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How COVID-19 has impacted businesses strategy

by Hari Middleton


Introduction

2009 marked a career-low point in Novak Djokovic’s career. A failure to perform, coupled with injuries and mid-match meltdowns left many asking if his career was destined to prove a classic case of missed potential. However, just two years later Djokovic was back. Winning three out of four grand slams in 2011 with a style of play that received the acclaim from all corners of the world. And becoming ranked as number one in the world for the first time.


Such a comeback required to change, namely through diet and training. Now with businesses around the world attempting to adapt to the new order in a Covid world, Djokovic’s tale of accomplishment can be used by businesses as an example of the ability to stay resilient, pivot and adapt to overcome ever-changing circumstances.


While naturally in these times businesses have had contrasting fortunes, we have seen a variety of new approaches appear in recent months. Take pivoting for example which refers to more of a short-term approach to adapt to the current circumstances. An approach seen predominantly by those most heavily impacted by the pandemic, namely gym and sporting industries. This article shall explore this and a wide array of industries to examine the key lessons learned from the covid-19 pandemic in relation to business strategy.



Industries:

Streaming on-demand industry

The industry is growing rapidly with an annual growth of 15%. Reasons constituting this include, rising broadband penetration and the decline in cable TV demand, although now the forefront factor is the Covid-19 pandemic. Consequently, many large media firms are making the switch from traditional broadcasting to the VOD market. This has made the competition much more intense within this market, so how has a new entrant like Disney+ implemented a strategy to deal with Covid:

Disney+
  • Disney+ was released in November 2019 – initially it was meant to complement Walt Disney’s wide product portfolio.

  • However, owing to the impact of Covid many aspects of the product portfolio have been in decline, as exemplified through the forced closure of theme parks and cinemas - such a factor is shown by how Disney lost $4.7 billion in just the third quarter of 2020.

  • Therefore, despite being one of Disney’s most recent services they are becoming increasingly reliant on its success.

  • So how is Disney+ strategy faring in these times?

  • Firstly, looking at price they have leveraged fellow Walt Disney assets, with an ESPN+, Hulu and Disney+ bundle - amazingly priced less than Netflix alone! This also serves as a response to criticism regarding the limited amount of content available on Disney+.

  • Furthermore, with Disney+ initially aiming to produce up to 10 new high-quality movies each year – this strategy has subsequently pivoted with the focus more now on repurposing older content for new audiences – this is likely to be a successful move given how much of Disney’s success comes from its unique ability to emote nostalgia and its well-loved brands.

  • With cinemas also closed for the foreseeable future executives took the decision to start premiering certain new movies on the platform.

  • The first example of this was Mulan – however, this did not prove as successful as expected with a range of political issues surrounding its release.

  • Mainly owing to part of the movie being filmed in Xinjiang, an area with imprisoned Muslims and actress Yifei Liu speaking in support of the Hong Kong police. This led to the #BoycottMulan trending online and human right demonstrations around the world.

  • It is clear that such a strategy is succeeding in Covid times, with Disney+ on track to far surpass its target of 90 million subscribers by 2025.

  • While of course, the streaming video on demand industry is one that has grown rapidly during the pandemic, this has also resulted in severe competition – making it even more of a triumph for Disney+ to have fared so well to date.

Health and Fitness

Rules stipulating the closure of gyms and leisure centres for the majority of the past 12 months, the fitness industry is one that has been forced to adapt out of necessity for survival. Having said this for the individual many are now deeming such necessary changes to be beneficial. This factor is highlighted with now only a reported 7% of people believing that gyms are the best way to stay fit. Therefore, the covid-19 pandemic can be seen to have accelerated such trends that largely revolve around outdoor activities, home workouts and running. To analyse this industry lets now zoom in one case, before highlighting two recent successes.

Example of a change in strategy:

David Lloyd

· Health and leisure centre that caters to the upmarket luxury market

· Owing to nationwide closures David Lloyd lost significant revenue streams from membership and add-ons such as meals served in its restaurants

· Given David Lloyd’s significantly higher overheads compared to competitors, predominantly a result of its much bigger premises, means they have had to find innovative ways to maintain revenue flow

· The first way they did this was by utilising its vast outdoor space to open up outside ‘jungle’ style gyms while ordinary gyms were still banned as per lockdown

· Yet the main way they have transitioned is by making use of its app and website – which it uses to provide members with workouts and top tips to stay fit

· Therefore, providing clear examples of how gyms have had to be innovative in order to maintain its members and keep revenue flowing in


Success stories:

Joe Wicks

· Also known as the Body Coach, Joe Wicks shot to fame during the first lockdown with his PE with Joe workouts live streams

· With schools closed by the government, this created a demand for children to be both entertained and invigorated – and this is what Joe Wicks did with his first stream receiving over 900,000 streams

· Now with various spinoffs including ‘Wake up with Joe’ and has recently completed a 24-hour workout which raised over £2.5 million for charity

· Launched this at a time when national morale was low, by bringing positivity and wellbeing to the country, it is clear that Wicks did the nation a service – but he also exploited a business opportunity by identifying a gap in the market created by Covid

Peloton

· Peloton has seen sales rise exponentially since the closure of gyms

· A simple business model that revolves around delivering either a bike or treadmill to your door

· Providing simple fun and engaging workout is a big reason driving such popularity – also the use of gamification is keeping users engaged, through leaderboards allowing users to compete with others around the world it has created a virtual world on fun exercise

· While this strategy has worked in a Covid world, it remains to be seen if it will prove a success as life re-enters some form of normality

These are all examples of how businesses from different industries, have adapted and pivoted to deal with the realities of Covid. It also provides hope that opportunity always remains, especially for those resilient enough to stand up and innovate


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