Fitch Ratings anticipates continued pandemic recovery for the Media & Entertainment sector in 2022, although at a decelerating pace that will vary depending on structural difficulties affecting each media subsector.

Fitch maintains a cautiously optimistic outlook for the total ad industry through 2022, predicting mixed but mostly favorable results. Legacy mediums will remain hypercyclical and continue to lose market share to digital platforms. Audience fragmentation will continue as alternative platforms cannibalize viewers.

Over the top (OTT) and direct to consumer (DTC) offerings experienced a significant increase in subscribers due to pandemic-related lockdowns, which fueled audience fragmentation along with declines in multichannel video programming distribution subscriptions. Fitch believes OTT and DTC offerings represent a disruptive threat to traditional video content distribution and creators. The increased substitution threat is also affecting film exhibition attendance, which Fitch does not expect to return to historical levels despite the lifting of pandemic-related restrictions.