Impacts of Covid-19 on launches and channel strategies – the audiovisual industry

The new coronavirus pandemic has had several impacts on society and global supply chains, as we have discussed here in the ILOS Insights. The restriction on the movement of people has caused major changes in habits and a series of problems for various industries and economic fields. Such conjectures require a replanning effort on the part of supply chain managers, especially regarding the launching strategy and how to distribute them.

To illustrate the point, one of the first sectors to take extreme measures due to the viral escalation was the cinema. Many big productions, such as the new 007 spy movie, “No Time to Die”, and the remake of “Mulan”, were delayed a few weeks before the release in cinemas, which would be empty. The movie “Fast and Furious 9” had its release date changed from May of this year to April 2021. Given that all the investment has already been made in the production, it is equivalent to holding a product almost an entire year in stock, with the cost associated with this immobilization. Many of the postponed films do not even have a new release date. The complexity is great because the entire release schedule is done in order to maximize the studios' revenue, but only a handful of titles can occupy the same time space, and therefore it is done years in advance. Productions in progress were also impacted, due to travel restrictions, and these stops also generate delays and financial losses.

Figure 1: Several film releases were postponed due to the pandemic. Sources: Paramount, Eon, Disney

However, in addition to the postponement of the works, other more active measures have been taken by the producers to reduce the impacts. Some productions had scripts changed to avoid filming in high-risk locations, such as Italy. In this way, the delay and risks for the completion of production are reduced (and for the health of those involved, of course), minimizing the effect of tied up capital. Another action adopted was to change the way of distributing the content. Universal, for example, released the entire catalog that was playing in theaters through digital channels, making them available to watch at home, to minimize the damage caused by the lack of spectators. Disney moved the launch of Frozen II forward by three months on its streaming service, Disney +, also to take advantage of the increased demand for content for the home.

Figure 2: Universal movies were made available On-Demand due to the new Coronavirus. Source: Comcast

These cases and actions in the audiovisual world serve as a reflection for companies in other sectors. Think about your new product launch plan. Is it still appropriate given the current situation? And future products, how will they be impacted by the delays now? Like movie theaters, production lines and warehouses also have limits, after all, and operational plans must adapt accordingly. With the change in routine, one can also think about changing the portfolio and distribution strategies in channels that better meet the more homely habits of consumers, in addition to plans to reduce stock that has been idle due to the drop in demand. As the film industry is doing, it is necessary to put out the fires and think about people's health, but it is also necessary to see where the opportunities are to avoid the worst paths.

References:

A vulnerable film industry feels the impact of coronavirus

Disney Plus now streaming Frozen 2 in a coronavirus coping surprise

Universal's movies currently in theaters will be made available on demand this week