By Maimun Mustafa
COVID19 is quickly developing into one of the greatest global health pandemics to affect mankind in recent history. National quarantines are forcing individuals into their homes and rendering everyday movement near to impossible. While our daily way of life has fundamentally been altered, the COVID19 crisis is also fundamentally reshaping the global business ecosystem as well. The United Nations predicts that the crisis may hit the world economy by $1 trillion by the end of the year. While some apprehend a 3% global economic contraction, there is some light at the end of the tunnel. While many industrial operations are failing, many brands associated with the digital space are experiencing phenomenal growth in the downturn.
Soaring with Social Media
As people are quarantined in their homes their need to connect with family and friends has increased manifold. It should come as no surprise, that across all messaging platforms, the growth in usage has been the largest in the 18 to 34-year-old age group. According to consulting firm Kantar, WhatsApp, Facebook and Instagram saw a 40% plus increase in usage from this same demographic. Overall, Facebook-owned WhatsApp has seen a 40% increase in usage that grew from an initial 27% bump in the earlier days of the pandemic to 41% in the mid-phase. For countries already in the later phase of the pandemic, WhatsApp usage has jumped by 51%. In Bangladesh, Imo has held a prime position in the communication category.
The Rise of Zoom
As business communication tools like video conferencing services are now essential, it’s no wonder that major teleconference platform Zoom Video Communications is now valued more than the combined market capitalisation of US Inc’s so-called blue-eyed boys American Airlines, Expedia and Hilton.
As of April 8, 2020 closing, Zoom had a market capitalization of $31.73 billion. The combined value of hotel chain Hilton ($18.26 billion), US aviation giant American Airlines ($7.91 billion) and travel site Expedia ($ 4.35 billion) stood at $30.52 billion. This clearly goes to demonstrate how the demand for teleconference has skyrocketed as companies around the world go online to stay connected while practising social distancing.
Zoom’s teleconference services are being widely used for education, telehealth and have even spread into personal space through weddings and “zoom parties”. As such, Zoom has already experienced a 50% increase in its share price since the start of the year.
Similar platforms such as Streamyard (which enables multi-platform video conferencing) have seen an increase in shares as well. Microsoft has aggressively pushed its new business messaging and collaboration tool, Microsoft Teams, which competes with the independent company Slack. Microsoft said the number of users on Teams had grown 37 percent in a week to more than 44 million daily users in April. There have been at least 900 million meetings and call minutes on Teams every day. “We believe that this sudden, globe-spanning move to remote work will be a turning point in how we work and learn,” commented Jared Spataro, a corporate vice president at Microsoft. Hangouts Meeting, Skype and GoToMeeting also fall among the top choices for Business Conferencing seeing huge surges in the Corona period.
On Cloud Nine
Companies were already dumping their own data centres to rent computing from Amazon, Microsoft and Google. This trend is likely to rise as huge numbers of workers are forced to work from home, naturally pushing up increased demand for cloud services. The shift to working at home has also demonstrated the merits of cloud computing when use unexpectedly spikes. For companies managing their internet infrastructures, making adjustments to computing needs on an individual basis is pricey and complicated. Cloud computing makes it easier. As such, Amazon, Microsoft and Google, the three major cloud-computing platforms, are swimming in cash and offering deep discounts for renting the underlying infrastructure for a corporate network as well as the software used by employees.
E-commerce platforms such as Amazon have metamorphosed shopping habits for items such as books, getting customers to trust it with groceries has been a challenge. Now, as more people are forced to stay home, one of the last strongholds of physical retailing may be coming under the pressure test. As more and more customers are experimenting with Amazon services, they may create permanent shifts in buying habits Thus it’s no surprise that Amazon said it was hiring 100,000 warehouse workers to meet surging demand.
One reason for Amazon’s increase in demand is that shoppers are buying a broader variety of goods. From February 20 to March 15, over-the-counter cold medicine sales rose ninefold on Amazon in the United States from a year earlier.
If we delve into local markets, e-commerce sites such as food delivery were seeing some positive traction. However, with the full onset of COVID19, grocery to pharmacy has also seen a surge in demand. The test for these startups is to prove they can live up to the quality and quick delivery expectations of the consumers. Additionally, the uplift in e-commerce may well become permanent if people remain wary of mingling in real life, and increasingly replace shop visits with online purchases.
Stay-at-home orders are unsurprisingly increasing traffic to video streaming sites, apps and social media platforms. Streaming services like Netflix have dampened box office sales for movies in recent years. Now, as cinemas close under regulations, Netflix and YouTube are garnering new audiences. This has resulted in Netflix harnessing a solid market cap of $194 billion. That is how much Netflix is now worth, having increased its market value more than $50 billion so far this year and, in doing so, overtaking the valuation of Disney. Disney, having been hit particularly hard by the coronavirus, is valued below $184 billion, down from nearly $258 billion at the end of 2019. Being two of the heaviest hitters in entertainment, Disney and Netflix have opposite approaches. Netflix is entirely dependent on paid subscriptions for revenue while Disney is much more varied with tourism and merchandise sales as it is on the content it puts out. While that diversity has traditionally been its strength, it has become a liability as to the pandemic forces Disney to shut down theme parks and delay film releases.
Downloads of Netflix’s app — a proxy for traffic from the streaming site — jumped 66 percent in Italy, according to data from Sensor Tower, an app data company. In Spain, they rose 35 percent. In the United States, where Netflix was already popular, there was a 9 percent bump.
As staying in becomes the new going out, instead of visits to concerts, museums and events, consumers are seeking equivalent AR and VR experiences, which can be enjoyed safely while sitting on the sofa. Hand-in-hand with this, we are already seeing growing demand for digital media and entertainment including social media, gaming, news, video streaming and books as people seek to relieve boredom and fill the time previously taken up with travelling and socialising face-to-face.
As people have self-isolated the amount, the excess amount of time has contributed to a spike in live-streamed gaming. Global viewership has increased by 10% on Twitch and 15% on YouTube Gaming. As more stay-at-home mandates are being issued around the world, the entertainment industry is finding new ways to migrate their offerings to live streaming platforms. These figures are expected to rise.
As more entertainment options are cancelled in communities across the US., an increase in video traffic and online gaming is not surprising.”
Doug Creutz, the analyst for investment bank Cowen, said gaming sectors are expected to “fare far better than the market average” during this pandemic.
“As such, we think the sector is a (relatively) good place to weather market volatility,” he added.
Meanwhile, in Italy, live-streamed gaming content has increased by 66% in terms of hours watched, according to StreamElements. This follows a country-wide quarantine after Italy became the hardest-hit European country with Corona related deaths so far.
In the Google Play Store, download of Loodle King and Carrom pool has also surged.
Post Pandemic Prognosis
According to a research note from Morgan Stanley, a handful of companies will emerge from the COVID-19 pandemic stronger, while others will not be so fortunate. The Banking Group sees Amazon, Uber, Google, Facebook, WW (formerly Weight Watchers), Chewy and online gaming companies Activision Blizzard, Take-Two Interactive, Zynga and Glu as “stronger post downturn.” The companies Morgan Stanley expects to be “weaker post downturn” include Yelp, Quotient Technology, Groupon, Casper, Trivago and Expedia.
Without minimising the devastating impact of Covid-19, it’s important that we be mindful of the digital business opportunities that are emerging right now. While these are often in response to short term requirements they have the potential to become long-standing shifts in the digital landscape once the current crisis has passed. As such, there are some sectors that have the potential to be winners post the pandemic.
As consumers focus much more on their health, testing is the order of the day, whether its COVID19 tests mandated by healthcare organisations or consumers opting to use private companies to test themselves for different medical conditions.
With the right privacy limits in place, the resulting massive increase in healthcare data represents an opportunity for various data and AI specialists to develop useful solutions that will help reduce risks of contagion, relieve consumer anxiety while also providing reassurance to help them cope with these difficult times.
Doctor on-demand apps are seeing a huge rise in Europe. Operating across Sweden, Norway, Spain and France, Kry is the most downloaded doctor app in Europe. It has seen an unsurprising spike in downloads as General Practitioners become unavailable by physical reach. App downloads are up 61% compared to the same time last year and consultations are up 80% for the same period. Interestingly, consultations for viral symptoms are up by more than 240%). This could be a new trend even post COVID19.
The Rise of Scalable Digital
As COVID19 puts pressure on the global supply chains of companies such as Best Buy, Wayfair, Nike and Gap, companies will increasingly start to build resilience in their businesses by complementing product-focused models with scalable and stable digital alternatives. This might include businesses diversifying from their core offer to sell data and AI assets to third parties.
They would follow supermarkets such as Walmart, who already sell point-of-sales data to brands including P&G and Unilever who use it to ensure adequate stock of products in their warehouses and to promote real-time availability of their products in grocery stores.
Beyond retail, we can expect the digital-enabled sharing economy which currently includes examples such as Combiworks (matches supply and demand of manufacturing capacity), and Cargomatic — which connects shippers with local truckers – to accelerate into B2B much more rapidly as businesses face urgent pressure to find smart and quick ways to slash costs and monetise existing assets.
The Silver Lining
The challenges COVID19 presents to different sectors means it’s hard to generalise about how to turn this crisis into an opportunity. While airlines and travel companies, for example, will struggle to re-engineer their business models fast enough digits, big tech companies are reaping and may continue to benefit from the rewards of the epidemic. In sectors that are less impacted by the global slowdown, businesses need to fundamentally rethink their priorities and what role digital innovation can play in creating value. Finally, companies that show social responsibility and offer solutions to the emerging health issues will have an edge over their greedy rivals who only strive to maximize their margins and shareholder value.
If we do believe that invention is derived from necessity, the COVID19 outbreak may allow companies to be resilient while still for employees and customers.
Whatsapp, Instagram, Slack and Uber were all founded in the aftermath of the last great recession of 2008. Many existing or upcoming brands can also learn on how the winners have come out on top from this fundamental shift in the way of living, they too may discover how to be frontrunners in the face of adversity as the next resilient unicorn post COVID19.
is a Serial Entrepreneur and an Executive Director of Global Chamber ®