"The Battle for Our Screens," Part 3: Social Media in the Social Distancing Age

Social Media Usage Trends and Behavioral Shifts

• Major social platforms experienced significant engagement increases in 2020 due to the pandemic:
  • Instagram saw a 31% rise in average daily minutes spent.
  • Twitter's daily active users (DAU) accelerated nearly 300% year-over-year in recent quarters.
  • Houseparty downloads grew by 2,000% in April alone.
• Non-social networking platforms adapted to fill the social void:
  • Twitch hours watched increased by 65% in recent periods, peaking at 100% in April.
  • Peloton reported 50% growth generally, with a 483% spike in April usage.
• Zoom, initially an enterprise tool, transitioned to a primary social connector:
  • Customer base expanded 6x, rising from 30,000 in 2019 to roughly 185,000 in Q1 2020.
  • Leadership provided free access to school districts globally to support remote learning.
  • Speakers predict sustained usage post-pandemic, eliminating the need for 12-hour travel for 1-2 hour meetings.
• Platform operators focused on two primary operational challenges:
  • Scaling R&D infrastructure to maintain service uptime amidst massive traffic surges.
  • Implementing stricter content moderation to address misinformation, bullying, and hate speech.

Regional Analysis: Asia and Short-Form Video

• Asian markets have largely normalized usage levels compared to peak pandemic lockdown periods:
  • Industry-wide time spent growth excluding short-form video dropped to approximately 2% (margin of error).
  • Peak pandemic growth rates of 30-40% have corrected to pre-pandemic levels as physical activity resumed.
• Short-form video remains a structural outlier with sustained growth:
  • TikTok and WeChat "Channels" continue to gain market share and time spent despite overall normalization.
  • WeChat's "Channels" feature leverages a social engine rather than a pure algorithm to drive sequential engagement growth.
• Live streaming has gained traction in Asia and is spilling over into the US market:
  • User behaviors established during isolation, such as live streaming, are expected to persist even as mobility returns.
  • The model has evolved from subscription-based (e.g., Tencent Music at $8) to high-tip models (e.g., online karaoke at $200+).
• TikTok's international success is attributed to three specific differentiators:
  • Superior UX that engages novice users within six swipes.
  • An algorithm capable of rapid user behavior analysis within the first session.
  • Full-screen video formatting optimized for mobile devices without requiring orientation changes.

Virtual Reality and Augmented Reality (VR/AR) Adoption

• The pandemic is acting as a catalyst for VR/AR mass adoption, accelerating the S-curve of technology uptake:
  • Potential hardware evolution involves replacing handheld phones with AR glasses for heads-up information display.
  • Use cases include real-time instructional overlays (e.g., appliance repair), remote surgical assistance, and virtual whiteboarding.
  • Consumer applications are emerging for virtual tourism (e.g., Great Barrier Reef) and remote real estate/college tours.
• Venture capital activity is anticipated to increase as the market reaches a "sweet spot":
  • Current challenges remain in application density and hardware performance levels.
  • Speakers expect a surge in emerging applications as users embrace the technology for social connection and information sharing.

Investment Banking and M&A Outlook

• Corporate clients have pivoted social media to function as essential digital storefronts:
  • Facebook hosts 9 million advertisers and 160 million small businesses, replacing physical foot traffic.
  • Digital advertising ROI has proven superior to traditional media, accelerating the shift in market share.
• Financial market reactions show a divergence between revenue expectations and valuation:
  • Investor revenue expectations for 2020 have declined 5-20% for major and private companies.
  • Conversely, social media stock prices have risen 30-100% despite revenue headwinds.
• M&A and IPO pipelines are expected to remain robust in late 2020 and early 2021:
  • Acquirers are prioritizing companies with strong video engagement capabilities and social commerce tools.
  • Strategic buyers are increasingly focused on audience scale and specific product capabilities rather than just general metrics.
  • A healthy IPO market is anticipated, with many high-growth companies preparing to go public early next year.
• Specific high-value targets for acquisition include:
  • Platforms with established video product traction.
  • Properties enabling small businesses to sell socially (social commerce).