Experts believe at least 30% of companies in every industry will not survive the pandemic and accompanying economic turmoil. Hardest hit are offline retail, tourism, restaurants, manufacturers of luxury goods and some others. However, a crisis is not all about negative factors; it is also about new opportunities. Accordingly, some industries are likely to grow despite the complicated socioeconomic factors.
The entire gaming industry, especially its online segment, is growing rapidly despite the crisis. Some companies in cloud gaming are showing a 300% revenue growth. Released just a couple of months ago, the Honor of Kings multiplayer online battle arena added 100 mio users during the Chinese New Year vacation (and quarantine); the company made $151 mio in just one month. Gaming companies are making record profits. Sales of Nintendo and Tencent (the largest online games producer) also showed rapid growth in the last quarter. Nintendo’s revenue rose 41% year-over-year; Tencent’s financial flow increased 41%. Experts from GamesIndustry.biz say sales of games in 50 different countries increased by 63%.
Worldwide videogame purchases during the pandemic, $ bln
The games that were released before the pandemic, and those released during the lockdown are equally popular with gamers. For example, after the release of Doom Eternal and Animal Crossing, the level of traffic has grown significantly, according to Comcast.
Delivery services have been particularly popular during the lockdown. Delivery companies have signed new deals with the catering companies that never offered food delivery before. Delivery Club and Yandex.Food reported that three times more restaurants have shown interest in delivery. The scope of delivery orders started growing immediately after the epidemic broke out. Dostavista’s Russian office noted a 65% increase in orders as soon as March 17, only one day into the lockdown, which was also 80% higher than the demand on the same date the year before. Both c2c and b2c customers are ordering more. Experts suggest that the online delivery services from retail stores, grocery stores and restaurants in Russia may double their profits in 2020, from the earlier predicted RUR 120 bln ($1.75 mio) to RUR 248 bln ($3.6 mio).
The same thing happened in China. The number of food delivery orders for more than one person grew by 13% in February, and orders for five and more persons grew by 70% in just a few weeks. Delivery services were overwhelmed and had to hire more staff. One Chinese company expanded its delivery team to 700K people in several weeks. The demand will go down after the lockdown but will still be higher than before the outbreak.
Production of drugs, face masks, food supplements and medical equipment will continue to grow. RBC reported that Regeneron Pharmaceuticals was ranked first in the top 10 of best foreign shares in Q1 2020. The company produces COVID-19 test kits and develops coronavirus treatment in cooperation with its partners.
This is just an example, and a very illustrative one. Pharmaceuticals, masks and food supplements production – all these areas are rapidly developing and will continue to develop in the near future. Shares of medical equipment manufacturers, especially mask producers, have increased several times. The telemedicine market is also growing. In Russia, this area will receive a huge boost if the government adopts a law on telemedicine to allow medical facilities to provide certain services remotely.
According to experts, wages of medical staff will also grow because of the growing demand; the revenue of companies related to medicine is also growing.
Remote education is one the rise amid the pandemic. According to experts, the Russian market of additional school online education will grow by 33% this year. The popularity of education for adults is also growing. Thus, the activity of users of one of Russia’s largest edtech platforms, Skillbox, has grown by 30% over the past few weeks. According to experts’ forecast made before the epidemic, the Russian online education market was supposed to reach RUR 60 bln ($872 mio) by 2023. The post-pandemic growth will be even higher.
The situation is the same in every country. For instance, in China, the capitalization of edtech company TAL Education has grown by $1.7 bln and reached $10 bln. The capitalization of India’s Byju’s reached $5.8 bln. The current objective of the edtech sector is to offer useful and relevant content to its users in order to retain a part of the offline education market after the pandemic and lockdown restrictions are over.
According to a forecast by Orange Business Services experts, the telecommunications industry will follow one of the most optimistic scenarios, with short-term, mid-term and long-term forecasts all in the green zone.
The areas to develop in the near term include apps for remote working. A notable example is Zoom, a cloud platform for video and audio conferencing, with the company’s capitalization having increased twofold since January.
According to the mid-term forecast, along with development of such tools as Zoom, information security services will advance as well. The shift to remote working has led to a growing number of cybercrimes and increased activity from fraudsters, particularly phishing attackers.
In the long run, areas of advance will include services, platforms and tools that accelerate infrastructure development and make for its scale-up.
We will see a more dynamic development of mobile apps, construction technologies, data centers optimization, cloud services, information security, and communications (including hardware as well as apps and services). Telecommunications market players will invest in customer retention, digital service channels, and AI technologies.
Overall, growth will be observed not only in specified sectors but others as well, including both related and non-related ones. For instance, as the gaming industry develops, so do games, software, and cloud services. Educational technology is advancing as well, with greater efforts to develop learning apps and services. In addition, business sectors that have failed to adapt to the current crisis are going through a transformation, and successful solutions will allow them to stop collapsing and start growing.
By Andrei Setsko, Head of Marketing Analytics for International Business, Orange Business Services