As the country eases out of the Covid pandemic lockdowns, many people are returning to sports, travel, events, and other activities that were limited during the past 16 months. But that doesn’t mean that all the increases in gaming, video viewing, and other at-home activities will disappear. My research shows that consumers will ease back into movie theaters and many will maintain much of their increased level of video viewing and consumption of other at-home entertainment activities.

The SVOD (subscription VOD) services were often noted as big winners throughout the Covid pandemic, but even these behemoths of content are starting to see slowing in their growth and recent price increases have not gone unnoticed by the consumer.

What will Netflix (and others) do to keep their revenue expanding at a dramatic rate (which their stock prices seem to demand). They have many things they can consider doing:

  1. Higher prices
  2. Limit sharing of passwords
  3. Add free content that is advertising supported or even create a branded Advertising Supported Video on Demand (AVOD) service .
  4. Add sports content and charge a supplement for sports content
  5. Add games that would generate advertising, in-app purchase, or supplemental charges for gaming content.

Wall Street analyst Michael Nathanson of MoffettNathanson Research recently pointed out the dramatic  suggests Netflix might have to look at adding revenues from the advertising and sports businesses.

I think there are other areas Netflix could consider too – such as games, as well as perhaps some “creator” platform down the road, more want YouTube and TikTok offer creators, influencers, and the ordinary person.

Nathanson, and I share his interest, is particularly focused on the opportunities for Netflix (and presumably for the other SVOD services) in driving new revenue through advertising. “Although Netflix management continues to strongly dismiss the idea of advertising, we think that view will be seen as a strategic mistake if future rates of subscriber growth start to fall short of Street expectations,” he said.

I have seen in my own consumer research a broad range of reactions to advertising and content – some folks say they want no ads, and are willing to pay, others say they will never pay for content and are fine with watching ads, and of course, many folks fall in the middle. A recent  confirmed that there is a real opportunity for advertising on content that is usually or had previously been advertising free. Also, remember that a few of the VOD services have had hybrid arrangements where you pay for the plan, but some content still has ads. Most notably Hulu had this model for many years.

Other notable executives in the media industry share this point of view of Nathanson’s. Dave Morgan, long-time advertising digital technology entrepreneur, said in an email exchange with me, “There is no question that Netflix will continue to dominate subscription based video on demand, but if it doesn’t soon build its own ad-supported streaming service, it’s going to have to buy one in three or four years. Netflix needs revenue streams to compete with the adjacent market subsidy power of players like Amazon and Apple since they don’t need to make money selling video subscriptions.”

Nathanson projects a revenue CAGR for Netflix in the years ahead at 14% and asks, “Is a 14% revenue CAGR over 2021-2025 enough to justify Netflix’s premium equity valuation? Compared to other Internet names, Netflix stands out with lower anticipated revenue growth than peers despite a relatively high valuation.”

Netflix has raised its prices and altered its terms of service for multi-person families (limiting password sharing to some extent) in the past, including recent changes, and no doubt, Netflix will continue to explore their options for driving more revenue through price increases. I imagine future price increases will be modest and will result in some customers abandoning Netflix. It is unlikely that price increases can bring Netflix back to high revenue growth numbers.

Adding advertising to some of the content, or to another tier of content, makes sense to me. The things that make a successful SVOD service are many of the same things that make for a successful AVOD service – lots of good content, available on multiple devices, with easy to use, rapid technology. Netflix is a noted user of analytics for business decisions and they can easily test and evaluate this approach. Maybe they already are?

As Nathanson also suggests, sports content is an opportunity for Netflix to bring in more revenue. Netflix might try and find some content to acquire like European Football, which NBC added to their programming quite successfully a number of years ago, at a reasonable price. If Netflix wants to capture near-exclusive deals for NFL, MLB, or NBA games, the price tag is going to hit them hard in the EBITDA. A big sports play by Netflix would be a , but I expect Netflix would only do that if they saw some great receivers open down the field.

Other further “out” new revenue ideas might cover gaming as well as a platform for creator content (formerly called user-generated content).

In the gaming area, Netflix could develop games that are focused on their IP as well as launch new IP, just as they have in video. Such games could be attractive to many consumers across the various platforms of mobile, Web, PC and console, not to mention ConnectedTV (an emerging platform for games too). Netflix could offer a game-subscription for additional revenue, or it could monetize their games through advertising and in-app purchase, which would not be consonant with Netflix’s pass monetization practices. Or Netflix could drive the creation of new and IP-games that would be sufficiently attractive to get new customers to sign up for the Netflix video package just to get the games. Amazon has tried an Amazon Prime video program around gaming and game content (Twitch) to unknown success.

Even further out is the idea of Netflix creating a platform, with creator tools, for their customers to make creator content – videos, audio, games, interactive story-telling, etc. The creator content will be distributed widely across the Netflix consumer audience, immediately competing with YouTube, and that creator content may become another reason for people to join Netflix and stick with Netflix.

Likewise, perhaps other competitors in the VOD space will move into gaming, creator content, and content focused on the Connected TV. Sounds like the business people in streaming have plenty to work on to build their growing revenue and profitability.

Originally Posted on Forbes

Disneyland Resort in Anaheim, CA, the original Disney theme park, opened in 1955. It has been closed four times in its lifetime, – after the assassination of President John F. Kennedy in 1963, in 1994 Disneyland closed because of the big Northridge quake, after the 9/11 terrorist attacks, and most recently due to the Covid-19 pandemic.

Disneyland initially closed the park in Southern California on March 14 and had indicated that it would stay closed indefinitely at that time. Later Disney announced that the Disneyland Resort in Anaheim would reopen July 17.

Today The Walt Disney Company released a statement saying that it would delay announcing its reopening until sometime after July 4. The Disney statement said, in part, “The State of California has now indicated that it will not issue theme park reopening guidelines until sometime after July 4. Given the time required for us to bring thousands of cast members back to work and restart our business, we have no choice but to delay the reopening of our theme parks and resort hotels until we receive approval from government officials. Once we have a clearer understanding of when guidelines will be released, we expect to be able to communicate a reopening date.”

The Disneyland Resort theme parks will be the last Disney theme parks worldwide to reopen during this crisis, if Disney’s plans continue as stated. Tokyo Disney has announced its reopening for July 1, then the Walt Disney World DIS -1.9%‘s theme parks will open on July 11 and July 15. The Disneyland Paris parks are scheduled to reopen on July 15. The Shanghai Disney park reopened on May 11 to limited attendance.

The other Southern California theme parks – Universal Studios Hollywood, Six Flags Magic Mountain, Legoland California and SeaWorld San Diego – had requested to reopen at the beginning of July. Now everyone in the theme park industry, and the consumers who might be eager to see Mickey Mouse again, will have to wait for guidance to be issued by the relevant local and State governments.

Disney sought to assure future visitors to the Disney parks that they have, “developed enhanced health and safety protocolsfor both cast and guests at Shanghai Disney Resort, Hong Kong Disneyland Resort and Walt Disney World Resort that have been approved, allowing us to reopen in a responsible manner and bring our cast members back to work.”

Disney must complete negotiations with the various unions that represent Disney’s workers to reopen. As Disney said, “In order to reopen our theme parks we need to negotiate agreements with our unions to return employees to work. We have had positive discussions and are very pleased to have signed agreements from 20 union affiliates, including the Master Services Council, which represents more than 11,000 of our cast members. The signed agreement details plans that include enhanced safety protocols that will allow us to responsibly reopen, and get thousands of our cast members back to work.” 

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As soon as people were ordered to stay home in response to the Covid-19 pandemic, consumers have had a number of ways to spend their added time at home—including play games. As the chart below shows, the increases in gaming revenue has been huge, month to month, since March. In March of this year, gaming, over March of 2019, is up 34% in spending. In April of this year, gaming was up 73% over last year, same month. And this past month, May, was up 53% over May of 2019.

“Video game engagement and revenue across all platforms, including console, PC, mobile, and VR, grew globally during the Covid-19 lockdown. Video gaming is considered an affordable and accessible form of entertainment, and existing and new gamers across all demographic groups found emotional and social support in these virtual worlds. The digital transition that began a decade ago through digital downloads, games-as-services, and mobile app stores has paid off for the industry,” said Michael Cai, president of Interpret, a global video game insights agency.

Stan Kwon, CEO of Beta Hat, a market and consumer insights agency specializing in gaming, media, and emerging technologies, confirmed the rise in gaming over the last few months. “Based on a recent survey we conducted among adult gamers in the U.S., almost 60% say that they’re spending more time playing games now than they were prior to stay-at-home orders going into effect.” Kwon also reported that he sees Americans “choosing to play a wider variety of games rather than sticking to the same games they were playing before” the stay-at-home order.

Further evidence of the rise in consumer engagement with gaming during this pandemic is that Unity Technologies, the real-time 3D software development platform company, has reported that mobile game ad revenue grew 59% during April 2020 compared to April the year earlier. Unity has also reported that in-app purchases in games rose 24% in March and April of this year.

There are many different types of games available to consumers on consoles, computers, and their smartphones. About 70% of the U.S. population at least occasionally plays some sort of video or mobile game. The breadth of games available to consumers are shown in this chart that looks at the most popular game titles over the years.

Rob Dyer, chief operating officer of Capcom in the U.S., spoke to the increase in gaming seen worldwide. “While we believe there has been an increase in the frequency of people playing games given the current restrictions on going outdoors, it is possible that less leisure time will be available in the future due to factors such as reduced summer vacation time.” Dyer went on to say, “We hope our games will continue to be a source of enjoyment for people everywhere facing these challenging times.”

While it is clear that consumer engagement with gaming has increased as people have had more time at home, but what will happen when the world goes “back to normal” and time at home goes down? Michael Pachter, research analyst at Wedbush Securities and a well-known expert in the field of gaming, points out, “It’s incumbent on the gaming companies to retain the new and lapsed players” down the road.

New estimates as to the impact of the Covid-19 pandemic on advertising revenue in 2020 and 2021 have been issued by Magna Global, a unit of IPG Mediabrands that provides media intelligence, such as on-going estimates of worldwide advertising revenue. Magna predicts that total worldwide ad spending will end 2020 down by 7%. In the U.S., if you remove the once every four year advertising tidal wave driven by Presidential and other political campaigns, then Magna estimates that U.S. advertising revenue will be down 6% for 2020.

Other analysts generally agree with Magna’s estimates, such as Raghu Kodige, Co-Founder and Chief Product Officer of Alphonso, a TV measurement and data company based in Silicon Valley, who said, “This is a reasonable, if modest estimate, given that we’ve already logged 25% of the year in a lower-spend environment with major tentpole marketing events, like March Madness, completely shut down.”

The digital ad spend is projected to be flat year-over-year by end of 2020 worldwide and up a bit in the U.S. for 2020 at a 2% projected increase. Magna says: “The most resilient formats will be digital video, as well as social media ads.” Digital spending had a very good Q. 1 this year and there are already signs of the third and fourth quarter bouncing back.

wrote about the falling advertising revenues caused by the Covid-19 recession last month here at and the new data from Magna shows clearly that traditional advertising is under a lot of pressure (particularly print and TV) and digital spending is showing some strength into the second half of 2020 and the full year of 2021.

Jonah Bloom, former Editor-in-Chief of AdAge and currently CMO of Kinship, a start-up dedicated to improving people’s friendships and networking, said there is, “a long-term, ongoing shift, that isn’t going to change regardless of market conditions,” as “brands continue to spend more on customer experience, and (related) technology and content.”

In 2021 Magna expects that advertising spend worldwide, and in the U.S., will rebound based on the GDP growth expected in 2021. Vincent Letang, Executive Vice President and Managing Partner, Global Market Intelligence at Magna, said, based on well-respected estimates of likely GDP growth in 2021, that the GDP is forecast to grow in the U.S. by 3.1% to 4.7%, according to macroeconomic forecasts issued by the Federal Reserve Bank of Philadelphia and the International Monetary Fund, respectively. These GDP estimates are likely to translate into a U.S. growth in 2021 advertising by 4% approximately, Letang estimated.

The unknowns, both in the advertising world, and across our economy, are immense as we go through this once in a lifetime event. As Josh Sternberg, editor and writer of the Media Nut, a daily media business newsletter, and a former journalist at Adweek, NBC News, Washington Post, and Digiday, said “We have no idea how bad it’s going to get.” He expressed worries to me that with the end of the stimulus, continued unemployment and a virus that is not under control yet, “it’s hard to see ad spend bouncing back.”

Though there is a lot of data and experience to back the Magna estimates, which are similar to other predictions about the next few years in the advertising industry, you still wonder if the Chinese Poet from the 6th Century BC, Lao Tzu, was wise when he said, “Those who have knowledge, don’t predict. Those who predict, don’t have knowledge.”

Monday, May 11, Shanghai Disneyland DIS opened to a limited number of visitors, along with new rules and procedures to keep everyone healthy. “During this initial reopening phase, the park will institute new measures and procedures, including opening with limited attendance and required advanced ticketing and reservations, accommodating social distancing in queues, restaurants, ride vehicles and other facilities throughout the park, and implementing increased frequency of sanitation and disinfection,” according to the Shanghai Disney Resort website. Disney and Disney’s travel partners had tickets on sale the morning of May 8 and they were very quickly sold out for most of the next week.

In general China’s government has been reopening much of the country and much of the economy, as the spread of the virus has slowed dramatically in China. The government and companies like Disney have implemented rules regarding social distancing, as well as mask and other health requirements. Disney reportedly will be scanning visitors when the Shanghai park opens for any high temperatures.

The theme park business is huge and many companies are deeply invested in their theme park attractions. The global amusement parks market size was valued at USD $45.2 billion in 2017, according to Grand View Research, a market research and consulting company headquartered in San Francisco, CA. Grand View, previous to the COVID crisis had projected almost a 6% CAGR for the last three years and through 2025. Obviously those estimates will be revised as the parks around the world figure out when and how to reopen.

In the U.S., Disney plans a phased reopening, starting with Disney Springs in Florida, an outdoor shopping, dining and entertainment complex, which will reopen on May 20. Other Disney Parks locations will remain closed for now, including theme parks and hotels. No date has been set for other Disney parks to reopen. Some analysts are predicting not until 2021.

Advertising expenditures are being canceled, delayed, and in some limited cases increased, all in reaction to COVID-19 and the stay-at-home orders issued across most of the nation. But not all industries and companies are feeling the same effects. Companies in some industries are even glimmering bright lights for the advertising industry. But many companies are simply turning off the light, at least for now, in terms of advertising expenditures. Some advertising executives are guardedly optimistic about the near and medium term for advertising expenditures though. Statista, a business data company, predicts that approximately $26 billion in advertising in the U.S. will be lost due to the pandemic.

The Interactive Advertising Bureau (IAB), a trade group of media and marketing industries in the digital economy,  conducted a study of 205 people from publishers, media platforms and advertising companies regarding how U.S. advertising revenue is being impacted by the pandemic. They reported on April 15 that both buyers and sellers of advertising expect advertising revenues to be down considerably for the period March through June of this year.

IAB expects digital advertising will fare better than traditional linear TV, print, and other traditional, non-digital advertising channels. IAB projects that digital ad revenue will be down 19%-25% vs. they expect linear TV (traditional TV channels) and print ad revenues to be down 27% and 32%, respectively. EMarketer said, “TV ad spending will likely be negatively impacted by the pandemic.” Magazines will be hurt considerably, not just in regard to advertising, but they are losing almost all of their newsstand sales, including airports, for now.

Advertiser Perceptions, a research company focused on the advertising and marketing industries, also did a study with advertisers to assess the effect of COVID-19 on the advertising ecosystem. In their report 64% of advertisers say they have held back a campaign until later in the year. In terms of outright cancellations, Advertiser Perceptions, said 44% of advertisers have cancelled a campaign completely.

Rob Norman, a long-time advertising executive and advisor/director to many companies, says that basic supply and demand are at work here. “Everything other than print have massive over-supply vs. demand,” which he indicated have contributed to “falling CPMs for TV and falling CPCs for performance-based digital” companies.

Nielsen indicated recently that U.S. video viewing could increase by 60% due to the stay at home orders. For the ad-supported TV companies this increase in viewership means more advertising impressions to deliver to their customers. However, the increased consumer time spent watching Netflix and other paid VOD services that do not show ads takes consumers away from the advertising-supported environment of traditional TV. One of the biggest negative impacts on the advertising industry is suspension of live sports, which is a big hit for both traditional and digital sports media.

LightShed Partners issued a report that indicates “less price-sensitive ad spenders are fleeing TV, with far more price sensitive brands/direct-response brands entering to take advantage of lower CPMs.” Some categories of companies are likely to reduce considerably their advertising expenditures because of the the economic fallout from the pandemic. IAB’s study says travel and tourism, brick and mortar retail, restaurants and autos will be hardest hit.

Every nook and cranny of the U.S. and worldwide economies are being negatively affected by the stay at home order due to the COVID-19 pandemic. Rob Norman repeated the well-know aphorism dating from the 16th century, “It’s an ill wind that blows no one any good.”

IAB indicates that their study suggests “a more optimistic view among some for the second half of 2020” in terms of advertising expenditures.

Dan Aks, president of Undertone, a digital advertising technology and network company, commented on the future: “We see digital advertising picking up this May and onwards. We see some industries ramping up their planned ad spend in the months ahead, particularly financial services and consumer product brands.” (Disclosure: I serve on the board of Undertone’s parent company, Perion.)

Advertiser Perceptions’ study with ad buyers indicate that the top three occurrences that will cause them to resume their normal advertising expenditures are: relaxing of social distancing, slowing growth of new cases of coronavirus, or no new cases of coronavirus.

Many executives over the years have spoken about how to respond in crises affecting their companies. Nobody said it better than Andrew Grove, the former CEO of Intel: “Bad companies are destroyed by crisis; good companies survive them; Great companies are improved by them.”

We will see how the advertising chips fall over the months and quarters ahead. Most interestingly, will be to see if any traditional behaviors of ad buyers shift in the post-COVID era.

NFX, a leading VC firm in the San Francisco Bay Area, that is focused on start-ups that benefit from network effects, has released a study of 286 early stage entrepreneur/founders and 114 venture capitalists delving into the feelings of these two groups about the future of start-ups and venture capital in the COVID -19 environment. Click below for a free copy of the April 3 report.

Survey report can be found here

Both groups of people were asked when they thought the U.S. will recover from the COVID-19 crisis. Not surprisingly, the VCs were considerably less optimistic than the founders. The founders were actually rather optimistic. Just over one-third of the founders said we would “recover” by September of 2020, but only 16% of VCs felt that way. Strikingly, almost 40% of the VCs said the recovery would occur between April 2021 thru April 2022, but two-thirds of the founders felt the recovery would be before April 2021.

Founders are super worried about this crisis. Over 51.7% of them said they were very or extremely worried about the crisis. Another 25% said they were moderately worried. You wonder who the 8.4% of the founders are who felt “not worried” at all.

Founders have plenty to worry about. The two biggest concerns of founders were about venture funding drying up and about sales declining.

The venture capitalists indicate that they will be slower to deploy their investment funds into start-ups. A majority of VCs say that their investment deployment rate will be 60-80% of the rate that existed previous to the crisis.

This study is a super recent look at how start-up founders and how venture capitalists feel about their businesses due to the COVID-19 Crisis. Read the full study to better understand what start-ups are doing to reduce their costs, the impact on hiring, as well as what founders are doing to improve their physical and mental states. Those and many other pertinent subjects are covered in this report from NFX.