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WHAT WE FOUND is that the COVID-19 story isn’t so much “before and after” as it is “before and faster.” Customer acquisition has accelerated, especially in paid streaming video, music, and gaming subscriptions. People have more time on their hands to watch, listen, and play games, and they are adding new services to get new content. More are trying new media and entertainment options that have been enabled or accelerated by the crisis. Social viewing, livestreaming, and first-run movies that release directly to digital services have all shown strong engagement during shelter-in-place guidelines. In difficult times, many turn to the solace of media and entertainment.
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At the same time, it is harder to keep customers – more are cancelling services. Introductory offers of free or reduced rates, along with compelling original content, are attracting subscribers. But they’re likely to cancel a service if the content dries up and they can’t justify the full price. The emergence of free, ad-supported alternatives makes it even more critical for subscription services to deliver value, especially since they’re up against growing competition from livestreaming video services and video gaming.
The situation is particularly acute for movie theaters, sports, and live events that have had closures during the crisis. They are challenged to sustain engagement and trust, and compete with the cost, comfort, and safety of watching from home. The pressures are likely to mount when consumers have less money to spend—39% of our COVID-19 survey respondents reported a decrease in their household income since the pandemic began.
How the pandemic and resulting economic repercussions will unfold is hard to predict, and it remains uncertain how much of these behaviors will persist afterward. But the opportunities and challenges facing media and entertainment companies are getting clearer, along with the questions executives should ask themselves to take advantage of windfalls, recover from setbacks, and thrive in the decade to come.