COVID-19 Market Impact: Digital Consumer Services - Omdia

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COVID-19 Market Impact:
Digital Consumer Services
Evaluating the impact of social distancing measures and a potential
recession on digital services

March 2020

Ronan de Renesse
Practice Leader, Consumer Technology, Media & Entertainment
ronan.derenesse@omdia.com
CES004-000143                                         © 2020 Omdia   Brought to you by Informa Tech
Contents

   • Catalyst

   • Omdia view

   • Recommendations

   • COVID-19 impact summary

   • COVID-19 global epidemic update

   • Consumer demand impact

   • Definitions and methodology

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Catalyst, Omdia
view, and
recommendations

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Catalyst

   • As the new decade dawned, the industry prepared to enjoy great prosperity through new technologies and digital services; then came
     one of the largest and most disruptive virus outbreaks the modern world has ever seen. The World Health organization (WHO) declared
     COVID-19 a global pandemic on March 11. While China is heading toward a steady recovery, Europe and the US have closed their
     borders and are in the process of locking down tens of millions of people in order to contain the spread. Many governments are faced
     with a difficult dilemma: Save as many lives as possible, especially among the most vulnerable, or protect the economy?

   • The impact of COVID-19 on the global economy will be significant and cannot be avoided. Whether it will last a few months, a year, or
     even longer remains to be seen. Precautionary measures are necessary to protect entire industries – including retail, commercial
     aviation, tourism, and hospitality – from falling apart. The technology, media, and telecoms (TMT) industry may not be as much exposed
     as these to the effect of social distancing and lockdowns, but there will be a significant impact on digital services consumption and
     resulting revenue.

   • This report evaluates the impact of COVID-19 on various digital consumer services segments such as mobile communications, mobile
     apps, broadband, TV and video, digital commerce, advertising, and gaming among many others. Recommendations on how to respond
     and prepare for those impending changes are provided throughout, along with some examples that have emerged in the past few days.

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Omdia view
   • The anticipated impact of the COVID-19 pandemic on digital
     consumer services is not trivial but not always negative.

   • Today, most attention and responses are focused on the impact that
     lockdowns and social distancing measures have on consumer
     demand. Increased consumption of digital content from mobile
     apps to TV and gaming has already been observed in China and Italy
     and can mean as much as a 50% increase in traffic. However,
     segments that rely on live entertainment such as esports, music,
     and cinema will suffer greatly from loss of ticket sales.

   • The deeper and more important outcome of the COVID-19
     pandemic will be the effect it will have on the economy in the
     longer term. At present, we expect that it will take 18–24 months
     before recovery can begin.

   • One positive aspect of the pandemic is that it will accelerate the
     development of technologies that help the fight against it. For
     example, artificial intelligence (AI) and smart home healthcare
     services should benefit in the long term.
                                                                          Source: Omdia   © 2020 Omdia

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Recommendations for telecom operators

    • Be transparent on 5G expansion delays. The frontrunners in 5G love to promote network expansion targets, but with a supply-side
      crunch looming in some cases, telcos need to keep consumers up to date on changes to rollout maps or else risk a consumer backlash.

    • Adjust expectations for moving 5G to the masses. Dampened confidence will mean consumers delay paying a premium for 5G,
      particularly those waiting for cheaper smartphones to emerge in 2020. Short-term stimulus measures such as 5G-handset subsidies may
      need to be considered to spur demand depending on the severity of any economic downturn in a particular market.

    • Do not rule out short-time usage incentives. Among those stuck at home, there will be a tendency to use Wi-Fi rather than mobile data.
      In turn, prepaid customers might be vulnerable to topping up less, so consider short-term offers to stimulate usage on the mobile
      network, subject to network load.

    • Dust off global mobile-revenue roaming projections. Telcos will need to lower roaming-revenue forecasts, particularly those outside the
      EU (where roam-like-home tariffs exist). It is worth incentivizing consumer roaming packs when travel rebounds.

    • Telcos should prepare their networks for increased remote working and home schooling. Government authorities are recommending
      quarantine and self-isolation in areas of COVID-19 outbreaks, which will force work and schooling to go online where practicable. This
      will result in increased network traffic as employees and students rely on primarily app-based voice and video calling and conferencing,
      messaging, and content sharing to communicate and collaborate.

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Recommendations for telecom operators

   • Demonstrate the technical capabilities of 5G and cloud technology to support VR/AR streaming. As companies make moves to reduce
     their carbon footprint, international travel will continue to come under scrutiny. Virtual reality (VR) and augmented reality (AR)
     technologies already offer early versions of next-generation telepresence solutions, providing a fertile ground for telcos and cloud
     technology providers to prove how they can enable and support large number of concurrent users using VR/AR.

   • Expand the assisted living product and service portfolio via strategic partnerships. Work not just with technology vendors but also with
     healthcare providers to develop specific use cases for home healthcare. Target family members who are concerned about the well-being
     of elderly relatives living alone at home.

   • Offer a bundled media-streaming device. Facilitate increased broadband consumption (via connected TV) through a media streamer
     bundled with increased speeds and network capacity.

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Recommendations for OTT service providers and platforms (1)

   • Demonetize content on coronavirus. Brands are going to be cautious about allowing their content to appear alongside media on the
     coronavirus. YouTube has already demonetized coronavirus-related content; social media platforms should do the same. Content from
     authorities such as WHO, the US Center for Disease Control (CDC), and the UK National Health Service (NHS) should not be subject to
     restrictions. Indeed, it should be promoted by social platforms.

   • Improve detection and removal of misinformation, inappropriate ads, and opportunist sale of products hit by shortages.
     Misinformation has a potentially serious impact on public health as does the encouraging of panic buying. Social platforms need to get a
     grip on what content is being shared about COVID-19 on their platforms or risk the wrath of regulators already incensed by the
     proliferation of “fake news.“

   • App publishers should beef up their in-app offering to satisfy increased user engagement. People stuck at home in quarantine or self-
     isolation are spending more time and money on mobile apps, so now is the time for app publishers to speed up the rollout of new in-app
     features, content, and levels (e.g., games) to keep users engaged during this period of greater consumption.

   • Like telcos, OTT communications apps should prepare to see their platforms being used to replace in-person communications.
     Quarantine and self-isolation will greatly reduce personal contact. Communications apps will allow people to keep in touch with their
     family, friends, and colleagues, so they must be ready to scale up their messaging, voice, video calling, and content-sharing capacity.

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Recommendations for OTT service providers and platforms (2)

   • OTT communications apps should also prepare for their platforms to be increasingly used as boredom busters. People confined in
     quarantine or self-isolation will lean heavily on their communications apps for entertainment including creating, sharing, and consuming
     content; playing games; or online shopping. The COVID-19 pandemic provides an opportunity for OTT communications apps providers to
     accelerate, iterate, or innovate product development in these areas.

   • OTT video platforms should promote their services. Online video platforms should take the opportunity to market their services by
     promoting exclusive content or original film to encourage subscriber uptake of online video platforms. Offering free access or extended
     trial periods in affected areas will help services promote the brand and gain goodwill and subscriptions.

   • OTT video platforms should promote transactional options. Online video platforms should promote transactional forms of
     consumption, especially for new content, as cinemas are temporarily shutting down.

   • OTT video platforms should be wary of ad-supported business models. In the short term, online video platforms with AVOD and SVOD
     will benefit from the situation because of increased traffic. However, if the duration is prolonged, online video companies that focused
     on advertising may suffer because of economic downturns.

   • Expand presence on multiple app platforms. People now have access to an array of video-consumption platforms, so it is vital for
     companies to make their apps present on the major app platforms including Android TV, Metrological, Apple, Roku, Amazon Fire, and
     Vewd.

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Recommendations for OTT service providers and platforms (3)

   • Help those unused to or new to e-commerce, particularly the elderly, onto the ladder. Make it easy to register, make sure payments are
     simple and intuitive, and think of providing free delivery for physical goods during the pandemic (particularly if deliveries are likely to be
     disrupted). Look at value-added services that make the e-commerce experience pleasurable and even more useful, for example, quick
     and easy recipes that make the most of available ingredients.

   • Convert the short-term upswing in e-commerce during the pandemic into a longer-term trend. Online service providers and commerce
     players should look at how this change in consumer buying behavior can be harnessed beyond the pandemic, for example, by leveraging
     personalization features more effectively, making flexible content offerings, or providing friction-free payment experience.

   • Leverage technology to help your business and customers through the crisis. Analytics and predictive modeling based on machine
     learning (ML) can help scenario planning and responses. AR can be used to enhance online shopping (e.g., trying clothes on, virtual
     showrooms); conversational commerce (chatbots, voice, video) can be used as a sales and support tool to provide interactivity and,
     ultimately, to help sustain relationships.

   • Plan a logistics and fulfilment response before it becomes an issue. Benefits from an upswing in e-commerce will be seriously eroded if
     commerce players do not plan for disruptions across the supply chain. Actions include everything from demand forecasting,
     contingencies for delivery delays and stoppages, and planning how to minimize physical contact during the delivery process.

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Recommendations for OTT service providers and platforms (4)

   • Continue to focus on “shoppable“ ad formats that facilitate e-commerce and food delivery. Despite the COVID-19 pandemic, people
     will still want to buy products, but they will move an increasing amount of their purchasing activity online. Brands and retailers will
     prioritize driving online conversions through digital ad campaigns, which will increase the value of commerce-focused inventory.

   • AI can help online service providers and commerce players protect consumers in uncertain times. The increase in consumer online
     activity during the pandemic will open the door for opportunistic and unscrupulous behavior, for example, disinformation, fake news,
     exploitative advertising and trading, commerce scams, and fraud. AI can be harnessed to help combat these issues (e.g., biometrics for
     enhanced security, ML for fraud detection and to monitor for disinformation about COVID-19).

   • Give consumers AI-enhanced services to help them through the crisis in ways more standard applications cannot. AI can bring
     capabilities to services and applications that can be particularly relevant and useful during the COVID-19 pandemic, including remote-
     working apps, enhanced entertainment, and videoconferencing to name a few. A specific examples could be leveraging geo-intelligence
     that could help keep track of the viral spread or, for areas not on lockdown, providing travel information, updates, and safety advice.

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Recommendations for media companies (1)

   • Devise a contingency plan. Create a contingency plan for cancellation of live events. This could include filling a programme schedule and
     addressing advertising commitments.

   • Enhance content experience. Niche companies, in particular, should prioritize investing in quality content to drive viewership and
     cement audience loyalty. Multidevice use in the home can also be used to offer differentiated experiences such as casting between
     screens and mapping multiple user profiles on different devices.

   • Partner with local authorities. Media companies including broadcasters and radio stations should partner with local government bodies
     to disseminate important information and updates regarding COVID-9 in order to raise public awareness and share safety precautions.
     Social media platforms can partner with local authorities and play an important role in reducing disinformation on the platform.

   • Experiment with ad-supported service tiers. Many price-conscious consumers will be more inclined to experiment with free, ad-funded
     OTT media services in their additional hours of free time at home. Ad-supported online video is one area that will likely benefit, as will
     ad-supported music streaming and free-to-play mobile games. However, ads must be as nonintrusive and useful as possible to avoid
     consumer backlash, and platform owners must be wary of declining overall ad budgets should economic woes continue.

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Recommendations for media companies (2)

   • Studios should release new films online in communication with cinemas. Studios should release new movies on online video platforms,
     because this can increase online sales for new films and reduce losses from the cancellation of theatrical releases and delays in film
     production.

   • Focus on social media and influencer marketing. Brands can shift their marketing budget to social media and video-sharing
     destinations: these are a popular viewing choice for consumers when they are spending time at home. This is also a time when
     consumers seek information online, and thus influencer marketing via short-form video may work well.

   • Support flexible payments across multiple channels. There will be a rise in content and media consumption in the home as people stay
     away from external entertainment sources. There will be a need for content outside of existing subscription models, and media firms
     must provide easy, flexible payment options across multiple devices including desktops, laptops, smartphone apps, and AI assistants.

   • Games developers should lower entry barriers to their online multiplayer games by introducing more free tiers or longer trial periods
     than usual. People experiencing quarantine or self-isolation still need social contact, and online multiplayer games are a great way to
     seek connection and support mental health while respecting curfews. Online games can be updated dynamically, so introducing
     incentives for new (or returning) players could lead to bursts of acquisition and retention that ultimately benefit spend.

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Recommendations for media companies (3)

   • Music-streaming services should take the opportunity to win new subscriptions. With so many workers and students facing lengthy
     periods at home, the level of music streaming is set to increase as part of a “quarantine and binging“ effect. There is a potential
     downside to this if only existing subscribers stream more, but this can be offset by ramping up marketing efforts to attract new
     subscriptions and by increasing the visibility of discounted offers and free trials.

   • Live-music companies need coordinated action. Cancellations of artist performances and festivals are inevitable going forward, but live
     promoters must put on a united front and collaborate in terms of action plans. An “all-or-nothing“ approach to the viability of future
     events will serve concertgoers best during the live-music downtime.

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Recommendations for technology vendors (1)

   • Plan for an impact on the way companies approach large industry events in future. Over the past decade, several large companies such
     as Nintendo, Oculus, Samsung, and Sony PlayStation have established “direct“ digital connection with consumers, and now other
     companies are having to adopt this strategy, at least temporarily. It remains to be seen what permanent impact this could have on future
     events: the relative success (or failure) of their direct approach will determine what companies’ event strategies look like for 2021 and
     beyond.

   • Diversify supply chains geographically to be shielded from adverse events. Many non-Chinese vendors are reliant on chipsets or
     specific hardware that comes only from China or certain other markets. Likewise, Chinese vendors should consider strategically
     expanding manufacturing premises, either outside the country or within China, to future-proof against adverse events that affect one
     particular geography.

   • Virtualization of hardware has been a niche in the vendor space; this is the time for wider experimentation. Vendors should future-
     proof themselves against the shift to cloud by bringing virtualization expertise in-house. As hardware become more vulnerable to supply
     reductions, cloud technology can step in to substitute, and even replace, hardware.

   • Increase R&D around broadband quality of experience and smart devices. The world has suddenly woken up to the fact that it needs to
     be prepared for global incidents such as the COVID-19 pandemic, leading to an increased focus and new investment in smart home and
     digital media applications. Vendors should be ready to meet this new demand.

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Recommendations for technology vendors (2)

   • Communications vendors should focus on providing platforms and services that connect, inform, and entertain people. These
     platforms and services could include video calling and conferencing, emergency broadcasts, public service broadcasts, or content
     sharing.

   • To roll out services quickly in affected countries, communications vendors should harness the power of the cloud. COVID-19 is
     spreading globally but unpredictably. Providing a cloud-based service will help communications vendors meet the needs of their telco
     and service provider customers more quickly.

   • Technology vendors and consumer tech players should open up their AI smarts to help the fight against COVID-19. The leading players
     in this space (e.g., Google, Baidu, Alibaba, IBM, Cisco) have world-class AI technology and expertise, and they should make that available
     to governments, scientists, and the medical community at no charge to help them fight COVID-19. This has the potential to help society
     at large in a way that reflects well on those tech players that take this action.

   • Show how your technology can help B2B/2C players through the crisis. Service providers of all kinds, and commerce players in
     particular, need technology solutions and tools that can help their business and customers. Key solutions will include tools to better
     manage strained logistics and deliveries, flexible payment solutions, enhanced security tools, and technology that enhances the
     shopping experience (e.g., AR, voice commerce, chatbots, video).

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Recommendations for device makers

   • Games console manufacturers should be prepared to give content and service freebies to new hardware owners. Because consoles
     have shifted so heavily toward digital consumption over the past ten years, manufacturers can implement multiple forms of
     compensation. Codes redeemable in online stores can be issued to counterbalance delays or other consumer frustrations, providing
     people with free games or subscription periods for various services (PS Now, Xbox Game Pass, etc.).

   • Smart home hub vendors should think of ways to make products more widely available during the crisis. Lockdowns, travel
     restrictions, and general social distancing will mean people are spending increasing amounts of time at home and will need products to
     entertain and support them. Smart speakers and displays can play an important role here, and vendors should implement schemes to
     put these products into more homes, for example, by offering price cuts to people in the worst-affected areas.

   • Promote financing options for smart home devices. Enable customers to purchase smart home devices over time. Target potential
     customers with bundles and special offers, promoting specific use cases triggered by the pandemic (e.g., video calls with doctors).

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COVID-19 impact
summary

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Impact summary (1)

     Service segment                            Revenue impact                     What to expect                                                                                                                                Expected duration*

     Mobile services                            Negative                           Loss of consumer confidence will affect 5G uptake                                                                                                                2y
                                                                                   Global mobile-roaming revenue will take a hit                                                                                                               1y
                                                                                   People staying at home will mean usage shifts more to Wi-Fi than to mobile                                                                             6m
     Broadband                                  Positive                           Increased home working and consumer videoconferencing                                                                                              6m
                                                                                   Accelerated push toward smart health                                                                                                         Continuous
                                                                                   Greater demand than ever for digital content                                                                                                       6m
     Mobile apps                                Very positive                      Upsurge in app downloads and consumption                                                                                                               6m
                                                                                   Demand for entertainment, home working, delivery apps                                                                                                  6m
                                                                                   Mixed impact for ride-sharing and COVID-19 info apps                                                                                                   6m
     Communications apps                        Positive                           Increased use of app-based video calling and conferencing                                                                                              6m
                                                                                   Authorities need to provide reliable and timely communications                                                                                         6m
                                                                                   Comms/social apps become vital links and boredom busters                                                                                               6m
     Social platforms                           Negative                           Increased use of social media to spread disinformation                                                                                                      1y
                                                                                   Advertisers reduce spending on social                                                                                                                            2y
                                                                                   Social firms must give away precious ad space                                                                                                          6m
  *Duration up to the period mentioned. This is an estimate based on whether the impact is purely driven by quarantines or lockdowns, continues for longer because of a post-pandemic recession, or simply accelerates an ongoing trend
  Source: Omdia                                                                                                                                                                                                                                          © 2020 Omdia

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Impact summary (2)

     Service segment                            Revenue impact                     What to expect                                                                                                                                Expected duration*

     TV content                                 Neutral                            In-home TV viewing increases                                                                                                                           6m
                                                                                   Demand for children’s, family, and news content grows                                                                                                  6m
                                                                                   Reduction in live event content (e.g., sports)                                                                                                              1y
     Free-to-air TV                             Neutral                            Catalog finds favor as viewing increases                                                                                                                    1y
                                                                                   Adding content makes sense                                                                                                                                  1y
                                                                                   Uncertainty over long-term TV advertising budgets                                                                                                                2y
     Pay TV                                     Negative                           Cord-shaving increases                                                                                                                                           2y
                                                                                   Bundling and discounts to take hold                                                                                                                              2y
                                                                                   Broadband services get faster                                                                                                                                    2y
     OTT video                                  Very positive                      Increased consumption at home / increased uptake of OTT services                                                                                       6m
                                                                                   SVOD subscriptions will grow                                                                                                                           6m
                                                                                   AVOD services can capitalize on increased viewership                                                                                                   6m
     Cinema                                     Very negative                      Cinemas shutting down as people go into lockdown                                                                                                            1y
                                                                                   Distributors delay film releases or move to digital                                                                                                         1y
                                                                                   Pent-up demand for cinema may lead to strong reopening                                                                                                      1y
  *Duration up to the period mentioned. This is an estimate based on whether the impact is purely driven by quarantines or lockdowns, continues for longer because of a post-pandemic recession, or simply accelerates an ongoing trend
  Source: Omdia                                                                                                                                                                                                                                          © 2020 Omdia

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Impact summary (3)

     Service segment                            Revenue impact                     What to expect                                                                                                                                Expected duration*

     Advertising                                Very negative                      Brands reduce overall ad budgets                                                                                                                                 2y
                                                                                   Canceled events and travel restrictions impact ad revenues                                                                                                  1y
                                                                                   Digital share of market grows as consumers spend more time at home                                                                                     6m
     Digital commerce                           Very positive                      Online shopping and payments will surge                                                                                                                6m
                                                                                   Not all merchants will benefit, and logistics and fulfilment will be strained                                                                          6m
                                                                                   There will be a rise in in-person payments via contactless cards and mobile apps                                                                                 2y
     AI                                         Very positive                      AI is playing a vital role in the detect-and-contain medical response to COVID-19                                                                                2y
                                                                                   AI will support and entertain people at home                                                                                                         6m
                                                                                   AI will be used to safeguard consumers from unscrupulous activity                                                                              Continuous
     Smart home                                 Positive                           Growing focus on home improvement and hygiene                                                                                                  Continuous
                                                                                   Home healthcare will intensify                                                                                                                 Continuous
                                                                                   Voice control will help users to avoid touching surfaces and objects                                                                           Continuous
     AR/VR                                      Positive                           Sharp rise in investment into VR enterprise applications                                                                                            6m
                                                                                   AR glasses makers explore thermal imaging for disease detection                                                                                         1y
                                                                                   VR headset adoption will likely be damped by production issues                                                                                         6m
  *Duration up to the period mentioned. This is an estimate based on whether the impact is purely driven by quarantines or lockdowns, continues for longer because of a post-pandemic recession, or simply accelerates an ongoing trend
  Source: Omdia                                                                                                                                                                                                                                          © 2020 Omdia

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Impact summary (4)

     Service segment                           Revenue impact                      What to expect                                                                                                                               Expected duration*

     Music                                     Very negative                       Inevitable increase in streaming consumption                                                                                                             6m
                                                                                   Music events of all sizes will be canceled                                                                                                                    1y
                                                                                   Artists, performers, and music companies face earnings losses                                                                                                 1y

     Games                                     Neutral                             Mobile games see record active users                                                                                                                     6m
                                                                                   PC games experience temporary uplift in revenue and activity                                                                                             6m
                                                                                   New console launches will not meet demand                                                                                                                          2y
     eSports                                   Negative                            Cancellation of major physical esports championship events                                                                                             1y
                                                                                   Large games companies’ 2020 esports strategies impacted                                                                                               1y
                                                                                   Media rights and streaming advertising largely unaffected                                                                                     Continuous

    *Duration up to the period mentioned. This is an estimate based on whether the impact is purely driven by quarantines or lockdowns, continues for longer because of a post-pandemic recession, or simply accelerates an ongoing trend
    Source: Omdia                                                                                                                                                                                                                                          © 2020 Omdia

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Information Classification: General
The overall impact across consumer digital
   services will be driven entirely by e-
   commerce offsetting physical retail

   • An expected precipitous decline in physical retail will result in a
     boom in e-commerce. Amazon US has already announced plans
     to hire an additional 100,000 workers and has increased hourly
     wages, while supermarkets workers are being redeployed to
     support digital sales in warehouses, packaging, and shipping.

   • E-commerce will grow around 5% overall as more purchases are
     offset by the lower value of the goods being bought. This takes no
     account of the reduction in physical retail.

   • Other consumer digital services will show flat overall growth as
     advertising and mobile services decline against broadband and
     entertainment services.

                                                                           Note: this chart is just an illustration of the likely outcome. Omdia will provide a detailed quantitative analysis in a subsequent report.
                                                                           *Games includes esports
                                                                           **Direct consumer spend on nongaming apps
                                                                           Source: Omdia                                                                                                                 © 2020 Omdia

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COVID-19 global
pandemic update

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COVID-19: What is it?

   • As of March 24, 2020 there have been around 420,000 confirmed
     cases of COVID-19 (often referred to as “coronavirus“) officially
     registered across 195 countries, of which 297,000 are still active,
     and around 19,000 deaths. On March 11, WHO declared the virus
     a pandemic, which means it is spreading globally in an
     uncontrolled manner.

   • The highest numbers of registered cases are in China, Italy, the
     US, Spain, Germany, Iran, France, Switzerland, South Korea, and
     the UK. However, the accuracy of the figures is highly dependent
     on local conditions including the availability of testing kits and the
     stringency of testing criteria.

   • This is a genuinely novel situation, both as a global health crisis
     and as a macroeconomic shock. It is therefore difficult to
     accurately predict any of the impacts, even relatively short-term
     ones. However, there is a range of factors that are worth
     considering to determine the likely range of impacts.                    Source: Worldometers.info   © 2020 Omdia

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Most countries are not capturing
   the full extent of the pandemic yet
   • With the exception of in mainland China, Hong Kong, Japan,
     Korea, Singapore, and Taiwan there is a significantly lower level of
     testing, contact tracing, and containment practices than required
     to achieve visibility of the entire outbreak. This means that most
     governments do not yet know the full extent or likely progression
     of the outbreak.

   • Crucially, China and Korea found that around 60–80% of COVID-
     19 transmissions occur in the asymptomatic phase (before
     symptoms appear), which lasts for five to seven days. This means
     that focusing containment and treatment on symptomatic cases
     does not limit further transmission and that the extent of
     transmission is not visible for one to two weeks. Without
     containment measures, this lag in visibility of actual cases means
     cases will continue to grow exponentially until the pandemic has
     run its course or containment measures are put in place.
                                                                            Source: Center for Systems Science and Engineering, Johns Hopkins University (2020) Coronavirus COVID-19 Global Cases.
                                                                            Available at www.worldometers.info/coronavirus/; https://github.com/CSSEGISandData/COVID-19;
                                                                            https://medium.com/@tomaspueyo/coronavirus-act-today-or-people-will-die-f4d3d9cd99ca

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Economic impact will be felt in several
   phases, culminating in a recession
   The likely impacts of the COVID-19 pandemic on the global economy
   will come in three phases:

   • initial supply and demand shock: supply restriction because of a
     lack of labor and closed workplaces; demand shock due to
     consumer fear

   • containment: government-mandated restrictions that mostly
     further reduce demand by restricting travel and closing
     businesses and public spaces; this will be directly moderated by
     government decisions and responses

   • recessionary pressures: further demand reduction due to loss of
     jobs, income, and spending power. Governments and central
     banks will try to offset some of the worst recessionary impacts.
     Importantly, how governments mitigate lost personal income and
     pressure on companies to make redundancies will have a critical
     impact on how this plays out in the next months and how long
     the slowdown lasts.

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Governmental responses                                              Quarantine and encouraged social distancing

                                                                       • Governments act early to reduce the spread through mandatory
                                                                         quarantines and encouraged social distancing for the entire
   Limited or late containment                                           population.

   • Governments act late or do not act at all to reduce person-to-    • Businesses are closed; working from home is recommended or
     person interaction in-country.                                      required. Ideally, transmission is managed to match healthcare
                                                                         capacity.
   • The spread of COVID-19 is exponential, resulting in widespread
     illness peaking in two to three months and leading to 60–80% of   • In moderate cases, disease spread is limited to linear rather than
     population becoming infected over the coming year.                  exponential growth. In strict cases, there is localized, temporary
                                                                         eradication.
   • The chance of healthcare systems collapsing peaks. There is
     widespread self-isolation as people make their own decisions to   • The economic impact is likely to be a strong reduction in local
     avoid transmission.                                                 spending because of closed businesses and will be sustained as
                                                                         measures last for many months.
   • The economic impact is likely to be sharp and potentially
     catastrophic, because people are no longer able to work because • Resolution is mostly achieved by herd immunity through
     of illness.                                                       vaccination with isolated instances of local eradication and long-
                                                                       term travel restrictions until vaccinations are available.
   • Resolution is due to herd immunity through infection coupled by
     vaccination in 12–18 months.

   Page 28                            © 2020 Omdia
Information Classification: General
Potential consequences of government response

              Limited/late containment                                         Early/full lockdown

                Brazil                   Germany        Greece     China     Hong Kong
                Iran                     France         Morocco    Denmark   Israel
                Italy                    Japan          Portugal   Korea     Singapore
                UK                       Switzerland                         Taiwan
                US                       Spain
               Initial economic schock

               Mortality

               Duration

   Page 29                               © 2020 Omdia
Information Classification: General
Likely resolution of the outbreak
   and recessionary pressures

   • The initial reaction from the market has been a rapid sell-off
     across all global stock markets. Containment measures in China
     and Europe have triggered huge dips in all markets.

   • The endpoint for both realistic scenarios is herd immunization
     through vaccination, which experts predict will take 12–18
     months. Before that, any location that is virus free will likely
     impose long-term travel restrictions, and any countries with
     containment measures will likely have to keep them for
     approximately the same duration to manage the spread.

   • Agriculture and most digital industries will be least impacted.
     Pharmaceutical and some heavy industry will grow as they are
     mobilized to deal with the direct impact. Gaming, pay TV, and
     online video will likely grow as people are kept isolated. Retail,
     travel, automotive, and energy industries will be badly impacted
     by the slowdown in consumption.                                      Source: Omdia   © 2020 Omdia

   Page 30                            © 2020 Omdia
Information Classification: General
Consumer demand
impact: Mobile and
broadband

Page 31   © 2020 Omdia
Mobile services: What to expect

        Loss of consumer              •     Amid forecasts of recession, consumers will show reluctance to
                                            spend more on telco services (e.g., 5G).
             confidence               •     People staying at home will see usage shift more to Wi-Fi than to
       will affect 5G uptake                mobile. In some cases prepaid users may top up in smaller amounts.

        Delays in 5G moving           •     The deployment/acceleration of 5G networks will slow in some
                                            cases, restricting 5G coverage expansion beyond hotspots.
           beyond early               •     Unable to get a cheaper handset (because of supply issues),
             adopters                       consumers could delay upgrading to 5G.

          Global mobile-              •     Canceled or delayed travel will adversely affect roaming traffic and
                                            revenue.
       roaming revenue will           •     This is not an indicator for the EU, where universal roam-like-home
            take a hit                      tariff policies exist.

   Page 32                                © 2020 Omdia
Information Classification: General
Mobile services: How to respond

     Response                                                                                                  Company types

     Do not overhype 5G’s network reach. Market transparent, clear, coverage maps.                             Telco

     Consider short-term handset subsidies to stimulate 5G demand.                                             Telco

     To dissuade prepaid users from downgrading in areas where they are staying at home longer, telcos could   Telco
     consider short-term promotions (e.g., bonus data offers) as long as the network is not overburdened.
     If the mobile network is overburdened, telcos should urge alternatives such as fixed line for voice or    Telco
     promotional off-peak data usage.
     Focus on antichurn management strategies.                                                                 Telco

     Stimulate roaming spend with innovative tariffs when travel improves.                                     Telco

     Keep 5G premiums moderate.                                                                                Telco

   Page 33                                 © 2020 Omdia
Information Classification: General
Mobile services: Company impact and responses so far

   Company name                       Company type           Location   Response/impact

   China Mobile                       Telco                  China      Network acceleration plans for 5G in 2020 (beyond phase 2) could be delayed.
                                                                        Postponed tenders for six major 5G projects (e.g., healthcare, Industrial Internet of
   Chinese government                 Government             China
                                                                        Things)
   Telefónica                         Telco                  Spain      Free 30GB monthly for two months for mobile customers.
                                                                        On March 15, 2020, Spanish telcos announced that mobile voice and data traffic had
   Movistar, Orange, Vodafone,                                          increased 25% and 50% respectively since the COVID-19 outbreak began, urging
                                      Telco                  Spain
   MásMóvil, and Euskaltel                                              prioritization of network usage. Recommendations include using fixed lines rather than
                                                                        mobile for calls.
                                                                        The CEO flagged possible network equipment delays, noting Chinese component
   Deutsche Telekom                   Telco                  Germany
                                                                        production delays.
                                                                        A $500m increase in 2020 capex including for 5G to “help support the economy during
   Verizon                            Telco                  US
                                                                        this period of disruption.“

   Federal Communications                                               FCC issued T-Mobile with spectrum at 600MHz for 60 days to assist with emergency
                                      Regulator              US
   Commission                                                           services, remote working, and tele-health. It also urges waiving long-distance fees.

   Page 34                                    © 2020 Omdia
Information Classification: General
Broadband services: What to expect

          Increased home              •     Videoconferencing becomes the default option for business.
            working and               •     Education establishments move to remote classroom options.
             consumer                 •     Increased pressure on governments to ensure high-quality
         videoconferencing                  broadband for all.

                                      •     Governments get serious about remote healthcare for all.
          Accelerated push            •     Increased pressure on governments to ensure high-quality
                                            broadband for all.
        toward smart health
                                      •     Increased focus on connected home to enable smart health.

          Greater demand              •     Home digital content receives a real boost.
        than ever for digital         •     An increase in interest in content bundles to secure the best deal.
                                      •     Increased focus on application prioritization to ensure the QoE.
              content

   Page 35                                © 2020 Omdia
Information Classification: General
Broadband services: How to respond

     Response                                                                                              Company types

     Work with government organizations to accelerate “high-speed broadband for all“ initiatives.          Broadband operators

     Market initiatives such as increased speed, smart Wi-Fi, and application prioritization that ensure   Broadband operators
     QoE as a differentiator for applications such as videoconferencing.
     Increase speed or lift usage restrictions on a short-term basis.                                      Broadband operators

     Innovate around service resilience and QoS insurances measures for key applications such as smart     Broadband operators, device vendors
     health.
     Innovate around service and device bundles to help facilitate smart health.                           Broadband operators, device vendors

     Ramp up broadband and media bundling and offer new special short-term deals including free            Broadband operators, OTT media platforms
     access to specific content for certain periods.

   Page 36                                  © 2020 Omdia
Information Classification: General
Broadband services: Company impact and responses so far

     Company name                     Company type                 Location    Response/impact

     UK government                    Government organization      UK          An investment of £5bn in faster broadband across the country.

     US government                    Government organization      US          Under renewed pressure to ensure broadband for all for remote education.

     ACT Fibernet                     Broadband service provider   Bangalore   Upgrading its broadband speeds to as high as 300Mbps and
                                                                               providing an unlimited fair-usage policy (FUP) until March 31.
     Telefónica                       Service provider             Spain       Will make every effort to ensure that the telecommunications network works at
                                                                               full capacity, in a reliable, stable, and secure way.
                                                                               Provides its entertainment offer, especially children’s and sports content, free of
                                                                               charge, accessible through the Movistar+ Lite application where customers and
                                                                               noncustomers can enjoy a month free.
     Telecom Italia                   Service provider             Italy       Will provide free gigabit service, unlimited voice traffic, access to TIMvision, and
                                                                               other initiatives aimed at both consumer and business customers for a month in
                                                                               affected areas.
     AT&T                             Service provider             US          Is suspending data caps for broadband internet customers.

   Page 37                                          © 2020 Omdia
Information Classification: General
Consumer demand
impact: Mobile
apps, comms, and
social

Page 38   © 2020 Omdia
Mobile apps: What to expect

                                      •      Demand for apps will surge with growing downtime at home,
            Upsurge in app                   particularly among schoolchildren, college students, and workers
            downloads and                    unable to do their jobs remotely.
             consumption              •      Downloads, and time and money spent on apps, will grow.

           Demand for                 •      Rising demand for entertainment apps, especially for children and
       entertainment, home                   young people (e.g., games, play-and-learn apps, etc.).
         working, delivery            •      Also for home working, remote learning, school comms, apps.
               apps                   •      And for food-delivery apps, as people shun physical outlets.

          Mixed impact for            •     In early-impact scenarios, there will be more ride sharing as people
                                            shun public transport but none in lockdown scenarios.
          ride-sharing and            •     Demand for virus-impact info, including mapping, will surge but so
         COVID-19 info apps                 will the clampdown on unofficial information sources.

   Page 39                                © 2020 Omdia
Information Classification: General
Mobile apps: How to respond

     Response                                                                                         Company types

     Focus app marketing efforts on virus-lockdown areas to maximize the benefits of the surge in     App publishers and marketers (incl. OTT service providers
     downloads and in-app activity.                                                                   and platforms, and media companies)
     Speed up rollout of new in-app features, content, and levels (e.g., games) to keep users         App publishers and marketers (incl. OTT service providers
     engaged during this period of greater consumption.                                               and platforms and media companies)
     Beef up in-app content/services geared at children and young people.                             Media companies, OTT service providers and platforms

     Publish mobile apps to provide people with official virus-impact info and counter                Governments, health authorities
     disinformation/panic-inducing info from unofficial sources.
     Monitor both official and unofficial COVID-19 info apps, and ban any that are misinforming or    App ecosystem owners
     masquerading underhand activities.
     Prepare for, at first, a surge in demand as people look to avoid public transport, followed by   Ride-sharing app publishers
     plummeting demand in areas that have been locked down.
     Use downtime from canceled developer events to not only enrich app offering but also carry       App developers and publishers
     out software debugging and other outstanding app-housekeeping tasks.

   Page 40                                 © 2020 Omdia
Information Classification: General
Mobile apps: Company impact and responses so far

     Company name                     Company type             Location              Response/impact

     Classting, Google,               Remote-teaching/         Italy, South Korea    There has been a surge in demand for apps enabling schools to remotely teach
     Edmodo, eNotifier,               school-notifications                           housebound pupils and communicate with parents in locked-down areas of Italy and
     IMS School, Kids                 app publishers                                 South Korea. DAUs rose sharply for Google Classroom, Edmodo, and WeSchool in
     Note, WeSchool,                                                                 Italy, and new installs shot up for Classting, eNotifier, Kids Note, IMS School, and
     Zoom                                                                            Zoom in South Korea.
     BJ’s, Costco,                    Food/grocery delivery    Italy, South Korea,   There has been a surge in demand for food/grocery delivery apps in Italy, South
     Esselunga, eMeals,               app publishers           US                    Korea, and the US. DAUs rose sharply for Deliveroo, Esselunga Online, and Just East in
     Deliveroo, Insta-                                                               Italy and for Post Kmall and Public Shopping in South Korea. In the US, eMeals and
     Cart, Post Kmall,                                                               InstaCart experienced a big jump in orders, and BJs Wholesale and Costco saw new
     Public Shopping                                                                 installs shoot up.
     Dida, DiDi, Hello,               Ride-sharing app         China, US             In the US, Lyft recorded its highest revenue and volume of rides ever as more people
     Lyft                             publishers                                     avoided public transport, but in locked-down China, Dida, DiDi, and Hello all
                                                                                     experienced big dips in app sessions.
     Google                           App ecosystem/OTT        Iran                  Banned virus-tracking app AC19, published by the Iranian government and accused
                                      service provider                               of spying on citizens, from Play Store.

   Page 41                                          © 2020 Omdia
Information Classification: General
Communications apps and services: What to expect

           Increased use of           •   Quarantine and self-isolation will reduce in-person meetings.
           app-based video            •   Consumers and employees use video as a substitute, enabling more
              calling and                 personal and social interactions as appropriate.
             conferencing             •   Higher use of video will increase traffic across telco networks.

        Authorities need to           •   Governments, health authorities, and enterprises will need to
         provide reliable,                communicate effectively, especially under quarantine.
              timely                  •   They will use multiple channels – SMS, comms apps, social –
                                          depending on the severity of the situation and required reach.
         communications

        Comms/social apps             •   Confined people will rely on their comms apps to maintain links to
       become vital comms                 the outside world and to entertain themselves.
        links and boredom             •   There will be an increase in app-based content generation, sharing,
                                          consumption, and commerce.
              busters

   Page 42                            © 2020 Omdia
Information Classification: General
Communications apps and services: How to respond

     Response                                                                                         Company types

     Increase data caps for consumers on metered plans, for an affordable fee.                        Telcos

     Increase network capacity to cover expected increased demand for voice, video, and               Telcos
     messaging communications.
     Ensure emergency broadcast capabilities are robust and scalable.                                 Telcos

     Test new content-based or commerce services.                                                     Communications app providers

     Accelerate the launch of new content-based or commerce services as practicable.                  Communications app providers

     Scale up capacity for messaging, voice calling/conferencing, and video calling/conferencing to   Communications app providers
     cover expected increased consumer use.
     Be prepared for increased demand for platforms and services that enable video                    Technology vendors
     calling/conferencing.
     Be prepared for increased demand for platforms and services that enable emergency                Technology vendors
     broadcasts or public service announcements.

   Page 43                                © 2020 Omdia
Information Classification: General
Communications apps and services: Company impact and responses
   so far
     Company name                     Company type       Location            Response/impact

     Telefónica                       Telco              Europe, South and   Has taken steps to ensure its network operates reliably and at full capacity across all
                                                         Central America     markets; increased data cap for its Fusion and Movistar mobile customers by 30GB per
                                                                             month for two months.
     Vodafone                         Telco              Spain               Gives its professional, SME, and freelance customers unlimited data until end-March 2020.

     Bharti Airtel, BSNL,             Telco              India               India’s Ministry of Health directed Indian telcos to replace their ringtones with a 30-second
     Reliance Jio,                                                           audio clip with information about COVID-19; it also told telcos that they might be asked to
     Vodafone Idea                                                           send SMS alerts that provide a list of “dos and don’ts.“
     SKT, Singtel, AIS                Telco              Asia-Pacific        The CEOs of SKT, Singtel, and AIS signed a contract agreeing an esports joint venture during
                                                                             a videoconferencing call, held as an alternative to an in-person meeting because of COVID-
                                                                             19.
     NTT DoCoMo                       Telco              Asia-Pacific        NTT DoCoMo instructed its employees to use videoconferencing in place of face-to-face
                                                                             meetings.
     Google                           Internet company   Global              Google has made premium features of its Hangouts Meet videoconferencing free until July
                                                                             1, 2020.
     IP Telecom                       Vendor             Europe              IP Telecom waived installation and usage fees for its hosted remote working platform.

   Page 44                                        © 2020 Omdia
Information Classification: General
Social platforms: What to expect

           Increased use of           •      Increased numbers of “fake news“ posts must be found and
            social media to                  removed by social platforms.
                spread                •      Potential for bad PR if social platforms are blamed for allowing
                                             disinformation to proliferate.
            disinformation

                                      •     Advertisers will not want to risk brand reputation by running
         Advertisers reduce                 adverts alongside content about coronavirus.
         spending on social           •     Advertisers in coronavirus-affected verticals (sports, travel, film,
                                            etc.) will reduce ad budgets to cope with the drop in income.

                                      •     Social firms are effectively giving away ad space against the biggest
          Social firms must                 current keyword to health authorities such as the WHO, CDC, and
         give away precious                 the NHS in order to protect public health.
              ad space                •     Social firms are having to remove more ads from profiteers.

   Page 45                                © 2020 Omdia
Information Classification: General
Social platforms: How to respond

     Response                                                                                        Company types

     Prevent spread of disinformation by fact-checking content and removing misleading content.      Social platform providers

     Remove coronavirus-related advertising from scammers and profiteers.                            Social platform providers

     Liaise with social platforms to ensure adverts are not displayed next to coronavirus content.   Advertisers

     Fill the vacuum left by the removal of misleading content with factual content.                 TV broadcasters/content owners

   Page 46                                 © 2020 Omdia
Information Classification: General
Social platforms: Company impact and responses so far

     Company name                     Company type             Location   Response/impact

     Facebook                         Social/messaging         US         Facebook has canceled participation in a number of conferences and moved its own F8
                                      platform provider                   Developer Conference online. It has also closed an office in Seattle and banned visitors
                                                                          from its offices.
                                                                          When users search for “coronavirus,” information from WHO or a local health authority is
                                                                          shown first.
                                                                          It has also banned ads for face masks as well as any adverts claiming to sell a cure or
                                                                          treatment for coronavirus and has pledged that it will remove disinformation about the
                                                                          novel coronavirus from Facebook and Instagram.
     Pinterest                        Social platform          US         Pinterest has redirected any searches for coronavirus to officially sanctioned advice from
                                      provider                            WHO.
     Twitter                          Social platform          US         Twitter has banned all outside visitors from its San Francisco headquarters.
                                      provider                            It has also banned advertisers using the COVID-19 outbreak to target inappropriate ads
                                                                          and directs users searching for “coronavirus“ to local health authority websites and Twitter
                                                                          feeds.
     TikTok                           Social platform          China      TikTok has said that it has been working to promote factual content. WHO has joined
                                      provider                            TikTok to aid this effort.

   Page 47                                           © 2020 Omdia
Information Classification: General
Consumer demand
impact: TV, OTT video,
cinema, and TV devices

Page 48   © 2020 Omdia
TV viewing and content availability: What to expect

                                      •     TV viewing increases as people spend more time at home because
        In-home TV viewing                  of the implementation of measures to contain the spread of the
                                            virus.
             increases                •     Differences in viewing preferences lead to multiple devices and
                                            screens being used concurrently in the home.

             Demand for               •     Demand for information, news, and talk shows increase as
          children’s, family,               workflow shifts to remote, decentralized work environments.
          and news content            •     Demand for children’s content grows because of school closures.
                                      •     Families at home together spike demand for family content.
                grows

                                      •     Reduction in live event content because of cancellation of sports.
         Reduction in live            •     Consumer viewing patterns will shift from live events and reality-TV
        event content such                  programming to sitcoms and series.
            as sports                 •     Major impact on revenue for rights holders of live events.

   Page 49                                © 2020 Omdia
Information Classification: General
FTA TV and TV advertising: What to expect

                                      •     In-home TV viewing of free content will increase as households
         Catalog finds favor                experience financial hardship.
        as viewing increases          •     Free-to-air (FTA) TV broadcasters experience greater adoption of
                                            their catch-up TV services as users seek out catalog content.

                                      •      Quality of content increases across the viewing day to capture
            Adding content                   audiences at differing times (e.g., affordable catalog content that
                                             has potential to act as a good cost-saving measure).
             makes sense              •      An addition of niche content in place of infomercials to increase
                                             viewership and test new audiences.

                                      •      TV advertising spend carries a lot of inertia; a spike in viewership
          Uncertainty over                   will not convert into an immediate revenue upside.
            long-term TV              •      Canceled upfront events and negative long-term economic outlook
         advertising budgets                 will impact renewals and pipeline for new campaigns.

   Page 50                                © 2020 Omdia
Information Classification: General
Pay TV: What to expect

                                      •   Cord-shaving increases as users cancel costly channels and add-ons
                                          in favor of less expensive packages.
              Cord-shaving            •   Reduction in the price of the most expensive pay-TV packages.
               increases              •   Employee quarantine and consumer reluctance to let installers into
                                          their homes create barriers for new subscription additions.

                                      •   Bundling will help to get new products in front of potential
             Bundling and                 customers; new reduced price bundles (e.g., hybrid FTTH and IPTV
           discounts to take              service at a reduced price in Italy) may find favor with price-
                 hold                     sensitive subscribers.
                                      •   Increase in promotions (e.g., free month from Telefónica in Spain).

                                      •   Telco operators will focus on infrastructure upgrade to meet the
        Broadband services                increase in demand for broadband services but might face setbacks
                                          with technicians not able to make house calls.
            get faster                •   Speed upgrades will see an uptick as more users at home require
                                          more bandwidth and unlimited data usage.

   Page 51                            © 2020 Omdia
Information Classification: General
Mobile TV: What to expect

                                      •     Mobile TV viewing in-home increases because the primary TV set
                                            will be used more by family members at home.
         Mobile device use
                                      •     Consumers conserving household income will marginally increase
         will grow in value                 spend on mobile devices (i.e., low-end/pre-used handset and tablet
                                            sales for children at home).

                                      •      Conversely, people who primarily turned to mobile video in an out-
        Loss of out-of-home                  of-home environment will no longer be interested in mobile video
           consumption                       consumption.

                                      •      Growth in prepaid mobile will slow as people stay home.
        Prepaid will slow as          •      Demand for mobile TV breeds more competitive contract fares.
          contracts grow              •      Demand for a reliable mobile connection to better the viewing
                                             experience drives 5G growth.

   Page 52                                © 2020 Omdia
Information Classification: General
OTT video: What to expect (1)

              Increased
                                      •   People sign up temporarily to new services.
           consumption at             •   Increased demand on home broadband bandwidth to
           home/increased                 accommodate OTT video consumption.
            uptake of OTT             •   People try new services and business models.
               services

       Growing demand for             •   Increase in uptake of both generalist and specialist services.
                                      •   Increased levels of viewership for children’s and family content.
       children’s and family
                                      •   Increased demand for content might negatively affect smaller
              content                     services unable to offer wide library of content.

                                      •   Live contents to be replaced with other shows or game replays.
         Lack of live sports          •   Sports-focused OTTs are at risk for loss of revenue.
         content; disrupted           •   Once production disruption starts affecting the new content
            production                    release schedule, SVOD services will find subscription acquisition
                                          and retention more challenging.

   Page 53                            © 2020 Omdia
Information Classification: General
OTT video: What to expect (2)

                                      •      Netflix, Disney+, DAZN, and others will all benefit from people’s
        SVOD subscriptions                   staying at home; Amazon Prime’s offer of fast delivery and SVOD
                                             makes for a particularly attractive consumer proposition.
            will grow                 •      As consumers increasingly become more frugal, pay-TV
                                             subscriptions will transition to online video services.

                                      •      Opportunity for telco operators to offer an FTTH, mobile, and
          New product and                    SVOD bundle package.
             services                 •      D2C services, such as AT&T HBO Max or Disney+ International,
           opportunities                     may accelerate their 2020 launch schedules.

                                      •     AVOD players with large content libraries (e.g., Tubi.tv and Pluto.tv)
         AVOD services can                  experience a rise in viewing.
           capitalize on              •     AVOD can attract brands increasing digital spend (e.g., food
       increased viewership                 delivery) and unmet demand from brands blocking inventory
                                            associated with COVID-19 content.

   Page 54                                © 2020 Omdia
Information Classification: General
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