Market Recap: Demand for On-Demand Content Opens Up More Insurance Opportunities in the Entertainment Industry
The pandemic altered many consumer behavioral patterns, with various industry sectors having to pivot to accommodate these changes. One of the most significant consumer changes, according to a McKinsey report, is the rise in at-home consumption. Homes have become the new café, restaurant, and entertainment venue, says the report.
This nesting trend has continued post pandemic, boosting at-home demand for services, including those for greater entertainment content. “Among the beneficiaries of at-home consumption are streaming services, independent production companies and, yes, insurance brokers, who now have more opportunity to insure smaller budget projects,” says Darren Lewin, vice president of programs at Abacus. Abacus specializes in insuring small to mid-sized productions and events.
Is Moviegoing Passé?
While a few blockbuster movies (for example, “Top Gun: Maverick”) drew big crowds to the theater, movie theaters are unlikely to experience the same success they had before the pandemic, according to many industry insiders. In fact, some, like former Disney CEO Bob Iger, say COVID has left a “permanent scar” on the movie theater business. During a panel discussion at Vox Media’s Conference in Beverly Hills, California, Iger, according to an article on CNBC’s website, said that consumers became much more comfortable with streaming services during lockdown. They could watch what they wanted, where they wanted, and when they wanted. The pandemic exacerbated a consumer trend that was already underway.
Domestic ticket sales, according to CNBC, generated about $5.3 billion between the months of January and August – down approximately 31% compared to 2019. Most recently, The Wall Street Journal reported that Cineworld Group, the owner of Regal Cinemas, the second-largest movie theater chain behind AMC, filed for bankruptcy. A sluggish recovery in theater admissions fell short of Cineworld’s financial needs.
The Rise of On-Demand Content
Streaming services Netflix, Amazon Prime, Hulu, Disney+, Apple TV, HBO Max, Peacock, and Paramount + are all fulfilling consumers’ desire for more on-demand original content. Research firm Ampere Analysis reported that these streaming services through their original-content strategies contributed more than $8 billion to content spend in 2021.
“On any given day, consumers can log in and get access to new titles from Netflix, Amazon, Hulu and other streaming services,” says Darren. “From original docuseries to shows and movies, they are producing increasingly more quality, lower-budget content to retain and gain new subscribers.”
This is a big win for independent production companies that can produce smaller-budget projects. “You can make a high-definition movie with an iPhone,” Darren remarks.
Good for Insurance Brokers, Too
Insurance brokers without experience in the entertainment space may have previously shied away from insuring huge-budget productions. With the rise of on-demand, small-budget productions, the space is wide open for brokers to tap into the market. “We insure many small productions – from commercials to music videos, documentaries, series, and independent films here and abroad,” says Darren. “We’ve made it easy for brokers to become an expert in film production with a turnkey solution comprised of online quoting and policy issuance tools.”
In fact, the Abacus platform does it all for brokers – from quoting, issuance to endorsements, renewals, and certificates of insurance. Several film production programs are available that offer a broad array of insurance coverages for the planning, creation, development, and shooting of film and related media. The programs are available for pre-production, production, post-production, and related production activities.