The coronavirus crisis has become the strength of technology companies: people are staying indoors, increasingly using the Internet and streaming more videos than ever before.
It is clear that the tech giants are in a good position to keep the crisis relatively intact. “Alphabet [Google’s parent]”Facebook and Amazon will be fine,” said Tal Chalozin, co-founder and chief technical officer of ad-tech company Innovid.
The crisis will make even the most powerful technology companies stronger, as they have business models and cash reserves for the digital marketplace built to withstand an economic downturn, Chalozin said, adding that “it will definitely make the big players bigger.”
This does not mean that the recession caused by COVID-19 is good for any business. Double-digit unemployment in the United States will weigh consumer spending (and through extension advertising) across the board.
And Big Tech is no exception. In its first-quarter earnings report for 2020, Google and Facebook saw a surge in advertising spending in March, but both companies said the numbers stabilized in April. Apple’s hardware sales fell for the first three months of 2020 – but services including app store sales rose 1.3 percent for the business period to an all-time high of. 13.3 billion.
Amazon sales hit a record জন্য 75.4 billion for the first quarter, which grew 26% year-over-year with irresistible demand from home-based customers. CEO Jeff Bezos says Amazon will spend about প্রথম 4 billion – or more in the first quarter – on operating expenses related to COVID-19 in the second quarter.
“The current crisis has never before demonstrated the adaptability and sustainability of Amazon’s business,” Bezos said in a prepared commentary addressing the first-quarter results, “but it was also the most difficult time for us.”
While companies in Hollywood and other industries are raining down workers or forefighters, technicians say they are still hiring by 2020, albeit at a slower pace than forecast. “Given our strong financial position and the critical social value of our services, we plan to hire at least 10,000 people this year in product and engineering roles,” Facebook chief Mark Zuckerberg told analysts last week.
Nicole Perrin, chief analyst at market research firm Emarketer, says the advertising businesses on Facebook, Google and Amazon will certainly take the weather by storm – and not all of their competitors will, says Nicole Perrin, chief analyst at market research firm Emarket. He predicts the pullback will get worse in the near term. For example, according to his forecast, video advertising spending could fall by 21% year-over-year in the second quarter. This could mean more M&A in the sector. “Overall, this probably points to further integration in the digital advertising market by the end of this year or in 2021,” he says.
Meanwhile, digital entertainment has received a huge adrenaline shot due to the health crisis, with virtually all theaters shutting down nationwide. Netflix recorded 15.7 million subscribers in the first quarter, although executives believe that Torrid’s momentum will not continue for the rest of 2020. Elsewhere, the first three weeks of Universal’s live-streaming “Trolls World Tour” grossed nearly million 100 million in release – a record for a digital film – and these transactions were funded by Apple, Amazon, Google and NBC Universal. As well as going through the platform of pay-TV operators.
“At the moment, Netflix and large streaming services are in a much better position than film production companies,” said Michelle One, KPMG’s media industry leader in the United States.
It will be seen in the post-COVID-19 reality that there will be winners and losers. One believes theater and live events will eventually return. “People are social people,” he says. “There is a claim to be social” – which he means in real life, not on Facebook.
On the other hand, the epidemic is training consumers to meet their recreational diets without setting foot outside the home. This is great for traditional media firms that have switched to live-streaming models and not a moment too soon between living in quarantine. Disney has already hit Disney Plus, and WarnerMedia expects HBO Max to splash later this month.
“I’m betting a lot that these behaviors will never go back,” said Chalozin of Inovid.