2020 has been a year of surprises. Dealing with a global pandemic, we are seeing different responses from many countries around the world and certainly seeing many businesses affected, albeit in different ways. The lockdown has certainly benefited and accelerated the growth of certain businesses exponentially, such as Zoom or Netflix.
For example, let’s look at Netflix.
Netflix, a streaming service, allowing millions of people to view different movies and T.V. series, has seen an increase in the number of subscribers by 16 million since the lockdown. This can be explained by the increase in stay-at-home orders. The company has responded by increasing hires by 2000 workers used as customer support staff due to the volume of people using their services. They believe to see another 7.5 million increase in subscribers. Revenue has increased by 27% compared to the same period in 2019, and profits have doubled from $344m to $709m.
We see these services are almost exploiting the pandemic as most people are starting to use these services to “cure” their boredom. However, the question remains what will happen after the lockdown has ended. There is the potential that the company will lose many of these subscribers when they return back to work, and profit will drop. This is not the only streaming service doing incredibly well. Disney, which has closed its parks, has launched its new app enabling users to watch any Disney movie and has acquired 50 million subscribers in five months. Competition is on the rise in the streaming market as this is the perfect time for these companies to launch as many people are using digital entertainment. However, they will need a backup plan for when everyone returns to work.
These are not the only online digital services that have seen success during this period of time, as many video games have also seen an increase in their users.
What will be left in the end?
It is undeniable that the pandemic, like any major historical events, will leave its winners and losers. We see work behavior being modified as people have new working habits and have adapted to work from home. Will it be the same for these industries that have grown, and is the new model going to stick? What will it take to make it stick and sustain this growth?
These firms should look at what is going to make their new clients stick with them, what services did they switch from, and how different the future will look for them in this new paradigm. How has their business model has been impacted by the influx of customers, and how do they respond to it in a manner that creates value for their users?
As all businesses are forced to transform in the wake of a global pandemic, time will tell.