COVID’s winners, revisited two years later
How have Amazon, Disney, Netflix, and more fared since the end of COVID? Center director Jeffrey Cole explores their various fortunes.
By Jeffrey Cole
In my last column, I looked at how the companies that came out of COVID as losers have fared in the two years since our first COVID Reset Project report. Some were able to gain ground and improve their standing, while others saw their futures stay the same or even decline further.
This time we look at how the COVID winners have managed since 2021.
Amazon: The Seattle-based disruptor of retail had become an essential part of everyday life before the pandemic. Today, all you have to do is look into mail trucks or mail carrier’s carts: about all you see are brown Amazon boxes (frequently much, much larger than they need to be).
In its retail and cloud businesses (there is also the streaming video service), Amazon has maintained its dominance. The annual fee for Prime Membership went up from $119 to $139, and there has been negligible cancellation. There are about 170 million Prime Members in the U.S. No other membership comes close to those numbers — a statistic even more remarkable considering the high cost.
Amazon has maintained the massive growth that came from COVID. Most households are so comfortable buying from the retail giant that they do not check prices before clicking and waiting for the “free” two-day shipping included with Prime.
In the past couple of years, Amazon has made significant moves into two of the biggest industries in the world: financial services and healthcare. Amazon’s advertising business has also grown so fast that some people in media are starting to talk about a digital advertising “triopoly” (Alphabet/Google, Amazon, and Meta/Facebook) instead of the duopoly of Google and Facebook.
However, there are a few clouds on the horizon.
Amazon’s massive success has raised concerns about its size and domination of retail and its other businesses. The federal government has filed a wide-ranging anti-trust suit alleging that the company does massive harm to both consumers and other sellers.
Others wonder where Jeff Bezos is in the management of the company (he is still its Executive Chair, having turned over the CEO reins to Andy Jassy in 2021), and whether he will return when he comes out of the world’s most public mid-life crisis. He just announced he is re-locating from Seattle to Miami.
Amazon’s position since COVID has remained the same at an extraordinary level.
Disney: In February 2020, Disney’s stock price was at $141. A month later, after its CEO resigned and the pandemic began, it fell to $85. Almost all its businesses came to a standstill. The only bright spot on the horizon was the introduction of Disney+ at the end of 2019.
The new streamer grew at a phenomenal rate, and the company began experimenting with different release patterns for its films. All was looking better as the theme parks slowly re-opened a year after COVID began.
In March 2021, as much of the nation became vaccinated, the future looked bright. The stock price was back at $200, over 40% higher than just before COVID. All this led us to declare Disney a winner coming out of the pandemic. Its traditional businesses were coming back and it had its new streaming business to add to its previous successes.
Then it all fell apart.
In 2019, Disney was responsible for 7.5 of the nine films that earned more than a billion dollars at the box office. Its Marvel superhero movies, Pixar animations, and Star Wars movies dominated the film business.
Later, coming out of COVID, superheroes and Star Wars themes felt played out, and Pixar seemed to have become a company that just made content for Disney+.
Disney seemed incapable of making films that were not-part of the well-oiled film machine that had served them so well before COVID. After COVID, the machine just stopped working. It made movie after movie that cost $200 million or more to make and $100 million to market. Those films had to be blockbusters to even turn a small profit. Few did.
Within a few months, Disney had lost $1 billion on the type of films that had worked so well up to and including 2019: The Little Mermaid (live action), Indiana Jones and the Dial of Destiny, The Haunted Mansion, Ant-Man and the Wasp: Quantumania, and more. Currently in the pipeline are more hugely expensive films such as The Marvels, Disney’s Wish, and Snow White. All look destined to suffer the same fate. Although the company’s formula for film worked well before the pandemic, today it feels tired and needs major revamping.
Disney+ continued to grow after the pandemic ended. Then, abruptly, Wall Street became unimpressed with growth alone and wanted to see profits. As it did with film, Disney spent massively hoping the audiences and profits would follow. In search of profits, it continually increased prices of Disney+ and added an advertising-supported version.
In 2023, it has raised prices twice. Disney+ started at $6.99 per month in 2019. It has now more than doubled to $13.99 a month. The streamer is still facing hundreds of millions of dollars in annual loses. Disney claims Disney+ will be profitable within a year and just reported smaller loses, but many in the financial community are skeptical.
In 2023, even the theme parks that are seemingly immune to wars and recessions (but not pandemics) saw attendance drop. Disney’s position since 2021 has worsened considerably.
Netflix: Along with Amazon, Netflix was the company ready for the pandemic. While not expecting millions to stay at home for a year or more, Netflix had a deep catalog of content that was ready for massive increases in television viewing. The huge numbers of shows released every Friday (some great, some not so good) were ready for audiences trapped at home, bored, and needing entertainment and escape.
Netflix emerged from COVID as the most successful entertainment company in history and the place where the first dollar for media was spent.
A few months out of COVID, Netflix was shaken by Wall Street’s emphasis on profitability over growth. They had overspent on content, sometimes with budgets of $20 billion a year. It had to make serious corrections to prove to investors that it could make money as easily as it spent it. In mid 2022, Netflix lost subscribers — nearly a million — for the first time since it began in 2011.
Netflix laid off five hundred employees and cut its production budgets to reduce costs. More importantly, it went after customers sharing passwords. Several years earlier there was so much growth Netflix was comfortable proclaiming “Love is sharing a password.” In 2023 it changed its mind.
It worked spectacularly well. Many sharers became subscribers rather than give up Netflix. In the third quarter of this year, after a long period of slow growth, Netflix gained 6 million new subscribers. Almost all of that was newfound revenue.
Around the same time, the company created an ad-supported version. The significant costs savings for ads ($6.99 a month versus close to $20 with no ads) has been a huge success with subscribers. While the streamer will not release data on how many premium subscribers have downgraded to ads, we do know most new subscribers opt for the less expensive ad-supported version.
When challenged, Netflix found a way to combine growth with profitability. It has solidified its position as the number one streamer: no one else has yet to join its ranks. Netflix’s position has improved considerably.
Labor: The last 50 years have not been good for labor. Unions have been weakened as management’s power and benefits have greatly increased.
COVID changed all that. Suddenly, half the population was looking for different kinds of work, and many were slow to return to any work. The resulting labor shortage gave great power to staff in restaurants, housekeepers in hotels, drivers for ride sharing, and workers in many other industries.
Office workers made it clear they did not want to return to the office full-time. They demanded, and got, hybrid work schedules. For the first time in a generation, there were strikes across many industries. So far, labor has won them all.
UPS drivers were able to get the terms they wanted for a new contract days before a strike. Hollywood Writers had to go on strike for 148 days to achieve their goal. The Actors’ strike ended after 118 days. And United Auto Workers (UAW) saw a relatively quick end to their strikes on terms favorable to them.
All this power may change if a recession comes. Automation remains a long-term threat. But, for now, labor’s position has improved considerably.
Next time: The rest of the winners, and how they have fared.
Jeffrey Cole is the founder and director of The Center for the Digital Future at USC Annenberg.
See all columns from the center.
November 20, 2023