Thriving through COVID-19 with Business Model Innovation

The emergence of COVID-19 has resulted in travel bans, quarantines, and social distancing. For industries that rely heavily on physical presence, the impact is devastating. Despite the massive plunge, some companies have successfully adapted to the ‘new normal’ by transforming their business model. These new business models are not only helping them to survive, but also opening up newfound opportunities. In this blog, I give two examples that demonstrate how business model innovation can help companies to face the crisis.

Building the virtual stage

Musicians, bands, and entertainment companies make billions from tours and concerts, but the restrictions of mass gatherings have forced them to cancel the concerts and music festivals. Knowing this potential loss, Big Hit Entertainment, a South Korean management company, quickly adjusted the business model. To replace the canceled tour, the company organized a virtual concert for one of its biggest stars, BTS. In June 2020, Korean boyband BTS broke a record with ‘Bang Bang Con: The Live’. The ticket was sold on the WeVerse app and website for about $26. A link will be sent to the buyer, permitting access to the virtual concert. Around 756,000 BTS fans (labeled as ARMY) in 107 countries reportedly attended this 100-minute show. This attendance was equivalent to 15 shows at a 50,000 seat stadium (1). By transforming face-to-face concert to virtual, Big Hit Entertainment has not only survived the crisis, but also invented a new source of income that can be capitalized, even when the pandemic is over.

Quaran-toned at home

The fitness industry was enjoying rapid growth. In 2019, IHRSA Global Report found that the global fitness industry is valued at around $94 billion with outstanding growth for the last ten years (2). However, with the COVID-19 outbreak, governments mandated gyms and fitness centers to close temporarily. Even when the restrictions are lifted, gyms are facing a tough recovery. Some people are still afraid to engage physically, while others have decided to stick with online classes because of their convenience.

To adapt to this situation, Barry’s, a global fitness studio, developed a new business model on top of their existing one. In April 2020, Barry’s opened up a virtual platform called Barry’s At Home, a 30-40 minutes live-streaming class led by Barry’s instructors that delivered via Zoom. Customers can choose different packages, from $20 for one class, $225 for 1 month, or $90 for one private training session. To replicate Barry’s experience, the company also sells in-home workout equipment such as resistance bands, dumbbells, mats, and more.

Although the financial result from this new business model has not been disclosed yet, Barry’s is now able to develop two new revenue streams through online classes and e-commerce. In addition, their virtual classes could be an opportunity to get new customer segments and provide ideas for future geographic expansions.

Do you have other examples? Feel free to share in the comment section below.

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References:

(1) Frater, P. (2020). BTS’ ‘Bang Bang Con: The Live’ Claims Record Viewership for Online Concert. Retrieved from https://variety.com/2020/digital/asia/bts-big-bang-con-the-live-record-online-concert-1234635003/

(2) IHRSA. (2020). 2019 Fitness Industry Trends Shed Light on 2020 & Beyond. Retrieved from https://www.ihrsa.org/improve-your-club/industry-news/2019-fitness-industry-trends-shed-light-on-2020-beyond/