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The Pandemic's Effects on Business Models P1509 June 2020

Author: Martin Schwirn (Send us feedback.)

The pandemic could change some business models permanently.

Abstracts in this Pattern:

Because the coronavirus-disease-2019 (covid-19) pandemic has triggered shelter-in-place and lockdown orders around the world, the majority of employees in many industries are working from home, students are learning online, and many social gatherings have moved from the real world to the virtual realm. As a result, collaboration-tools, online-learning, and communications-technology companies have seen their business increase rapidly during recent months. Because digital-platform-based business models are benefiting from social-distancing measures, companies such as Google (Alphabet; Mountain View, California), Amazon.com (Seattle, Washington), Zoom Video Communications (San Jose, California), and Coursera (Mountain View, California) are thriving in a very challenging environment.

The covid-19 pandemic is creating challenges for some business models that companies designed to address needs in regular times. For instance, Facebook (Menlo Park, California) reports that because of the pandemic, total messaging and video calling across its social-networking and messaging platforms and services increased substantially in some regions. But Facebook does not monetize its messaging and video-calling services and is therefore seeing no financial benefits from their increased use. In fact, Facebook is losing revenue because of pandemic-related decreases in digital-advertising spending. And many internet-service providers have decided to lift their data-consumption limits to benefit people whose online activities have increased because of the pandemic. As is the case for Facebook, companies such as AT&T (Dallas, Texas), CenturyLink (Monroe, Louisiana), and Comcast Corporation (Philadelphia, Pennsylvania) are providing customers with additional services but extracting no additional revenue from doing so.

Tsinghua University (Beijing, China) professor Zhu Ning and collaborating researchers from other institutions recently looked at pandemic-driven changes that will affect companies in China but also likely apply to companies around the world. According to the researchers, new business models are emerging in multiple areas—including health care, retail operations, office work, and education—and an increasing number of businesses will shift their offline services and offers online. These changes come as no surprise, but the pandemic certainly accelerated the rate of change in the business world.