Global Marketing Monitor: Weekly Market Trends (March 13, 2021)

The Oprah Winfrey interview of Prince Harry and the Duchess of Sussex Meghan Markle and everything that followed was arguably one of the biggest stories of the week While its revelations were significant at a societal level the event itself was also illustrative of the capacity of important content to generate audiences In the same vein there was news this week related to traditional TV network owners and emerging streaming services highlight that European media owners will need to invest in content more aggressively if they are to keep up with the much larger and more globallyoriented American conglomerates in pursuit of the same audiencesNew data from the OECD conveyed improved expectations for economic growth this year versus that of only a few months ago As the pandemic hopefully abates over the course of the year the overall economy in many countries should be substantially healthier for consumers and marketers tooContent is Queen Over the past week significant attention was drawn to Oprah Winfrey39s interview of Prince Harry and Duchess of Sussex Meghan Markle While the ramifications of its revelations on the British monarchy and overarching issues related to racism society and media will play out over an extended period certain elements were very quickly quantifiable The Wall Street Journal reported that ViacomCBS paid between 7 and 9 million for the rights to the interview in the United States and for the rights to license the program internationally If there39s an important takeaway that39s consistent with arguments we39ve made in the past it39s that media owners who are willing to invest in content will be rewarded with audiences at least on a relative basis Media owners who choose to focus on lower programming budgets will likely all else being equal end up with lower audience sharesThe need to increase programming investments will be an issue for many traditional freetoair broadcasters in countries around the world During the past week ITV and RTL the owner or controlling shareholder of large properties in Germany the Netherlands and France reported earnings and reiterated many of their plans for investments in their streaming services Those services for ITV are Britbox which it coowns with the BBC and for RTL includes Videoland in the Netherlands RTL Now soon to be rebranded as RTL in Germany and Salto in France coowned with TF1 and France Tamp233lamp233visions Unfortunately for those media owners current content spending commitments mean they could currently only afford global rights to no more than 1015 similar Oprah interviews per year Of course neither of the two companies are mainly focused on opportunities in the US so the point of reference is perhaps a little unfair However most of Britbox39s subscribers are in the US where their aspirations are limited to providing a niche offeringThe scale of investment that European services owners have made in streaming is small in a global context RTL has indicated that Videoland and RTL Now should have a amp8364350 million content budget by 2025amp160It would be unsurprising if each of Netflix Disney and Amazon amp8211 and possibly others amp8211 individually spent more on local market content in each of those two markets by that point in timeamp160And of course they will also collectively have tens of billions of dollars of spending on Englishlanguage content to supplement it As consumers in markets where subtitles were historically unpopular become increasingly comfortable with foreign language content global content budgets will be much more appropriate points of comparison in assessing whether or not a given media owner is investing enough in futureproofing its businessTo more specifically illustrate the scale of existing spending and announced plans for content spending on streaming services which will primarily be funded by shifts of spending from traditional content spending budgets we point to the following data among the globallyoriented USbased media ownersDisney incurred 21 billion in total content costs in fiscal 2020 for the period ending last October They have committed to spending 1416 billion on streaming services by fiscal 2024 They have not indicated how much if any will be incrementalViacom recorded 13 billion in content expenses for calendar 2020 They have guided toward 5 billion in annual spending on content on streaming services by 2024 Some of this spending will be incremental to existing levels of spendNetflix spent 11 billion on content during 2020 It would be unsurprising if the company was spending nearly 20 billion annually on content by 2024ATampampT incurred 12 billion in programming and production costs for calendar 2020 In 2019 the company stated that by 2024 HBOHBO Max would spend an incremental 4 billion annually over HBO39s 2 billion expense for 2019 or 6 billion in content for the service That was before significantly increasing its expected subscriber base during the past week In 2019 they guided expectations to a range of between 75 and 90 million global subscribers by yearend 2025 but during an investor event on Friday called for 150 million at that time excluding markets where they presently license most of their content such as the UK Germany Italy and AustraliaBy contrast consider the following from some of Europe39s largest freetoair broadcast TV network ownersITV incurred amp163935 million in program schedule costs for 2020 and several hundred million pounds in additional content spending for third parties at ITV StudiosRTL spent amp836435 billion on content across its portfolio including France39s M6 and spending on content for third parties from Freemantle The company has guided towards amp8364350 million in annual spending on content for Videoland and RTL Now by 2025Pro7Sat1 recorded amp8364966 million in programming costs during 2020 for its broadcast business and likely added a few hundred million euros in additional content spending at Red ArrowTF1 spent amp8364833 million on programming during 2020 Along with its coowners collective spending commitments on Salto amount to a minimum of amp836445 million annuallyIt39s always possible that a media owner could find ways to drive audience shares up while keeping content spending shares down within a given market Some inexpensive programming will always have a chance to outperform but on average this won39t likely be true When popular lowercost viewing gets renewed it will likely become popular highercost viewingArguably whether spending is directed to a streaming service or a traditional broadcast property is somewhat irrelevant it39s the total amount of spending on quality content that mattersbampgt Netflix Disney and others are demonstrating that consumers will likely find a way to get access to content if it is good enough to pay for As the Oprah interview showed there is content that can still generate a large audience The problem many traditional TV network owners worldwide face is that if the global media giants are increasingly responsible for massive shares of spending on content within individual countries they will likely take viewing share that is somewhat in proportion to those levels of spend As a result nonUSbased traditional TV network owners who want to sustain their current audience shares need to be prepared to substantially increase their overall commitments to content and be prepared to expand to international markets more than they are planning on presentlyThe OECD upgraded their expectations for global economic growth in 2021 to a significant degree this past week With the release of a new report this week the Organization for Economic Cooperation and Development an intergovernmental organization now expects 56 real growth in GDP during 2021 versus 42 previously This year39s growth would occur off of what they estimate was a 34 decline in 2020 Their prior forecast for 2020 called for a 42 decline so the improved growth is off an improved base as well For reference the International Monetary Fund39s January forecast called for 55 growth in 2021 while the World Bank39s January forecast was more conservative and closer to the OECD39s December estimate at that time with a 40 gain expected for this year Expectations for the US were meaningfully upgraded to 65 growth from 33 previously and ahead of the IMF39s January expectation for 51 growth this yearThe OECD notes that containment measures are having a smaller adverse economic effect now versus earlier in the pandemic in most markets The report shows that industrial activity in the OECD countries that essentially matched December 2019 levels by December 2020 and at the same time global air freight merchandise trade and container port traffic was also back to the prior year39s levels Of particular relevance to marketers the report points to stimulus measures in the US as a factor and toward those ends a 19 trillion stimulus bill became law this week While consumers have clearly been saving at high levels they collectively maintain substantial capacity to spend on productsAt the same time the OECD also highlights the divergence between countries Despite a relatively limited toll from the pandemic in Japan for example growth is expected to amount to only 27 there this year off a 48 decline last year Similarly Germany is only expected to grow by 30 this year off a 53 decline last year Many countries still won39t be back to 2019 levels until 2023 or beyond not least because the distribution of vaccines won39t be widespread until that point in time for many parts of the worldSupport from governments has been critical during the pandemic and will likely remain so for some time The report goes on to state that quotstrong and timely fiscal support since the onset of the pandemic has played a vital role in supporting incomes and preserving jobs and businesses A premature and abrupt withdrawal of support as in the aftermath of the global financial crisis should be avoided while economies are still fragile and growth remains hampered by containment measures and a slow pace of vaccinationsquot It also advocates that quotaccommodative monetary policies need to be maintained in the major advanced economies as currently planned to help preserve favorable financing conditions and low longterm interest ratesquot The report further argues that quotenhanced structural reform efforts are required in all countries to raise opportunities for displaced workers improve economic dynamism and foster resource reallocation toward sectors and activities that strengthen growth improve resilience and contribute to environmental sustainabilityquot Toward those ends quotstrong income support for poorer households helps to make the recovery more inclusive and support demand given their high marginal propensity to spendquotThe report essentially lays out conditions that should result in a very favorable 2021 for most of the marketing industry For higherend product categories consumers who saved money during the pandemic may be predisposed to draw down their bank accounts as confidence around normalcy returns In categories with broad appeal at least to the extent that fiscal policies or returning jobs provide support to lowerincome consumers related products could have a good year as well and build on a solid overall 2020 None of this necessarily should cause one to anticipate fasterthanpreviouslyforecast advertising growth this year as many of these elements were contemplated previously however the incremental confidence projected by the forecast nonetheless captures the reality that conditions are generally improving for much of the world at presentPhoto courtesy of GroupMClick the social buttons to share this story with colleagues and friendsThe opinions expressed here are the author39s views and do not necessarily represent the views of MediaVillagecomMyersBizNetamp160

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Global Marketing Monitor: Weekly Market Trends (March 13, 2021)

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Brian Wieser

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Global Marketing Monitor: Weekly Market Trends (March 13, 2021)

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