The sudden and large-scale shift to remote working and education precipitated by the Coronavirus (COVID-19) is certain to have serious implications not only for the telecommunications industry but also for the over the top (OTT) video and game streaming providers that deliver goods and services over their networks and the payment providers that facilitate these purchases.
Organisations across the globe have ordered their employees to work from home rather than risk escalating the spread of COVID-19 by travelling into offices, whilst many cities have also ordered school closures and the elimination of many other social and professional gatherings. Google, for example, advised its workers to stop coming into the office in late February, while Twitter made the ban compulsory for its employees last week.
Thousands of other organisations across the world have followed suit. The scale of the disruption is unprecedented, and the impact on the global economy immeasurable. To mitigate the impact and maintain service continuity, mobile network operators (MNOs) are already introducing temporary measures that allow their fixed and mobile broadband subscribers to extend their data allowances or carry them over to the following months to facilitate remote working and education.
Emirates telco du, has gone one further, announcing a collaboration with the country's Ministry of Education to support UAE teaching institutions by enabling all post-paid and pre-paid customers to access their school websites and homework throughout the entire duration of the closed period without occurring any additional charges on their data.
Global data consumption has surged exponentially. Spanish carriers, for example, reported a 40% spike in network IP traffic, with mobile usage up 50% for voice services and 25% for data, whilst traffic from IM platforms, such as WhatsApp, increased fivefold, and Webex fourfold. The subsequent strain felt on network capacity was sufficient for Telefónica's Movistar, Orange, Vodafone, Masmovil and Euskaltel to request that subscribers shift video streaming to off-peak hours and avoid uploading or downloading large files unless absolutely necessary, to better support remote working and schooling applications.
OTT streaming surge on the cards
Telcos and MNOs the world over may additionally have to contend with a surge in demand for over the top (OTT) video streaming services and online gaming traffic, as quarantined adults and children look for alternative sources of entertainment within the confines of their homes.
The price of Netflix's stock rose almost a percentage point at the end of February, as analysts anticipated a short-term benefit for the provider, derived from existing subscribers having more spare time on their hands to watch its films and box sets, coupled with new customers signing up in anticipation of spending more nights at home. And that impact is certain to be amplified by the sudden absence of any live sports coverage. Recently, Netflix announced that it would be reducing its video resolution from 4K in Europe for a month to avoid straining the internet service providers (ISPs) as more consumers tune-in while being-in quarantine.
Based on data compiled from prior crises in the US, Nielsen data suggests that whenever events conspired to force American citizens to stay at home, total TV usage (including live TV, DVR recordings, video on demand and streaming services) increased by nearly 60%. The company noted a 61% jump in streaming during Houston's Hurricane Harvey in 2017, for example, and the severe snowstorm that hit New York on the weekend of January 23rd 2016.
Nielsen found similar patterns in behaviour when it looked at two of the countries most impacted by the COVID-19 virus this year, calculating that South Korea saw a 17% increase in TV viewing between the second and fourth week of February (compared to just 1% in 2019). The corresponding figure in Italy was 6.5%, and much higher (12%) in the particularly hard-hit region of Lombardy.
Data from mobile marketing intelligence company Sensor Tower estimates that new installations of the Netflix app in Italy and Spain were up 57% and 34% respectively, while live-streaming across YouTube, Twitch, Facebook and Mixer grew by more than 66% in Italy during February, according to live streaming platform StreamElements.
Isolation leads to a surge game downloads
COVID-19 is also pulling the video gaming industry in different ways. Entertainment Software Association's flagship E3 event and the 2020 Game Developers Conference were both cancelled after leading developers pulled out, causing widespread disruption. However, figures compiled by mobile app analytics firm App Annie also suggest that global downloads of mobile games increased 39% in February over January as consumers found new ways to pass the time.
Much of that activity came from China, with Apple's App Store in the country alone seeing a 62% jump in-game downloads, including online multiplayer battle games like Honor of Kings, Game for Peace and Lineage 2. Overall mobile game downloads reached 4bn during February, compared to 2.9bn in February 2019 according to Sensor Tower data. Elsewhere Bloomberg News reported that usage of Italy's national network increased by more than two thirds, as housebound pupils logged onto games such as Fortnite.
Supply chain issues impacting the delivery of new consoles like the Nintendo Switch, Konami's TurboGrafx-16 Mini and Facebook's Oculus Quest VR headset could also drive more gamers onto mobile platforms while they wait for COVID-19 to subside.
Many live eSports tournaments have been hit too. Activision Blizzard either cancelled the Overwatch and Call of Duty League events or moved them into online-only formats, as did Tencent with its PUBG Mobile Pro League South Asia tournament. It was a similar story for Electronic Arts' Apex Legends, as developers pulled the plug on tournaments scheduled for March and April which have previously attracted tens of thousands of spectators to physical locations.
Changes in digital buying patterns
There is no doubt that widespread COVID-19 related quarantines, lock-downs and self-isolation initiatives are helping to drive increased e-commerce activity across the world, both for physical and digital goods and services. In the UK, home delivery specialist ParcelHero estimated that digital purchases are likely to increase to 40% of all retail sales at the height of the pandemic's peak. And in Singapore e-commerce platform Lazada said it experienced a spike in bulk buying and large orders through its grocery service RedMart, when the Government's Disease Outbreak Response System Condition (DORSCON) level was changed from yellow to orange on February 7th.
Any consumers still undertaking physical in-store purchases may also prefer to use contactless payments, rather than make cash transactions, due to fears that bacteria may be embedded in bank notes, whilst avoiding touching cashiers or counter surfaces wherever possible. Juniper Research concludes that an increased use of contactless payments is "highly likely" as a result of people's mistrust of banknotes in China and South Korea after the Chinese banks ordered people to disinfect cash, before issuing it in public.
Those concerns could drive greater use of contactless credit/debit cards and embedded smartphone technologies, such as near field communications (NFC) or radio frequency identification (RFID) tied to mobile eWallet apps. Banks too are encouraging customers to use remote banking options, including online and mobile app-based banking services
The big question is whether any shift to digital payments is a temporary phenomenon that subsists only for the duration of the crisis or a longer-term trend that leads to broader adoption of online, mobile and contactless transaction platforms in lieu of cash or bank transfers.
What does seem inevitable is that COVID-19 will make remote workers out of many employees that have not previously engaged in commercial activity outside of their office or workplace, while also increasing the volume of online transactions amongst elderly shoppers. Any torrent of new participants in e-commerce and online payments (and statistically a fair proportion of the mobile e-commerce and payments) would almost certainly set the trend for repeat behaviour at a later date when the epidemic has been contained.
A recent example illustrating that catastrophic events often encourage people to change their behaviour comes from India, which saw electronic payments soar after a sudden cash crunch in November 2016 saw the government ban 500 and 1000-rupee notes to combat tax evasion. The number of electronic transactions increased 150% in the first week, then roughly doubled each week over the next three weeks, according to research conducted by Northwestern University's Kellogg School of Management. The switch to downloading and playing mobile games (and making in-game purchases from smartphones) already appears to have boosted revenue for some electronic and mobile payments platform providers. Some of these developments may even change consumer behaviour fundamentally in ways difficult for any of us to fathom at this stage. It is important that we all make mobile content and services consumption convenient, scalable and safe.