After the pandemic, viewers may choose to stick with streaming instead of going back to cable or broadcast television.
Photo: toms kalnins/EPA-EFE/ShutterstockHow different could the post-coronavirus world look? Predictions of radical change abound, such as working from home becoming the norm. But a more certain outcome of the pandemic is the accelerated demise of industries that were already in decline.
The last deep recession offers a template. During the financial crisis, companies had to reassess and justify expenditures, triggering a reset. Some industries that had long been expected to be disrupted by the internet finally were.
Advertising in newspapers, for example, remained surprisingly resilient through the dot-com era, but took a deep dive during the financial crisis and has never come back. Newspapers in the U.S. lost 70% of their advertising revenues between 2006 and 2018, according to Pew Research Center. The rise of smartphones and social media was one likely factor, but the recession was another: Once spending on print advertising was cut, there were few reasons for companies to bring it back.
Paper mail, as archaic a form of communication as can be, tells a similar story. First-class mail volume handled by the U.S. Postal Service dropped a modest 5% from 2000 to 2006, but has since fallen another 44%.
So how could the current health crisis reshape industries?
Customers who got their first taste of digital streaming during the lockdown may choose to stick with it instead of going back to cable or broadcast television, accelerating changes in the entertainment business. The looming recession also could force many viewers to count their pennies and pay attention to all the channels they don’t watch in their cable bundles. The pace of so-called cord-cutting may accelerate further if online services start to eat into live sports—cable’s trump card. That will also mean lower television advertising revenue, which has been holding up relatively well compared with other forms of legacy media such as print and radio.
While shopping, especially in its more enjoyable forms, will surely come back when the pandemic is over, buying mundane goods over the internet seems bound to become more common. That is especially bad news for retailers that sell goods that are themselves becoming digital, such as videogame chain GameStop.
As for corporate spending, businesses will likely continue their shift to third-party cloud-based services instead of hiring information technology consultants such as Infosys and Cognizant Technology to maintain costly in-house systems.
Most industries hit by the pandemic will likely bounce back sooner or later. The exceptions may be those that were already suffering from underlying health conditions.
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These Businesses Won’t Bounce Back From Coronavirus - The Wall Street Journal
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