The recovery of the entertainment industry: Three cases
(By: Fabián Vélez, Julián González, and Guillermo Pérez, Cupeyville Students. Finance summer at Inteligencia Económica Inc.)
The reduction in Covid-19 cases worldwide provides a great opportunity for the recovery of certain industries, such as the entertainment sector. Last Saturday, Puerto Rico made history when Gilberto Santarosa performed the first concert since March 15, 2020. Our research team prepared a comparative analysis of how Los Angeles, New York and Miami are reopening their entertainment industries.
Covid-19 on Los Angeles’ Entertainment Industry
Beacon Economics forecasts that 90,547 direct employment in Entertainment and Digital Media were lost in Los Angeles County from February 2020 to December 2020, according to the most current Otis Report on the Creative Economy. Film production and general economic activity are still well below pre-pandemic levels as of April 2021. These job losses, as well as the effects on supporting supply chains, totaled $74 billion in lost economic activity.
Such a slowdown was felt across the economy in an Entertainment and Digital Media hotspot like Los Angeles County, as hundreds of thousands of films and film-supporting workers struggled to save their jobs.
Film production and general economic activity are still well below pre-pandemic levels as of April 2021. Furthermore, due to greater pandemic-related production expenses, even a fully reopened Los Angeles County may not be able to return to 2019 filming levels.
Recovery of the Entertainment Industry in New York
According to a new study from the New York State Comptroller, employment in the arts, entertainment, and recreation sectors in New York City plummeted 66 percent between December 2019 and December 2020. According to the data issued Wednesday, the reduction in employment to 34,100 jobs from 87,000 jobs a year ago is the biggest among all sectors in the city's economy. The arts, entertainment, and recreation sector, according to the study, includes live theater, museums, athletic events, zoos, and botanical gardens throughout the city.
Federal initiatives such as the Paycheck Protection Program, which initially stopped applications in August 2020 but has since reopened for a second round of loans, have primarily helped the sector's firms. According to the study, PPP loans were authorized for nearly two-thirds of firms in the sector, excluding independent contractors, sole proprietors, and self-employed persons.
While certain parts of the business have begun to reopen, the research claims that further government assistance is needed to revive the industry. One move in that direction is the Save Our Stages Act, which would offer grants of up to $10 million to qualified theatrical companies and venue operators. However, the industry has a long runway ahead of it, with Broadway shows suspended until May 2021 and slated to reopen in the fall, as well as the Metropolitan Opera and the New York City Ballet.
The recovery of the entertainment industry in Miami
For many people who work in the entertainment sector, life as they knew it altered abruptly in late March when COVID-19 spread and forced the whole industry to shut down. The global pandemic effectively brought the multibillion-dollar industry to a halt, with cinema theaters shutting dark, concert venues locking their doors, and film sets delaying production indefinitely. Many forms of entertainment, such as movie theaters and concert tours, necessitate big crowds. When it comes to television and film production, social distance prevents 50 to 75 people from working together on a single project.
Even though the lights in Hollywood have gone out, several aspects of the industry are quietly striving to reinvent themselves in this moment of crisis. Late-night TV hosts have abandoned their elaborate production sets in favor of their living-room sofas.
Different types of entertainment sectors will bounce back faster than others, according to O'Dowd, as various television series begin to progressively adapt to the new circumstances.
It is simpler to bounce back from late night television than, say, the making of the latest James Bond movie, because you will need hundreds of people on site and to market it by bringing enormous audiences together, and it is not the same experience for artist to do concerts online that in some arenas but now they are opening back arenas and large places for large crowds to bring back concerts.