For consumers and businesses alike, inertia can be a very powerful force when it comes to how much they do or don't use various tech products and services.
The spirit behind the old mantra that no one ever got fired for buying IBM is relevant to a whole lot of activity. Human nature being what it is, quite often individuals and organizations stick with a product, service or behavior pattern without giving any serious consideration to alternatives, simply because they're used to going about things one way and have deemed it to be an acceptable way of doing things.
All of that matters a lot when gauging the long-term effects of a year such as this one on consumer activity. A year in which consumers have been either forced or strongly incentivized to abandon a lot of age-old behaviors -- and to embrace alternatives -- for everything from how they shop to how they interact with friends and relatives, to how they spend their leisure time.
A year from now, it's possible (particularly in light of recent vaccine announcements) that the factors that sparked these behavior changes will in many cases be completely gone, and in other cases exert less pressure on daily behavior than they do today. But chances are that a lot of the changes witnessed since March will at least partly stick.
Here are some quick thoughts on how much consumer activity in a few different areas could revert to pre-COVID patterns, and how much changes could be permanent.
The current white-hot environment for gaming activity and spending can't be expected to last forever. Game consoles and high-end gaming GPUs will probably be a lot easier to buy at list prices a year from now than they are today, and game purchases and in-game transactions may have cooled off some as well.
But there are reasons to think that gaming activity and spending won't return to Feb. 2020 levels either. Gaming was a secular growth story before COVID hit, and the past several months have seen major spikes in the number of users playing casual and AAA titles alike. Some of those users might stop playing once they're no longer worried about COVID, but a substantial portion of them probably won't.
Spending on Goods Versus 'Experiences'
With COVID driving major declines in travel, dining and out-of-home entertainment spend, many consumers have been spending a larger portion of their disposable income on physical goods. And that certainly includes a variety of tech and consumer electronics products.
Once COVID vaccines are widely available and used, the pendulum could swing hard in the other direction, particularly given how much pent-up interest there appears to be for things such as vacations and live events. But demand could still remain above pre-COVID trend lines for certain products, such as gaming hardware and (due to many companies deciding to partly or fully support remote work on a permanent basis) notebooks and PC peripherals.
E-Commerce and Digital Payments
This is an area where I think COVID has driven major structural changes that to a large extent won't be undone in the coming years. Going into 2020, e-commerce only accounted for 16% of U.S. retail spend, even after backing out spending at places such as restaurants, car dealerships and gas stations. Inertia was undoubtedly a big reason why that number was so low.
COVID has clearly led many consumers to become a lot more familiarized with, and accustomed to, the convenience that online shopping can provide. It has also led a lot of them to do things such as place grocery delivery orders or use curbside pickup services for the first time, and I think the odds are high that many of them won't at least fully go back to doing things the old-fashioned way.
Likewise, COVID has quite likely driven a long-term inflection for the use of digital payments services from the likes of PayPal (PYPL) , Square (SQ) and MercadoLibre (MELI) -- not only for e-commerce, but also for peer-to-peer payments and other transactions.
When it comes to viewing activity, a certain amount of mean-reversion has already happened for streaming, judging by the Q3 reports of companies such as Netflix (NFLX) and Roku (ROKU) . And more could conceivably happen over the next 12 months.
But as with gaming, streaming was a secular growth story pre-COVID. And even if -- as Reed Hastings has suggested -- COVID has served to pull forward a lot of demand that would have been generated later, the long-term growth trajectory still looks good.
Moreover, to the extent that COVID has served to accelerate cord-cutting, it might be driving a slight inflection for streaming's long-term growth trajectory. In addition, as Roku has highlighted, the giant TV ratings declines being seen right now are leading a lot of video advertisers to make online/streaming video ads a big portion of their ad spend for the first time (and probably not the last).
Social Media and Video Calling
Look for a fair amount of mean-reversion for social media. After seeing large usage spikes this spring, social media firms generally didn't report much (if any) sequential U.S. user growth for Q3. It's not hard to see usage growth for many social media services reverting to pre-COVID trend lines in 12-18 months, or close to it.
There could be some exceptions, though. For example, Pinterest (PINS) , which has seen user growth inflect this year with the help of sign-ups among consumers who have taken up new hobbies/interests this year, could hold onto a lot of those new users. Likewise, Snap (SNAP) might hold onto a lot of the new users it has added in emerging markets this year.Also, consumer video calling services probably won't see a full mean-reversion -- both due to how many consumers have gotten hooked on them for the first time this year, and because both social and non-social platforms have put a lot of effort this year into improving and fleshing out their video offerings for consumers.