Oscars 2023: raising the curtain on the recovery and risks in the entertainment industry

0
  • Allianz Global Corporate & Specialty (AGCS) has insured five of the 10 movies nominated in the Oscars’ Best Picture category this year
  • The recovery of the entertainment sector is well underway after the pandemic, but it is not immune to the current challenging economic environment
  • Health and safety protocols, crowd safety, more extreme weather and technology risks are key industry concerns while ESG has a growing influence.


SINGAPORE – Media OutReach – 9 March 2023 – With the Oscars taking place on March 12, all eyes are on the global entertainment industry. The glamour, revenues and audiences may all be returning post-pandemic, but the movie and live events business has yet to fully recover from the Covid crisis and is having to constantly evolve in a new environment driven by economic, technology and sustainability risk trends, according to insurer Allianz Global Corporate & Specialty (AGCS)’ new outlook for the sector. AGCS is a major player in the global entertainment insurance market and has insured five of the 10 movies nominated in the Oscars’ Best Picture category in 2023, continuing a long tradition of partnership with the film industry that goes back as far as the movies of Charlie Chaplin 100 years ago.

“The entertainment industry had a very positive year in 2022 and a welcome recovery is definitely underway, but we are not out of the woods yet,” says Michael Furtschegger, Global Head of Entertainment at AGCS. “In the three years since the coronavirus first hit the headlines, the world has changed. The sector must continue to evolve in line with new technologies, proliferating platforms, and seismic shifts in patterns of consumption, as well as changes in the public mood, particularly among younger generations.”

Despite the headwinds, consumers are heading back to their favorite entertainment venues or platforms in encouraging numbers. Global box office receipts hit $25.9bn in 2022, reports Gower Street Analytics, a 27% gain on 2021, but still 35% behind the average for the three years before the pandemic (2017 to 2019). Live music revenue is expected to exceed pre-pandemic levels in 2024, with digital music streaming subscriptions fueling growth in recorded music, where revenues are projected to reach $45.8bn in 2026, up from $36.1bn in 2021, according to PwC. Live theater is also staging a comeback with rising receipts and attendances, while the global sports industry is proving particularly resilient supported by media rights, sponsorship deals, and a calendar of fixed international events and tournaments.

The big picture
However, as with other industry sectors, the entertainment sector is not immune to economic trends such as rising costs or staff shortages. “Our entertainment clients are feeling the effects of inflation, with increased production and live-event costs.,” Furtschegger explains. “Staffing costs have risen following the skills shortage that occurred in the wake of the pandemic when many left the industry. Venues are scarcer than they were because there are still many shows postponed from the pandemic that need to take place in addition to new events and festivals. Bigger events may be thriving, but smaller events are more challenged by factors such as venue, transportation, and energy costs. We expect to see more consolidation in the industry, with smaller, struggling production companies and venues being bought by larger operators.”

Quality not quantity
Technology has lowered the barriers to entry for content creators, when almost anyone can upload to TikTok, YouTube or Instagram, while at the other end of the scale, the major studios and tech businesses are launching their own platforms. The sheer volume of content that is now being created and distributed makes quality a key differentiator in a crowded market.

“We see a move towards quality in film production, but this doesn’t come cheap,” says Wanda Phillips, Head of North America Entertainment Insurance at AGCS. “Businesses need to know they have sufficient insurance cover for sophisticated productions. Where costs increase, so, too do exposures because the costs are higher with each day of shooting, and this could be reflected in any insurance loss.”

Getting vigilant about sustainability
There is a growing influence of ESG, or environmental, social, and governance issues on the sector. This year’s Oscars ceremony will see green dresses on the red carpet as the Academy encourages a more responsible approach to awards-season fashion. In live events, British band Coldplay has pledged to halve the carbon emissions associated with its current ‘Music of the Spheres’ world tour, compared to 2016-2017, and has made a raft of sustainable commitments, including paying a surcharge for aviation fuel, sourcing ethical, sustainable merchandise, and planting a tree for every ticket sold.

“Younger generations are particularly concerned about sustainability, and festival organizers are responding to this,” says Furtschegger. “More and more entertainment organizations are committing themselves to sustainability targets to reduce the emissions associated with live tours.”

The virtual future
With streaming now fundamental to the entertainment and media landscape, virtual conferences are a particular growth area. The global virtual events market was valued at over $114bn in 2021 and is expected to grow at a CAGR of 21.4% from 2022 to 2030. Even without a live audience, virtual conferences still carry risks, including transmission failure because of a weather event or natural catastrophe, fire affecting the broadcast unit, or network issues impacting broadcasting infrastructure. Rented equipment and studio space can also be vulnerable to property and casualty liabilities.

Reality and live content are also continuing to grow, facilitated by on-demand services and social media platforms. Virtual reality (VR) is the fastest-growing entertainment and media segment, reports PwC, with global VR growth between 2021 and 2026 expected to bring the segment to $7.6bn. Gaming is forecast to be 85% of total VR revenue by 2026.

“As the worlds of gaming, music and entertainment continue to converge, gaming platforms such as Fortnite and Roblox are increasingly serving as entertainment and social hubs, while gaming content is crossing over to social media and streaming platforms,” says Furtschegger. HBO debuted ‘The Last of Us’, a video-game adaptation set in a post-apocalyptic world, in January 2023 to critical acclaim. Meanwhile, video games continue to develop as a spectator sport, with the total number of esports viewers worldwide possibly exceeding 640 million by 2025 according to a recent report.

Emerging risks on the scene
Health and safety protocols, particularly in the event of future pandemics, increasing weather hazards and crowd safety are some of the key risk concerns that the entertainment industry needs to monitor closely. “The Covid crisis and the recent tragic shooting incident on a film set have shown that the industry needs to remain vigilant about its health and safety protocols,” says Furtschegger. Climate change is another cause for concern. “We’re seeing more abnormal weather-related events – heavy storms and flooding in Europe and bushfires in California, for example. These inevitably cause havoc for live events, both in terms of cancellation exposure but also damages and human safety.”

“Crowds have always carried inherent risks,” adds Kurt Miner, Managing Director, Entertainment, at Allianz Risk Consulting, North America. “Event organizers are now better able to monitor large groups of people and keep them safe, as well as artists, with the use of real-time video monitoring. Safety experts can remotely monitor two or three events, which could each be taking place over 15 acres or more, spotting risks concerns such as blocked exits or damaged barriers. They can also monitor social media to pre-empt gate-rushing and prevent stampedes, sending a security contingent to the location before the situation gets out of hand.” Slips and falls are the most common cause of claims from live-event policies, so organizers should ensure medical staff and transport to local medical facilities are on site.

Hashtag: #AGCS #BusinessInsurance #Oscars2023 #Allianz

The issuer is solely responsible for the content of this announcement.

About Allianz Global Corporate & Specialty

is a leading global corporate insurance carrier and a key business unit of Allianz Group. We provide , and for a wide spectrum of commercial, corporate and specialty risks across nine and .

Our customers are as diverse as business can be, ranging from Fortune Global 500 companies to small businesses. Among them are not only the world’s largest consumer brands, financial institutions, tech companies and the global aviation and shipping industry, but also floating wind farms or Hollywood film productions. They all look to AGCS for smart solutions to, and for, their largest and most complex risks in a dynamic, multinational business environment and trust us to deliver an outstanding .

Worldwide, AGCS operates with its own teams in and through the Allianz Group network and partners in over 200 countries and territories, employing around 4,200 people. As one of the largest Property-Casualty units of Allianz Group, we are backed by strong and stable . In 2021, AGCS generated a total of €11.2. billion gross premium globally.

For more information please visit our website

About Author

Comments are closed.

error: Content is protected !!

Maintain by Designwell Infotech