Will Americans have jobs in the future?

Digitalization in fast motion: In the USA, the pandemic is changing some industries forever

New Hollywood films are being launched in the living room instead of in the cinema, many Americans are now visiting their doctors using the iPad, and former home office opponents such as Facebook are opening up to working from home.

After around two months of state-ordered house arrest, more and more communities in the United States are also loosening the regulations. But the reality to which citizens are now returning has changed massively during the weeks of house arrest. In several industries, the pandemic has accelerated digitization like in a time lapse.

Home office acceptance

So far, Facebook, of all things, was known in Silicon Valley for the fact that employees were not allowed to work from home and colleagues even had to travel from overseas for meetings. A few days ago, Facebook and Google announced that employees would be allowed to work from home until the end of the year. Twitter went one better: Its 5,100 employees can now work permanently from home or in a café, a mountain chalet or wherever they want. Only those who want to or are forced to do so for professional reasons can return to the office from September. The HR manager announced that all personal meetings would be canceled by 2021. "The reopening of the offices is our decision, when and whether our employees come back is up to them." Each employee received $ 1,000 for office equipment.

"My opinion about the home office has completely changed in the past two months," tweeted the head of the real estate platform Zillow, Rich Barton. Before the pandemic, just 2% of the company's 5,000 employees worked permanently from home. Zillow has now also extended the option of working from home for the entire workforce until the end of the year. "I expect this will have a long-lasting impact on the work of the future - and on the home."

Today we let our team know they have flexibility to work from home (or anywhere) through the end of 2020. My personal opinions about WFH have been turned upside down over the past 2 months. I expect this will have a lasting influence on the future of work ... and home. Stay safe.

- Rich Barton (@Rich_Barton) April 25, 2020

For reasons of cost, too, “work from home” - or as they say in slang: WFH - is likely to develop into a broader trend. In a recent survey by market research firm Gartner of finance directors in the United States, three out of four said that at least some of their workforce would continue to work from home. One in four even said that an additional 10 percent of the workforce would work from home who would not have already done so before. "The data show the lasting impact that the coronavirus crisis will have on the way companies work," said Alexander Brant from Gartner. "The CFO see this as an opportunity to realize savings through a remote workforce."

Three quarters of the chief financial officers want to at least partially stick to home work

Percentage of the workforce who will now work permanently at home even after the pandemic

Digitization of work

Millions of employees have had to learn in the past few weeks what Zoom, Slack or Teams is all about. Because due to the Corona crisis and the forced home work, more and more work processes have been digitized. Smaller companies such as the provider of the video conferencing software of the same name, Zoom, whose share price has increased by 150% since January, or Docu Sign, a San Francisco-based company for digitally signing documents, benefit from this. The Slack communications platform has also grown to an extent that co-founder and CEO Stewart Butterfield recently described as "pretty unbelievable". In the entire last quarter of 2019, the company had gained around 5,000 new customers, this spring it was an impressive 7,000 within six weeks. At the moment, Butterfield said, it feels like Slack was born for just such a crisis: “This is ours Moment."

On the other hand, the technology companies have also received a tailwind: Microsoft reported in mid-March that the demand for its collaboration program Teams had grown by more than a third within a week, to 44 million users a day. Every day, teams use 900 million minutes of phone calls. "We believe that this sudden, global change to working from home represents a turning point in the way we work and learn," wrote Jared Spataro, who is responsible for the Microsoft 365 software package. Google reports something similar: Its video conference program Meet was used 25 times as much in March as it was in January, and the Classroom software also seems to have been made for the crisis.

The pandemic served as a technological equalizer, said Nadja Yousif of the Boston Consulting Group in London to the American television channel CNBC: “People were more patient in learning and trying out new technologies, simply because they had to be. We all develop new skills in virtual work. " Communication channels are also likely to change in the long term if everyone no longer works together in one office, says Yousif: video conferences would increasingly replace meetings, and more would be communicated via e-mail and chat services such as Slack. Ironically, this technological change could also affect Silicon Valley itself, writes Margaret O’Mara, Fellow at the think tank joint venture Silicon Valley, in an analysis. Technology developed in the Valley can help more companies realize that their employees no longer have to be based there.

Power struggle between Hollywood and cinemas escalates

Even before the corona pandemic, cinemas had a hard time attracting guests. With 3-D or even 4-D films, karaoke performances or evenings in disguise, many operators tried to make the film an experience and to lure people from the couch to the cinema. The success was moderate, on average an American went to the cinema four times a year. From the perspective of the big Hollywood studios, business with cinemas is anyway less profitable than rental via digital platforms: with cinema operators, the studios have to split the sales in half, with platforms such as Amazon Prime or Apple TV they can keep 80% of the sales.

But all attempts to wrest the exclusive film rights from the cinemas have failed in recent years. Until the Corona crisis came: For the first time in April, a large Hollywood studio did not launch a film in the cinema as planned, but switched to digital platforms at short notice due to the pandemic. Viewers could watch the Universal Studio production "Trolls World Tour" for $ 20 at home for 48 hours. The offer hit like a bomb: Within three weeks, Universal Studios took in $ 100 million with the animated children's film, more than it had earned in cinemas four years earlier with the first "Trolls" film over five months.

Inspired by this success, Universal Studios recently announced that it would continue to experiment with such digital first releases even after the end of the pandemic. This is more bad news for cinema operators, who are already in a deep crisis due to the corona pandemic. The world's largest cinema operator, AMC, had to send all employees, including the CEO, on vacation in the past few weeks. AMC is now threatening to stop showing universal productions if it does not get the exclusive film rights again.

The coming months will show how the power struggle continues. But the crisis has shown that consumers are prepared to pay as much money for films on their home screen as they do for a cinema ticket.

Netflix wages "streaming war"

The Netflix founder Reed Hastings has long been criticized for not showing advertising on his streaming platform. Given the growing digital advertising market, it seemed like a given source of income. When Netflix increased its subscription prices last year, some observers predicted the beginning of the decline of the world's largest streaming platform.

But in the Corona crisis, Netflix's business model, which relies entirely on subscription fees, pays off: The currently collapsing advertising market does not affect the streaming service at all. But the demand from viewers has exploded: Around 16 million people subscribed to Netflix in the first quarter; the company itself had expected 7 million new subscribers. A total of almost 183 million viewers worldwide now pay for the streaming service. Netflix's last quarter earnings of $ 709 million are more than double what it was last year, with its stock up 50% since January.

But Netflix assumes that the wave of success will die down as soon as citizens have more recreational opportunities than permanent television. He expects viewership to decline, said Hastings recently at the presentation of the quarterly figures.

In a recent survey by Morning Consult, however, 80% of respondents said that they will use their Netflix subscription at least as much, if not more, once the crisis is over. This value was only slightly lower for the competitors Disney + and Amazon Prime. Obviously, the streaming platforms have grown very dear to viewers in the past few weeks.

The streaming business is booming even during the crisis

Netflix paying subscribers (in millions)

Telemedicine

The possibility of medical care via telephone or video calls has been around for decades, but the corona crisis has given the offer an enormous tailwind, as reported by several hospitals and telemedicine providers. The decisive factor was probably that health insurers adjusted the rates for virtual consultations to those of regular visits. They also include the large state insurers Medicare and Medicaid for the elderly and the needy, through which a third of Americans are insured. Before that, many insurers would have paid less than half, doctors report. In addition, the federal government in Washington has for the first time allowed physicians to treat patients via telemedicine in states in which they are not licensed.

The Ohio and Florida-based Cleveland Clinic hospital chain recorded 60,000 virtual patient visits in March, compared with an average of 3,400 previously, according to the health-related news service Kaiser Health News. Several platforms that mediate video consultations between doctors and patients report similar results: The Virginia-based platform CareClix reported an increase of 50 percent in March, as did the New York-based provider Teladoc. Other companies, such as Zipnosis from Minneapolis, forego direct contact between doctors and patients; instead, the patient fills out a questionnaire, which the doctor evaluates and then makes a diagnosis. In an emergency, the patient is advised to go to a clinic.

The great demand for telemedicine can be explained firstly by the fact that the symptoms of Covid-19 can be determined relatively easily via telemedicine, including a characteristic cough. Insurers and doctors had urged the population to resort to telemedicine for milder symptoms. Second, many patients with different symptoms were afraid of contracting the coronavirus when visiting hospital. Virtual appointments with psychotherapists are also in greater demand.

In a survey by McKinsey & Company from the beginning of May, 13% of those surveyed said they had used telemedicine for the first time or more since the outbreak of the Corona crisis. The consulting firm writes that the number of users for physical complaints has increased by 178% and for mental illness by 125%. In the long term, particularly rural regions in America, where there is often a lack of specialists, should benefit from this development.