Top 25 media brands could lose over $40bn from COVID-19
The world’s top 25 most valuable media brands could lose over US$40 billion worth of brand value as a result of the COVID-19 pandemic, according to the latest Brand Finance Media 25 2020 report. Brand Finance’s analysis shows that the media sector is a moderately impacted industry globally and could face a potential 10% loss in brand value.
Looking beyond the media sector, the value of the 500 most valuable brands in the world, ranked in the Brand Finance Global 500 2020 league table, could fall by an estimated US$1 trillion as a result of the Coronavirus outbreak.
Brand Finance has assessed the impact of COVID-19 based on the effect of the outbreak on enterprise value, compared to what it was on 1st January 2020. The likely impact on brand value was estimated for each sector. The industries have been classified into three categories – limited impact (minimal brand value loss or potential brand value growth), moderate impact (up to 10% brand value loss), and heavy impact (up to 20% brand value loss) – based on the level of brand value loss observed for each sector in the first quarter of 2020.
Richard Haigh, Managing Director, Brand Finance, commented:
“In these turbulent and unprecedented times we are currently witnessing, the fortunes of the world’s most valuable media brands are no doubt going to be mixed. On the one hand, the far-reaching and extended lockdowns that have been imposed worldwide have caused a shift in consumer behaviour and thus an increase in demand for online media platforms and streaming services in particular. However, this increase in demand and subscribers may not offset, or compensate for, COVID-19’s impact on advertising, which many media brands rely on heavily for their revenue.”
Facebook claims top spot
For the first time social media brands are included in this year’s ranking and Facebook has stormed into the ranking in first place, claiming the title of the world’s most valuable media brand, with a brand value of US$79.8 billion. With over 2.5 billion active monthly users, Facebook is the most popular social media platform in the world and the brand continues to post profits above analyst expectations.
The business success of Facebook demonstrates how disconnected it is from its public reputation. Facebook has negotiated several high-profile reputational issues, most notoriously the Cambridge Analytica scandal, which resulted in a US$5 billion fine last year. More recently, in July 2020, companies across the US and Europe are boycotting advertising on the platform in a stand against the brand's lack of action on the long-standing issue of 'fake news' and misinformation, while peers like Twitter take action. This has been accentuated given the heightened political climate and the resurgence of the Black Lives Matter movement.
Richard Haigh, Managing Director, Brand Finance commented:
“Facebook is no stranger to being at the centre of controversy and criticism, specifically around uncensored political messaging and false information allowed on the platform. The Black Lives Matter movement in the US has been the catalyst for many advertisers to change their stance on their acceptance of misinformation and mass manipulation, causing them to question their continued use of the site. Which side will buckle first is unknown. Advertisers may be unable to resist the appeal of Facebook advertising, but equally Facebook might not be able to suffer the losses for much longer. It’s too early to tell how its brand value will emerge from the chaos of 2020.”
Facebook-owned Instagram has entered the ranking in 5th position, with a brand value of US$26.4 billion. With more than 1 billion active monthly users and a focus on new technology, like the latest Checkout feature that benefits both consumers and other brands, Instagram is catering to demand and staying relevant. The platform is successfully leveraging its position in the market as a genuine business tool – beyond its traditional influencer market – as more businesses move online during lockdown.
Ones to watch: YouTube & Netflix
YouTube has enjoyed steady growth over the course of last year, its brand value increasing 17% to US$44.5 billion. With 300 hours of video uploaded to YouTube every minute and 5 billion videos watched every day, the platform has only increased in popularity during COVID-19, becoming both an outlet for coronavirus-related news, as well as a source of entertainment as people around the world spend more time indoors.
In line with positive trends in brand value among other video streaming services, last year also saw Netflix enjoy an 8% boost in brand value to US$22.9 billion. Netflix has been a pioneering force in changing consumers’ viewing habits, taking over traditional television by providing a more appealing, flexible option in line with the modern fast-paced lifestyle. This success has only been spurred on by COVID-19, with the timely release of Tiger King raking in 34 million US viewers in the first 10 days alone.
Network television continues to lag behind online competitors, best exemplified by Fox being the fastest falling media brand this year’s ranking, with a 47% decrease in brand value to US$8.4 billion, and dropping 8 positions in the ranking to 12th place.
Richard Haigh, Managing Director, Brand Finance, commented:
“Consumers’ viewing habits have been transformed with the rise of streaming services. Under the current COVID-19 lockdown, it remains to be seen whether traditional television will be better positioned to compete with streaming services, or whether their brand values will continue on a downward trend for the rest of the year.”
Gaming brands crack top 10
For the first time gaming brands are also included in the Brand Finance Media 25 2020 ranking, and China’s Tencent (QQ) (brand value US$44.1 billion) and NetEase (brand value US$13.0 billion) have claimed 4th and 9th positions respectively.
As the largest gaming brand in the world, Tencent (QQ), has continued to command the sector. QQ has focused on increasing its popularity with the younger generations through expanding its entertainment packages to mini games. Furthermore, since the COVID-19 outbreak the brand’s School-plus-Home groups – which facilitates both online and offline education - have served a staggering 120 million users.
Further down the ranking, Activision Blizzard (brand value US$5.3 billion) has taken 17th spot and Electronic Arts (brand value US$3.9 billion) has entered in 23rd position.
SiriusXM grows impressive 33%
New York-headquartered broadcasting company SiriusXM is the fastest growing brand in the Brand Finance Media 25 2020 ranking, recording an impressive 33% brand value growth to US$5.0 billion.
Last year, SiriusXM completed the acquisition of leading music and podcast discovery platform, Pandora, catapulting SiriusXM to become the world's largest audio entertainment company, reaching more than 100 million people across its audio products. Furthermore, the brand has celebrated solid business and financial performance – a result of an increase in subscribers and growth in average revenue per user.
Disney keeps sparkling
In addition to measuring overall brand value, Brand Finance also evaluates the relative strength of brands, based on factors such as marketing investment, customer familiarity, staff satisfaction, and corporate reputation. Alongside revenue forecasts, brand strength is a crucial driver of brand value. According to these criteria, Disney (up 23% to US$56.1 billion) is the world’s strongest media brand with a Brand Strength Index (BSI) score of 93.9 out of 100 and a corresponding elite AAA+ brand strength rating.
The shining star among traditional media brands, Disney, is no longer just children’s films or vacation spots – with the acquisition of 21st Century Fox, the company has secured its place as a leader in the industry. Disney has also put an emphasis on delivering direct-to-consumer experience. With the recent launch of Disney+, perfectly timed as Americans remain at home, the brand intends to take on Netflix and other emerging rivals such as HBO Max.
Note to Editors
Every year, Brand Finance values 5,000 of the world’s biggest brands. The 25 most valuable media brands are included in the Brand Finance Media 25 2020 report.
Brand value is understood as the net economic benefit that a brand owner would achieve by licensing the brand in the open market. Brand strength is the efficacy of a brand’s performance on intangible measures relative to its competitors.
Additional insights, charts, and more information about the methodology, as well as definitions of key terms are available in the Brand Finance Media 25 2020 report.
Data compiled for the Brand Finance rankings and reports are provided for the benefit of the media and are not to be used for any commercial or technical purpose without written permission from Brand Finance.
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About Brand Finance
Brand Finance is the world’s leading independent brand valuation consultancy, with offices in over 20 countries. Brand Finance bridges the gap between marketing and finance by quantifying the financial value of brands.
Brand Finance helped craft the internationally recognised standard on Brand Valuation – ISO 10668, and the recently approved standard on Brand Evaluation – ISO 20671.
Brand Finance is a chartered accountancy firm regulated by the Institute of Chartered Accountants in England and Wales (ICAEW), and also the first brand valuation consultancy to join the International Valuation Standards Council (IVSC).
Brand Finance’s brand value rankings have been certified by the Marketing Accountability Standards Board (MASB) through the Marketing Metric Audit Protocol (MMAP), the formal process for validating the relationship between marketing measurement and financial performance.
Brand Finance has assessed the impact of the COVID-19 outbreak based on the effect of the outbreak on enterprise value, compared to what it was on 1st January 2020. Based on this impact on enterprise value, Brand Finance estimated the likely impact on brand value for each sector. The industries have been classified into three categories – limited impact (0% brand value loss), moderate impact (up to 10% brand value loss), and heavy impact (up to 20% brand value loss) – based on the severity of enterprise value loss observed for the sector in the period between January and March 2020
Definition of Brand
Brand Finance helped to craft the internationally recognised standard on Brand Valuation – ISO 10668. It defines a brand as a marketing-related intangible asset including, but not limited to, names, terms, signs, symbols, logos, and designs, intended to identify goods, services or entities, creating distinctive images and associations in the minds of stakeholders, thereby generating economic benefits.
Brand strength is the efficacy of a brand’s performance on intangible measures, relative to its competitors. In order to determine the strength of a brand, we look at Marketing Investment, Stakeholder Equity, and the impact of those on Business Performance.
Each brand is assigned a Brand Strength Index (BSI) score out of 100, which feeds into the brand value calculation. Based on the score, each brand is assigned a corresponding Brand Rating up to AAA+ in a format similar to a credit rating.
Brand Valuation Approach
Brand Finance calculates the values of the brands in its league tables using the Royalty Relief approach – a brand valuation method compliant with the industry standards set in ISO 10668. It involves estimating the likely future revenues that are attributable to a brand by calculating a royalty rate that would be charged for its use, to arrive at a ‘brand value’ understood as a net economic benefit that a brand owner would achieve by licensing the brand in the open market.
The steps in this process are as follows:
1 Calculate brand strength using a balanced scorecard of metrics assessing Marketing Investment, Stakeholder Equity and Business Performance. Brand strength is expressed as a Brand Strength Index (BSI) score on a scale of 0 to 100.
2 Determine royalty range for each industry, reflecting the importance of brand to purchasing decisions. In luxury, the maximum percentage is high, in extractive industry, where goods are often commoditised, it is lower. This is done by reviewing comparable licensing agreements sourced from Brand Finance’s extensive database.
3 Calculate royalty rate. The BSI score is applied to the royalty range to arrive at a royalty rate. For example, if the royalty range in a sector is 0-5% and a brand has a BSI score of 80 out of 100, then an appropriate royalty rate for the use of this brand in the given sector will be 4%.
4 Determine brand-specific revenues by estimating a proportion of parent company revenues attributable to a brand.
5 Determine forecast revenues using a function of historic revenues, equity analyst forecasts, and economic growth rates.
6 Apply the royalty rate to the forecast revenues to derive brand revenues.
7 Brand revenues are discounted post-tax to a net present value which equals the brand value.