Lorne Daniel, Research Director, Technology
It’s no surprise that with weekends and evenings stuck at home, video streaming services have added almost 5m subscriptions since the start of the UK lockdown. Globally, Amazon Prime, with a potent combination of shopping delivery and videos has gone from 100m subscribers last year to 150m now. Netflix added 15.8m paid subscribers in Q1 alone, compared to 9.6m last year; in N. America its Q1 subscriber growth was 79% of its total growth in 2019. Perfect conditions to launch Disney+ and last week, HBO Max (don’t ask the difference between HBO Max and the existing HBO Now and HBO Go apps as no one seems to know).
Even without COVID-19, there seems to be the same amount of content these days, but on a greater variety of IP platforms – to the quiet satisfaction of Amino, Pebble Beach Systems and ZOO Digital, all harvesting more business from an increasingly appreciative audience of broadcasters. The problem is finding where shows are available. Take The Edge of Tomorrow, the movie where Tom Cruise re-lives a day battling invincible aliens, restarting it every time he dies. It’s basically a sci-fi rip-off of Groundhog Day. The latter has lots of imitators - check out Happy Death Day for a horror copycat and 50 First Dates for a rom-com version and 12 Dates of Christmas for a festive clone. It’s wonderfully ironic the aliens in Edge of Tomorrow are called Mimics. The film wasn’t on Netflix but a handy app called Just Watch is a Compare the Meerkat for OTT services and tells you which platforms a film or series is available, highlighting the cheapest to buy or rent (there’s always a niche to be found in tech).
The premise of the movie is perfecting a strategy by trial-and-error without penalty for error. Natural selection is also trial-and-error, but the world would be a strange place if there were no penalties for evolutionary missteps. Which brings me back to the evolution of COVID-19 and our global response. This latest coronavirus is just one of a series, following SARS and MERS but even more contagious. It clearly will not be the last, so we are faced with multiple opportunities to learn to avoid our mistakes and perfect a strategy for dealing with it.
We are learning that the economic battle has four phases; Containment, Stabilization, Normalization, and Growth. Containment is an initial response as authorities restrict travel, social contact, businesses, education and leisure. In that sudden shock there is a rapid decline in spending and economic activity. Stabilization then sees these measures adhered to (unless you need an eye test) and spending levels plateau at low levels on just essentials. In Normalization, people learn to live in the new normal and we see a bit of relaxation of travel and social distancing restrictions, accompanied by gradual increase in spending. It’s nowhere near pre-COVID levels, but still a gradual upward trend. Finally the growth phase where travel and social distancing restrictions are lifted, accompanied by more concrete evidence of therapies and vaccines. This phase will see spend levels rising rapidly - perhaps above the pre-COVID levels as repressed demand is suddenly freed.
These phases won’t be linear or regular; different sectors and different geographies progress at different speeds and will be in different phases; some in Stabilization others in Normalization, others in Growth (OTT services like Netflix straight to Growth). May PMI data showed a sharp bounce for construction from April lows and earlier this week real-time data from telematics provider Quartix highlighted vehicle usage in its construction customers was rising faster than others. For Tracsis, responsible for many of the transport measurement surveys carried out across the UK, despite lockdown, we suspect there may be just as many surveys as pre-lockdown to more broadly capture such transport data. Investment is about predicting the future and the next waves of battle, typically through some form of measurement (and we haven’t mentioned Big Data for years, but Big Data +AI really is the winning formula here). You can re-live experiences without penalty in Hollywood’s imagination, but in the real world we suffer emotionally and financially for mistakes so have to learn to predict quickly.
Like Tom Cruise in Edge of Tomorrow we are now learning from experience with this new threat. Success will come by knowing what to expect and perfecting our strategy. This will be fought again in future and we must remember the correct path to tread. In general this will mean a reduction of physical dependency; in our sector we are looking to digital, distributed, virtual and cloud technologies as the world prepares its strategy not for yesterday’s but for tomorrow’s battle.