2020 has presented many challenges and fiscal hits to the world as a whole. These hits don’t exclude major media giants such as Sony Music and Warner Music Group. Both have taken quite substantial hits during this pandemic.
Sony Music
Sony Music has seen substantial losses in almost every area. However, it has reported that streaming and download revenue has seen an increase. Physical music sales, merchandising, music publishing, and live concerts/events are the real culprits during this time.
Sony has reported an overall decline of 13.1% or revenue of $1.646 billion versus 2019’s first-quarter revenue of $1.184 billion. Licensing, merchandising, and concert staging all had a decline. They saw 40% or $82.4 million loss from last year’s first-quarter total of $135 million.
Sony stated,
“Around the world, the release of new music is being delayed primarily due to some artists being unable to record songs and music videos. The impact on profitability from the delays in new music is limited at this time in the U.S. and other countries where the proportion of music that is streamed is high. However, in countries like Japan where the proportion of music that is streamed is relatively low, CDs and other packaged media sales are decreasing due to restrictions on going outside.”
They continued saying,
“Ticket and merchandising revenues are also decreasing, as concerts and other events are being postponed and canceled in Japan and other areas. Due to a global reduction in advertising spending, revenue from advertising-supported streaming services and revenue from the licensing of music in TV commercials is decreasing. Additionally, delays in the production of motion pictures and TV shows are causing a decline in music licensing revenue.”
Warner Music Group
Warner Music saw a drop of 5.7% to $1.010 billion from Q1 and 4.5% from Q2 2019. CFO Eric Levin said this quarter’s results are “Slightly better than our expectations“. He also states that streaming revenue is “Clearly affected” by COVID. Additional revenue such as merchandise and touring are “dramatically affected.”
Warner posted a $519 million net loss last quarter compared to a net income of $14 million a year earlier. The hits didn’t come as a surprise to WMG who had warned investors of the possible impact.
Recorded music revenue in the quarter declined 5.7% which totaled at $913 million to 4.2% totaled at $861 million. Yet they saw a 7.9% increase in digital revenue of $584 million to $630 million.
Streaming revenue, much like Sony’s, saw an increase during these times rose 9.1% or $589 million accounting for 93.5% of the quarter’s digital revenue and 68.4% of total recorded music sales. Streaming revenue grew 11.7% from $1.58 billion to $1.76 billion.
CEO Stephen Cooper stated, “Streaming revenue was “largely unaffected by COVID“. He was pleased that “consistently double-digit” and “quite stable” subscription revenue continued in the latest quarter.
Summary
Overall for both Sony Music and Warner Music, streaming is very thing that took off during these times. The steady increase of media companies heading to streaming may be the saving grace to face what 2020 had in store.
As we see more media and major companies go to streaming-based services like iTunes Music and even taking over the gaming work like Xbox’s Game Pass, the world seems to now run on this user-driven experiences. Paying monthly for what seems to be unlimited options is the trend. I mean, if you’re paying monthly, why not get the biggest bang for your buck?
After 2020, it will be very interesting to see how much the world not only has changed, but media overall and the delivery system for that media.