Covid-19’s Impact on the Web Hosting Industry
The first part of the 21st century saw the World Wide Web grow at break-neck speeds. The number of active internet users shot up, and so did the number of hours people spend online. In light of all this, you probably won’t be too surprised to find that the web hosting industry was also doing rather well.
In early 2020, however, the Covid-19 pandemic took over the world and ruined quite a lot of people’s plans.
But how did this affect the hosting business?
Today, we are taking a closer look at one of the hottest topics in the last two years.
Table of Contents:
Covid-19 Global Business Impact
It’s been well over a year since China registered the first Coronavirus cases, but we’re still very much affected by it. It’s anyone’s guess when the pandemic will be over, which is far from ideal if you’re a business trying to survive an unprecedented crisis.
Regardless of the industry it works in, no company has gone through the pandemic without a scratch, and quite a few small and medium-sized businesses paid the ultimate price – going bankrupt.
Many businesses are in a pretty dire state right now. Hosting providers, however, may not be among them…
Web Hosting in the Midst of a Global Pandemic
To better understand how the coronavirus crisis has changed the web hosting game, you need to consider the specific effects on businesses and individuals as a whole.
Social distancing rules meant retailers had to close their brick-and-mortar stores. Suddenly, having an online store wasn’t just an additional source of revenue and a way to reach more people – it became the only viable monetization option. In such an environment, it’s no surprise the ecommerce industry grew by approximately 50% in 2020.
As for individual users, they now get to spend a lot more time at home, in front of their internet-connected devices. As a result, existing online services registered a lot more traffic.
We have also seen a rising demand for new online projects to fill up the long hours spent in social isolation. The same social isolation also gives entrepreneurs the chance to start work on ideas they’ve had for a while but couldn’t find the time to bring to life.
These are just a few of the major consequences of the Covid-19 pandemic, and it’s fair to say that they all work in favor of the hosting providers.
According to a report from Fortune Business Insights, the hosting industry’s market value at the end of 2020 stood at just over $75 billion. Still, the pandemic and the increasing demand for hosting services has forced the experts to readjust their Compound Annual Growth Rate (CAGR) to 18%.
They now believe that by 2028, the industry will be worth a whopping $267 billion. From that perspective, you could argue the Covid-19 pandemic is more of a blessing than a curse for the hosting industry.
How is Covid-19 Changing Web Hosting?
The pandemic is far from over, but it has already changed quite a few rules. Both new and existing providers now have a unique set of challenges to deal with, and overcoming them will be anything but easy.
Here are some of them:
Web hosting is a competitive business as it is. But the enormous expected growth is bound to attract a ton more new companies who will doubtlessly want to get as big a piece of the pie as possible.
This will increase the competition further. As a result, both new and existing providers will have to ensure they offer a high-quality service with top-notch support. They’ll have to do it at a reasonable price, as well, which is often easier said than done.
A global business recession
You might think that a global financial crisis won’t have such a horrific effect on the IT sector, but this is not quite the case. If the purchasing power of internet users diminishes – online services are some of the things they might get rid of. The providers will have to take the brunt of the impact.
Hosting companies, in particular, have to deal with soaring hardware prices at the moment. With the values of all commodities going up, computers and servers are not really staying behind. For hosts, this could cause problems if they wish to continue providing top-tier services and make room for the new influx of clients.
The rise of online gaming
The coronavirus crisis has affected every aspect of our activity on the internet, but its biggest impact must be on our pastime activities.
Video games are a great distraction during times of social isolation, and the idea of playing with people on the other side of the world has its obvious appeal. A fact proven by the explosive uptick in the number of active online gamers during the Covid-19 pandemic.
Some hosting providers see this as an opportunity to add gaming servers as part of their portfolio of services. However, if they are to develop the segment properly, hosts need to ensure the hardware they offer meets the gaming community’s rather high standards.
Security is still key
The internet’s population has been growing for a while now, and the security repercussions have been blatantly obvious. The surge of new websites and the higher number of people spending hours online mean hackers have many more targets to choose from.
Hosts play a significant part in protecting client websites. They need to stay on top of all new threats and make sure their servers are configured to prevent downtimes, data breaches, and malware attacks proactively.
Covid-19 hosting discounts
In an attempt to help fight the crisis, quite a few hosts offered (and continue to offer) special Covid-19 discounts to customers based in regions that were severely affected by the virus.
This inevitably led to some losses, and hosts need to find a way of recuperating them without burdening their customers with higher fees or extra charges. If they don’t – the long-term effects on the business could be significant.
Adapting to the home office style of work
Social distancing measures forced pretty much everyone in the IT sector to switch to work-from-home mode. Besides containing the virus, this also proved to be a rather cost-effective setup, and quite a few companies announced they would implement it permanently.
However, remote work isn’t necessarily the best possible setup when it comes to efficiency and security. Hosts need to find a way of overcoming the challenges associated with home office employment.
Cloud services are booming
IT companies weren’t the only ones switching to remote work mode. Businesses in other sectors also decided to send their employees home. Many of them already have their IT infrastructure in the cloud, but there are a few who continue to use on-premises servers.
It’s hardly the most secure way of powering a corporate network, and sooner or later, companies will realize they need to let the sysadmin work with the experts. Hosts must ensure they can meet the increased demand for cloud services.
The Future of the Hosting Industry
From a business perspective, the Covid-19 pandemic has brought a somewhat positive development for the web hosting industry. The number of new website owners has grown, and quite a few providers have registered increased profits.
It’s not all smooth sailing, though.
As we outlined in the previous section, hosts face quite a few new challenges, and the companies who fail to acknowledge them will see the effects on their balance sheets.
The pandemic has created an extremely dynamic environment, and predicting what’s going to happen in the long run is practically impossible. The only thing you can safely say for the time being is that the projected growth is more than likely to attract an influx of newcomers to the industry, stiffening the competition.
To survive, hosts will need to adapt to the new landscape and figure out ways of staying a step ahead of their competitors.
At ScalaHosting, we’ve been doing this even before the Covid-19 outbreak.
Our focus is on providing reliable, secure service to all our customers and innovating in the field of VPS technology. Thanks to all our hard work, we can now offer a reliable and secure VPS service at prices very close to shared hosting.
This is possible thanks to SPanel – an all-in-one management platform we developed specifically for our virtual private servers. It gives our customers an easy-to-use interface that integrates all the tools they need to control their hosting account and its associated services.
Among them is SShield – an in-house security system that uses artificial intelligence to monitor your account in real-time and block any cyber attacks aimed at it.
As a part of SPanel, you’ll also get SWordPress – yet another utility we’ve built for our customers, helping you install WordPress in seconds and manage the installation through an intuitive interface.
Although SPanel has all the features you need to control your virtual server, we haven’t stopped developing it and adding new functionality. Clients play a significant role in the process.
Using our feature request system, our clients can effectively steer SPanel’s development. They can place new feature requests and vote for existing ones. We monitor the platform every day, and we implement the features that receive the highest number of votes.
Our users know what’s best for them, and it’s our job to ensure we can provide it.
Covid-19 had a truly devastating effect on the entire world so far. Although the hosting business has actually marked progress during these difficult times, it’s safe to say everyone in the industry would be glad to see the end of the pandemic.
Quite a few experts predict the positive trend will continue, but it’s impossible to say how hosts will cope in the coming years.
How has the coronavirus pandemic affected the web hosting industry?
The prolonged periods of social isolation coupled with the lockdown restrictions meant that users and organizations now spend more time on their online projects. The demand for hosting services has increased, and so has the number of available providers.
How long will the positive trend last?
Experts predict that the foreseeable future will be good for the hosting industry, but it’s difficult to say how correct the forecasts will be. Even if the momentum carries through over the coming years, it’s impossible to tell if it will be down to the coronavirus crisis.
Can we expect an overcrowded hosting market in the near future?
Although the growth is only partly due to Covid-19, the pandemic has drawn the attention of quite a few analysts to the web hosting industry. They all seem to agree the business will be worth an enormous amount of money very soon.
This is bound to attract new players who will want to capitalize on the demand for hosting services.