video advertising income grew by 12%. In 2023, TV advertising revenue will stagnate while online video advertising income will continue to grow by 11%. It’s worth mentioning that much of this revenue is generated by tech giants such as Google and Meta.
Pay TV in CEE, meanwhile, is expected to grow very slowly (+1% in the CEE region in 2022), whilst the curve will remain flat in Western Europe (0% in 2022). The subscription-based streaming market is also slowing down, after the rapid growth recorded over the past few years. It’s a trend which is visible “across the board”, with North America being the most affected region.
“The theatrical sector will continue to recover, provided that cinemas remain open. Much of the global theatrical revenue is driven by the Chinese market, while North America and Europe are struggling and will quite not reach pre-pandemic levels, having knock-on implications for film slates and release strategies, [...] with more and more titles going straight to streaming”, Towler concluded.
In terms of content expenditure, these economic downturns mean slowdowns in spending growth. However, commissioning activity remains strong, driven by global market shifts – the figures show 4,581 new commissions in Q1 2022, 4,575 in Q2 2022 and 3,895 in Q3 2022. Among other trends, Towler pointed out an ongoing disconnect between declining production spend and commissioned projects, but also stressed how unscripted works are gaining prominence, roughly accounting for 70% of projects commissioned between 2020 and 2022. Overall, scripted investments soared by 104% between 2019-2022, and unscripted by 400%.
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