Partnership for New York City The following Kearney’s research and analysis focused on five topics materials were prepared for the Partnership for New York City to support • Logistics the post COVID-19 revitalization of our • Media & Entertainment great city • Supply Chain • Healthcare Innovation For questions or comments on this material, please contact: • Digital William N. Callender Partner and New York Office Head

[email protected]

2

Kearney XX/ID Table of Contents 1. Logistics 2. Media & Entertainment 3. Supply Chain 4. Healthcare Innovation 5. Digital

3

Kearney XX/ID PFNY should – Road transportation is a vital to NYC’s economy, driving 300,000 jobs that service support the NY area the city’s numerous businesses, residents, and visitors by promoting – Despite declining residency and tourism, an accelerated transition to e-commerce initiatives that will rapidly grow NYC’s road transportation volume beyond today’s 365M tons of facilitate Last Mile cargo that enter, leave, or pass through the city each year (89% of which is delivered by delivery and reduce truck and expected by grow 68% through 2045) congestion – 79% of commercial vehicle activity across Manhattan CBD , Midtown Manhattan Core, FIDI, and Downtown Brooklyn takes place between 7am-7pm presenting opportunity for extended Off-Hour Delivery (OHD) and alternative delivery methods

Scope of Highly Impacted Areas: – Commercial road transportation is estimated to account for 30% of NYC’s total • Essential Categories: carbon emissions presenting a big opportunity for sustainable transportation – Food & Beverage – Retail – To continue fueling NYC’s vibrant economy, government officials must invest in: • Supply Chain Modes – Store Fulfillment – Extended OHD: Establish/Enhance programs and incentives which promote OHD – Last Mile • Consumption Channels: across both residential and commercial buildings – Retail – Direct to Consumer (DTC) – Alternative Last Mile delivery strategies: Incentive shippers and logistics providers to employ sustainable storage/delivery solutions such as cargo-bike delivery, mobile fulfillment centers, shared-use networks and urban DCs – Real-Time Data Sharing and Transparency: Empower businesses to expedite investment in real-time transportation/delivery visibility though government subsidies and tax-credits 4

Kearney XX/ID Source: Kearney, NYC DOT, NYC Mayor’s Office of Sustainability – COVID-19 pandemic grew e-commerce sales to 17% of total US retail market NYC’s unique Accelerated environment – Supply chains must rapid evolve to respond to the expedited shift to e-commerce transition to e- – NY area has both greater potential (customer density is profitable and attractive to presents a premier commerce startups) and great constraints (congestion challenges), so high stakes proving ground for – NY area is a perfect crucible with demanding and relatively wealthy customers how to adapt to rising customer expectations and – Total freight tonnage is expected to grow by 68% to 540M tons by 2045, sustainability Rising freight increasing vehicle congestion and carbon emissions imperatives volume – 41% of New Yorkers receive home delivery at least a few times per week which will continue increase with the accelerated growth of e-commerce

Key Challenges

– Total employments costs for private industry workers increased 2.5% YoY across the NY-NJ-CT-PA metropolitan region High living and – Higher payroll taxes, parking tickets, tolls, and congestion pricing operating costs produces a high cost operating environment for transportation providers

– NYC’s population density of 27,711 people/mi² is the highest of any major city within the Unite States, yielding a complex Last Mile due to increased congestion Complex and – Geographical nuances (e.g. residential ‘walk-ups’, one-way streets, etc.) lead to highly variable loading/service times nuanced Last Mile – NY congestion can be a severe impediment to success 5 – BOPIS a great model for NY area retail to drive people to stores and to the city

Kearney XX/ID Alternative to previous page COVID-19 impacts every step of the COVID-19 value chain and NYC is no exception – Suppliers Manufacturer Retailers Consumers Concerns of supplier Respond to shifting Responding to Irregular purchasing Retailers and network and delivering demand with labor & increased demand & behavior fueled by Consumers being materials supply shortages supply shortages perception of threats at the core of Situation Situation Situation Situation NYC’s logistics – Aware of risk and facing – Peaking demand for daily – Labor shortages – Erratic demand of similar situation essentials, stopping – Risk of cross-regional products Behavior planned deliveries for transportation bans – Shifting priorities and others – Coordinating with – Post COVID-19 frequent updates from supplier network to meet – Different communications declines in foot traffic customers/retailers with retailers Key Challenges supply agreements Behavior – Awareness of risk, panic – Labor shortages and recovery Priorities – Change shopping – Real time monitoring of – Cross-regional bans on journey to respond to – Extended time at home inputs transportation for inputs consumer needs, – Accelerated transition to – Daily updates to Behavior including minimizing online buying manufacturers on stock – Adjust workforce schedule transmission risk Behavior levels, inventory, and daily tasks for – COVID-19 regulations – Stockpiling and panic- deliveries, and priorities prevention potentially impacting buying near term transaction – Modify demand planning – Preference for online volumes to new work requirements retailers over physical – Maximize and optimize Priorities stores production of essentials – Stocked shelves over Priorities negotiated purchasing Priorities – Stock of daily essentials, terms – Safety first necessities and key – Meet customer demand pantry and household items – Delivery to retailers – Communication 6

Kearney XX/ID In this document Survive Operate Grow we will focus on post-pandemic, as future of NYC will – How to get organized – As things become – As new industry right away and identify more certain, how do dynamics emerge, how see increases in gaps in your plans you operate in the new can you be successful fulfillment freight thus far environment? in the new normal? and Last Mile – Immediate actions – What decisions / – How to learn from this activity required across the tradeoffs do you have experience, build the business to make within the first lessons into your – How to stay few months? plans, and prepare for responsive to the daily – How do you begin to future impactful changes you will face prepare for the next events? Key Challenges phases of the crisis? – What does the future for NYC’s freight distribution and Last Mile look like with: – E-commerce growth – Lasting effects of COVID19

7 Focus of this document Kearney XX/ID There are two Last Mile (DTC) main contributors commercial NYC Consumer traffic: Last Mile Manufacturer NYC DCs deliveries and store fulfillment originating from outside of 5 STORE Last Mile Boroughs FULLFILLMENT

Approach Scope

Stores Illustrative

– Includes inbound traffic to any inventory holding location within boundaries of NYC, including retail Store Fulfillment stores, DCs, forward deployment centers, dark stores and retail units – Typically delivered by 3PLs, shipper assets, and local carriers that operate on ‘milk-run’ principle

– Includes direct to consumer deliveries originating from DCs outside of 5 Boroughs

Last Mile – Includes direct to consumer deliveries originating from DCs within 5 Boroughs – Typically delivered by traditional, regional, and local parcel carriers – Crowdsourcing and Managed Crowdsourcing is becoming a choice of resilience and flexibility, 8 especially after COVID-19 Kearney XX/ID Key questions to consider as you Resident- Safety and Resilience and Efficiency and Reliability and centricity and develop a winning Environment Flexibility Visibility Compliance Freight and Last Mile Sustainability delivery strategy in

the New York Area’s – What supplies, – How do you pivot your – What capacity levers – What strategies or – How do you design tracking mechanisms delivery network to are needed to quickly technologies can you your network to new normal or technological successfully service a respond to unplanned implement to improve repeatedly achieve on- changes are required growing resident environmental change? operational time delivery rates? to keep workers safe? population? efficiency? Safety and – How do you design – How do you minimize Environment – What type of – How do you minimize your delivery network – What actions are delivery defects which adjustments are carbon footprint while to mitigate operational needed to minimize diminish customer Resident- Resilience needed to reduce supplying the city’s risk? cost headwinds with trust? and Flexibility centricity and Sustainability employee touch or growing economy? growing home contamination delivery volume? exposure?

Efficiency Reliability and and Visibility Compliance

Approach - Supply Perspective

9

Kearney XX/ID Restart / Reenergize (Do Now) Invest / Grow (2-5 years) Proposed 1. Personal protective equipment and supplies 14. Autonomous vehicles to reduce accident rates 2. Mobile applications to proactively track employee health 15. Enhanced zoning restrictions to regulate commercial traffic Solutions status 16. Robotic delivery vehicles to execute final 50 ft, reducing

3. Mandatory health and safety training for all workers human-to-human contact Safety and Safety

Environment 4. Extended OHD to reduce VMT

5. Crowdsourced delivery to manage intra-day and intra- 17. Dynamic routing algorithms using graph databases and week delivery demand variability ML to predict and automatically adapt to environmental 6. Vertical cloud integration to enhance real-time change transportation visibility 18. Real-time, automated anomaly forecasting and 7. Data sharing and transparency to proactively adapt to resolution systems using ML and neural networks Flexibility change

Safety and and Resilience Environment

Resilience Resident- 4. Incentivize OHD to minimize congestion and carbon 19. Governmental mandate for 100% carbon neutral and Flexibility centricity and - missions (e.g. Shipper of Choice) transportation systems Sustainability 8. Cargo-bikes, ‘walker’ deliveries, and EVs to decrease 20. Drone delivery for ultra-fast small parcel to reduce road congestion, and enable carbon neutrality congestion 9. Shared Use Networks (SUN) to reduce carbon 21. Vertical Micro-Fulfillment Centers (MFC) to position

Resident emissions and congestion inventory closer to customers, limiting road Sustainability centricity and centricity transportation and congestion

Efficiency Reliability and 17. Dynamic routing algorithms using graph databases and 10. Zone-based delivery strategies, SUN, and mobile fulfillment and Visibility Compliance ML to predict and automatically adapt to environmental centers to increase route density and reduce Last Mile change delivery costs 16. Autonomous mobile delivery robots using dynamic 6. Vertical cloud integration to enhance real-time algorithms and deep learning to minimize final 50 ft

Visibility transportation visibility and minimize final 50 ft complexity variability 11. Alternative delivery options (e.g. store pickup, lockers) to Efficiency and Efficiency 22. Real time track and trace, Real time optimization minimize service time variability

12. Real-time exception management to proactively address 17. Dynamic routing algorithms using graph databases and identified delivery defects or anomalies ML to predict and automatically adapt to environmental change 13. Network design optimization to ensure repeatable KPI achievement 18. Real-time, automated anomaly forecasting and resolution systems using ML and neural networks

10 6. Vertical cloud integration to enable real-time Compliance

Reliability Reliability and 23. Urban DC/Warehousing performance tracking Kearney XX/ID Solution Impact to Congestion and Efficiency Impact: plotting High various solutions showcases varying effect on congestion and efficiency 17 Offhour Delivery Incentives (OHD) Dynamic Routing Algorithms ML/Deep Learning Anomaly Detection 4

18 7 5 Crowdsourced Delivery 8 Data Sharing

Approach - Illustrative Cargo-Bikes

6 16 Autonomous Mobile Delivery Robots Congestion Impact Vertical Cloud Integration

9 Shared Use Networks (SUN)

10 Mobile FC

Low

Low Efficiency Impact High

Efficiency and Visibility Resilience and Flexibility Safety and Environment Resident-Centricity and Sustainability Size: Impact on Cost per Package (CPP) 11 Reliability

Kearney XX/ID Shared Use Network Summary Impact Establish programs which incentivize shippers Decongestion and logistics providers to collaborate and reduce city congestion and carbon emissions Challenge – Instituting the right initiative which encourages business to work together and integrate distribution networks – Providing a centralized platform to facilitate the What is it matching of compatible partners across needs of – Recent volatility has created capacity shortages and surpluses in flexibility, cost, and capability the asset bases of shippers – Shared Use Networks are a trend among shippers who want to share the fixed cost of their networks while increasing capability, flexibility and resiliency Approach Efficiency – Duplicative networks build costly pipelines into the same markets – think of how many hundreds of supply chains are built to supply – Kearney teams conduct Fleet and DC modeling to NYC’s robust economy understand available capacity and the synergies created by adding additional shippers’ volumes into a network – Kearney teams model networks using digital twins to Who needs it determine the right level of integration and the advantages created – Cities which are seeking to reduce VMT, congestion, and carbon footprint – Shippers with sub-scale distribution capabilities or growing needs Benefits in context of reaching consumers with a shorter lead time – Kearney’s clients have identified opportunities to reduce Sustainability – Asset-owners with excess distribution capabilities that could be operating expenses by 15-20% with additional monetized by sharing them with the right partners synergies such as cross-selling and G&A overhead reduction

12

Kearney XX/ID Shipper of Choice Summary Impact Establish programs and incentives for Shippers Cost of Choice Challenge – One of the biggest contributors to NYC traffic is commercial activity during peak hours. The resources such as curb space, loading docks and temporary What is it parking availability presents challenges to transportation activity within 5 boroughs An incentive and recognition program for: Decongestion – Shippers that are highly compliant with regulations and take the lead in innovating solutions – Shippers with highest OHD scores Approach – Shippers with highest sustainability impact – Outline a program that will award the “shippers of – Most decongestant shippers (Deliver Hours Per Package) Choice” – Understand and quantify KPIs to implement in the program Efficiency – Execute KPI tracking methodologies and data visibility – Increase attractiveness to shippers by incentivizing and Who needs it recognizing Shippers of Choice – Most shippers, who seek to benefit incentives and recognition from NYC – NYC Benefits – Special traffic permits or subsidies or credits Sustainability – Recognition by NYC – Credits for carbon footprint offset

13

Kearney XX/ID Table of Contents 1. Logistics 2. Media & Entertainment 3. Supply Chain 4. Healthcare Innovation 5. Digital

14

Kearney XX/ID Overview

The Media and Entertainment industry (incl. TV, film, theater, music, sports, digital publishing, print, advertising and public relations) in the Greater New York metropolitan region employed 363K people in September 2019, with total annualized wages of ~$43.7B A study published by the NYC Comptroller’s office found that the creative economy (which includes Media and Entertainment industries mentioned above plus museums, art galleries, and fashion, and excludes sports) generated $110B in economic activity in NYC (1/8 of total economic activity) The media industry faces tremendous headwinds caused by COVID-19 and the associated shutdowns – the damage will be felt most acutely by the 36% of creative workers who are self employed, and thus have limited access to health and unemployment insurance Media leaders are envisioning a three phase evolution of the COVID-19 impact on their businesses: 1) Crisis Response, 2) Interim Management, and 3) Steady-state Future. We are currently entering the interim management phase, where businesses will have to adapt to significant disruptions including: reduced tourism and attendance at live events, a continued shift towards digital channels, and lower levels of discretionary spending The greater New York community can assist the Media and Entertainment industry by supporting companies as they develop new economic models to weather the downturn until we reach a steady-state future

15 Source: Kearney; BLS; NYC Comptroller’s Office: The Creative Economy;

Kearney XX/ID Media and Overall NYC Media and Entertainment Industry – Key Facts Entertainment impact on NYC Employees: 363K Metro region Wages: $43.7B Economic impact: $110B1

Relevant statistics/trends: – NYC is home to more $2B+ revenue media companies than any other city globally – 36% of NYC’s creative economy workforce is self-employed (compared to 10% of overall workforce)

16 1. Economic impact based on creative economy output which also includes museums / art galleries and fashion and excludes spectator sports. Employment is based on BLS statistics for NY Metro region. Source: Kearney; BLS; GoCompare;.com; Broadway League; New York Times; NYCEDC; NYC Comptroller’s Office Kearney XX/ID Media and TV / Film Theater Music Entertainment Employees: 82K Employees: 18K Employees: 10K selected sub- Wages: $9.4B Wages: $1.0B Wages: $1.2B industry impact on Economic impact: N/A Economic impact: $16.0B Economic impact: $21B NYC Metro region Relevant stat/trends: Relevant stat/trends: Relevant stat/trends: – From 1998-2017 Manhattan – Broadway show admissions – 5.4 million tickets sold annually had the most movies filmed reached 14.8M in the 2018- at major music events (most on-location of any city in the 2019 season, a record high globally) world; Brooklyn and Queens – Non-Caucasian attendance – 70+ startups involved in digital are also in the top 5 reached a record high of 3.8M music services (most globally) – 19% of US TV/Film jobs are Media/Entertainment in NYS Sectors – Key Facts1

Sports Advertising and PR Digital & Print Media / Publishing / News Employees: 3K Employees: 121K Employees: 116K Wages: $0.7M Wages: $14.4B Wages: $15.6B Economic impact: $0.7B (excl. Economic impact: N/A Economic impact: N/A athlete salaries) Relevant stat/trends: Relevant stat/trends: Relevant stat/trends: – 22% of US advertising jobs are – 19% of US publishing jobs are – NYC is one of only two major in NYC in NYC metropolitan areas with more – 27% increase in advertising than one team in each of the jobs from 2008-2017 four most popular professional 17 sports leagues 1. Sub-industry categories excludes agents, independent artists/writers/performers, and commercial photographers. Economic impacts pulled from variety of reports on economic impact of different industries in NYC. Kearney XX/ID Source: Kearney; BLS; GoCompare;.com; Broadway League; New York Times; NYCEDC; NYC Comptroller’s Office NYC has the TV/Film # of Employees (2019)1 TV/Film Annualized Wages (2019)2 second largest TV/Film industry in the US 123.2K $15.2B NYC is one of three cities globally that can staff an entire film production without importing resources (LA and London are the others) 82.5K $9.4B

21.0K $2.1B

6.0K $0.5B

LA-Long NYC Metro Atlanta-Sandy Chicago- LA-Long NYC Metro Atlanta-Sandy Chicago- Beach- Springs- Naperville- Beach- Springs- Naperville- Anaheim, Roswell, GA Elgin, IL- Anaheim, Roswell, GA Elgin, IL- CA MSA MSA IN-WI MSA CA MSA MSA IN-WI MSA

1. Based on September 2019 2. Based on Q3 2019 * 4 18 Source: Kearney; BLS

Kearney XX/ID The Media and Positive externalities of the Media and Entertainment industry Entertainment General entertainment industry is a big driver of tourism – Tourists’ recreation and entertainment spend totaled $5.5B in 2019 and talent – NYC has 8% of the US’ creative industry employees (second only to LA) attraction for NYC TV / Film – Live TV filming is estimated to generate $45M in tourism spend each year in NYC Theater – 65% of Broadway show attendees are tourists (19% from outside the US) Music – 5M tickets are sold to music events each year, with an estimated 10-25% of attendees from outside the tri-state area, leading to $400-500M in overall tourism spend Sports – In 2019, more than 4M visitors attended a sporting event in NYC

19 Source: Kearney; Wall Street Journal; Leichtman Research Group; Broadway League; Sonic Bids; NBC News; Pollstar; Expert interviews

Kearney XX/ID Some Media and Organizations most at risk of COVID related declines Entertainment TV / Film sub-industries – Production in NYC is shut down and will likely remain so until there is a vaccine in place and social have a serious risk distancing requirements are removed of COVID related – Sports affiliate networks (e.g., YES, MSG), will struggle greatly in the short-term so long as live sports declines are cancelled – Linear advertising spend is declining due to clients financial struggles from COVID as well as a shift in consumer attention towards digital platforms – Ad buyers estimate that $1.0-$1.5B in linear advertising commitments could be cancelled in Q3 – Long-term reduction of 20-30% in linear advertising will impact broadcast companies as well as the creative community around these types of advertisements Live attendance events (cinema, theater, concerts, sports games) – Currently, spectator events are prohibited in NYC – Attendance likely to remain low until there is a vaccine in place and social distancing requirements are removed Print media companies – Increased shift towards digital further reduces demand for printed media, particularly as concerns over the virus spreading from contact persist Out of home advertising – Out of home advertising will have reduced demand so long as stay-at-home orders (or recommendations) are in place, particularly in major foot traffic areas (e.g., Times Square)

20 Source: Kearney; Wall Street Journal; Leichtman Research Group; Broadway League; Sonic Bids; NBC News; Pollstar; Expert interviews

Kearney XX/ID Executives see Phases of COVID recovery – Thoughts From Interviews of Industry Stakeholders three phases to As businesses think about their multi-year horizon, many industry leaders envision three the COVID distinct phases in the COVID recovery: recovery 1 Crisis response 2 Interim management 3 Steady-state future

As widespread quarantine With the immediate shock of When vaccines, herd and social distancing the crisis behind us and immunity, and/or effective requirements are limited openings underway, contract tracing are in place, implemented, how do we how do we weather ongoing what do we want our long- adapt our operations? consumer anxiety and term operating model to look reduced discretionary like? spending to survive long enough to reach a more steady state future?

March - May June – YE ??? 2021-2022 ??

Primary focus of interviews Most industry leaders are focusing on interim management. No one knows how long this will last, but it is clearly going to be a fight for survival To survive, companies will need to rethink their operating models and identify new revenue streams to bring gross profits as close to fixed costs as possible

21

Source: Kearney interviews with 40+ median and entertainment industry executives, employees and freelancers, May 2020 Kearney XX/ID NYC must help 1 2 3 Steady-state future companies solve Crisis response Interim management for the interim management stage between crisis response Possible solutions to survive the interim management phase – Purely Speculative and our steady Within NYC’s Media and Entertainment industry, industry stakeholders have mentioned a state future few ways for sub-industries to adapt in the interim: – TV/Film: Revise NYS tax credit incentive programs to focus less on location shooting and more on post-production activities (e.g., editing) and production support activities (e.g., set design, costumes) until live production is safe to return to NYC/NYS – Theater: Adapt shows to limit social interactions between actors, orchestra, and crew and produce streaming offerings for mass consumption and/or limited in-person viewings at higher cost per ticket. Offer ancillary services such as live or digital meet and greets with cast members – Advertising: Continue supporting NYC startups in the digital space to shift the concentration of media innovation (e.g., AR/VR, gaming) from Silicon Valley to NYC – News: A NY news provider (e.g., NYT, NYP) could create premium subscription with special NY-centric interactive podcasts structured around the newspaper’s sections. Exclusive interviews could include the chance to “meet” leaders from New York’s sports, arts, literature, business, and political industries These interim management solutions may or may not continue into the longer-term “steady 22 state future” , but could serve as a bridge to that future

Kearney XX/ID A number of pre- 1 2 3 Steady-state future COVID trends are Crisis response Interim management accelerating in the Media and Entertainment Industry Trends Affecting the Post-crisis “Steady State Future” industry that will TV cord cutting: define steady- – Pre-COVID: Cord-cutting a continuing trend, with the largest cable and satellite pay-TV providers in state future (1/3) the US losing 3.2M subscribers in 2018 and 5.5M subscribers in 2019. COVID has accelerated recent declines to double this. – Long-term steady state: In the first quarter of 2020, the largest pay-TV providers in the US lost more than two million customers, the sharpest quarterly decline on record. While the decline will not be this steep in the long-term, there will continue to be falling numbers of subscribers – With decreasing numbers of subscribers and rising fees per subscriber, the economic model for pay-TV will need to reset, ultimately resulting in a 25-30% decline in basic cable affiliate fees – Additionally, with the rise in SVOD platforms, demand for content will remain high, continuing to shift the balance of power towards content creators. >40% increase in streaming demand in two months Movie releases – Pre-COVID: Studios have been exploring alternative release strategies outside of standard theatrical release windows, but have faced pushback from major theater chains – Long-term steady state: The success of Trolls World Tour in a DTC release showed that a large budget film could perform without theatrical revenue. Given the ~50% rev share in theatrical vs. ~80% share in direct to home, this may drastically impact release strategies for non-spectical features.

23 Source: Kearney; Wall Street Journal; Leichtman Research Group; Broadway League; Sonic Bids; NBC News; Pollstar; Expert interviews

Kearney XX/ID A number of pre- 1 2 3 Steady-state future COVID trends are Crisis response Interim management accelerating in the Media and Entertainment Industry Trends Affecting the Post-crisis “Steady State Future” (Continued) industry that will Theater define steady- – Pre-COVID: Broadway’s revenue and attendance has increased every year since the 2011-2012 state future (2/3) season, driven by rising tourism every year for the past 10 years – 65% of Broadway show admissions in the 2018-2019 season were by tourists – Long-term steady state: Broadway’s shutdown through summer 2020 will have immediate impacts, but longer term COVID related decline in tourism and consumer concerns over social gatherings will lead to a reduced number of shows and a long road to recovery. Once we reach steady-state, there should be a return to pre-COVID levels of activity. Music – Pre-COVID: Alternative revenue streams from touring, merchandise sales, and licensing rising as revenues from albums and streaming services remain low – Long-term steady state: Coronavirus could cost the live show industry $9B in lost revenues for 2020 (~75% of total projected for the year), and the recovery will be slow, requiring artists to find new ways to monetize themselves. Ancillary revenue streams developed during the intermittent management phase should – Product release trending toward social media (tiktok soundtrack bidding increasing rising rapidly)

24 Source: Kearney; Wall Street Journal; Leichtman Research Group; Broadway League; Sonic Bids; NBC News; Pollstar; Expert interviews

Kearney XX/ID A number of pre- 1 2 3 Steady-state future COVID trends are Crisis response Interim management accelerating in the Media and Entertainment Industry Trends Affecting the Post-crisis “Steady State Future” (Continued) industry that will Advertising define steady- – Pre-COVID: Ongoing shift from print advertising to digital, largely due to stronger targeting and state future (3/3) conversion tracking capabilities – Trend toward niche content away from tentpole features and episodic television will disintermediate mainstream advertisement. Focus will be on hyper niche and native ads backed by evidence of interaction (e.g. social media) not just eye balls. Strong shift toward gaming where community and segmentation is robust (75% traffic growth since quarantine) – Long-term steady state: As consumers’ digital engagement rises during quarantine, there is a greater shift towards digital that will stick as consumer habits are forever changed. Ad buyers estimate that $1.0-$1.5B in linear advertising commitments could be cancelled in Q3; while this is in the short term, we believe reductions in linear advertising will ultimately decline 20-30% in the steady state – Along with the greater emphasis on digital advertising, there will be a shift towards programmatic buying across digital advertising, driving a rise in those roles in NY and a decrease in roles dedicated to traditional media buying and selling

25 Source: Kearney; Wall Street Journal; Leichtman Research Group; Broadway League; Sonic Bids; NBC News; Pollstar; Expert interviews

Kearney XX/ID Table of Contents 1. Logistics 2. Media & Entertainment 3. Supply Chain 4. Healthcare Innovation 5. Digital

26

Kearney XX/ID Reduced tourism and increased work from home are the largest disruptors, while manufacturing has potential to benefit from increased localization of essential supplies

Potential Low Impact ○ - ● High Impact GDP Employment Impact Industry Big Disruptors Share Share NY NYC Metro – Essential Categories: Healthcare 8% 16% – Increased need for locally sourced medical supplies boosts healthcare manufacturing ◕ ◑ – Medical supplies – Increased work from home & cost pressures will reduce commercial real estate footprint Real Estate 16% 2% – Real Estate – As more people look to save money, residential buying will fall off ● ◑ – Brick and mortar retail – Impact of reduced tourism will result in closed brick and mortar stores (up to 20%) Retail Trade 5% 9% – Manufacturing – eCommerce will double ● ◑ – Food and beverage – With increase need for localization of essential supplies, manufacturing is set for a boost Manufacturing 5% 4% given right incentives ◕ ◕ – Transportation & Accommodation & Warehousing 2% 7% – With tourism 25% decline, accommodation & food services will be the biggest losers Food Services ● ◕ – Key Takeaways: Transportation & – Expansion of eCommerce will increase delivery related transportation with a need to – NYC will see the most 2% 4% Warehousing repurpose warehousing to meet ecommerce demands ● ◑ significant disruption in SC Finance and – Increase in work from home will broaden the talent pool beyond NYC and reduce need for due to declining tourism 13% 6% ◔ ◔ Insurance commercial real estate – Imports of essential items Professional – Increase in work from home will broaden the talent pool beyond NYC and reduce need for will need to be replaced with 10% 8% ◔ ◔ Services commercial real estate localized manufacturing Information 9% 3% – Increased work from home will increase need for information tools ◕ ◑ – Last mile delivery will go up significantly due to increase – As tourism falls, and work from home increases, public transit revenues will take a decline Government 9% 13% ◑ ◑ in home deliveries – Increased eCommerce will drive traffic and congestion leading to higher govt. expenses – Brick and mortar retail will Wholesale Trade 6% 4% – With demand falling because of reduced tourism, wholesale trade will take a significant hit ◑ ◑ go down by up to 20% due to lower tourism and – As commercial and residential real estate demand falls, and government revenues shrink, increased work from home Construction 3% 6% both public and private construction will fall ◕ ◔ – Reshoring of sourced building materials given tariffs and localization trends

Admin27 and Support 3% 4% – Shifting jobs to work from home will impact source of talent, broadening hiring pool ◔ ◔ Impacted Industries Mgmt of Companies 3% 5% – Reduced demand for corporate space could impact commercial real estate ◑ ◔ Kearney XX/ID Recommendations: Operating NYC in “New Normal” Key Challenges Private Public How to Operate NYC Incentivize consumer spend 15 – 25% drop in consumption 1 Increase disposable income 3 • Develop tax incentives or Supply Chain in the due to decline in tourism and • Relax deposit restriction for residential renters subsidies for tourism (hotel, “New Normal” daily commuters • Offer flexible payment terms on airline, rail) • Channel Shift: Step change increase of products and services • Evaluate regulations on impacted eCommerce / omnichannel as preferred 2 Ease consumer fear and anxiety: industries (e.g., outdoor dining, consumer channel (overall 2X increase) alcohol delivery) • Implement safety measures (e.g., with increased consumption 4 Ensure daily commuters return Demand policies, infrastructure) to provide Scope of Highly Impacted Areas: • Category Priorities: Increased demand comfort for consumers to visit social • Subsidize resident and day for essentials and shift to “no-frills” • Essential Categories: establishments, including increased commuter needs (e.g., mentality – Food & Beverage automation transportation, real estate) • Increased Need for Assistance: Food 5 – Medical and Cleaning Supplies • Provide insurance style guarantees Increase income insecurity expected to double on events – Building Materials • Offer stipend/guaranteed income 35% drop in make capacity and 6 Localize manufacturing and sourcing 8 • Supply Chain Modes Incentivize local make & source reliance on imports for • Identify tri-state area suppliers and – Last Mile • Drive supply chain localization essentials with a surplus of contract mfg. for critical supplies and essential product production – Intermodal retail and hospitality workers • Consolidate at risk industries (e.g., (e.g., quotas, tax breaks) – Imports farms and/or food processors) • Provide loans or grants to critical • Supply Risk: Reliance on highly taxed 7 • Consumption Channels: imports puts essential supplies SC at Increase DC capacity and automate local business (e.g., food – B&M – Small (e.g., convenience) risk manual activities processors, farmers, distributors) – B&M - Large (e.g., Mass, Supply • Increase eCommerce distribution • Spur automation innovation • Excess labor: 20% of NY workforce is capability for channel shift at: through subsidies or investment Grocery) in industries expected to decline post- – Pharmacy pandemic, which will require a pivot in – 6 NYC food and beverage DCs 9 Develop programs to retrain workers – eCommerce skills – Company DCs, 3PLs, etc. • Retrain leisure and hospitality – Institutions • Reduced Productivity: Updated safety • Develop automation to improve measures lower production capacity capacity and reduce crowding workforce in new skills Increased strain on NYC 11 Adapt to demand change impacts infrastructure 10 Improve community features • Increase sanitation capacity for incremental parcel waste • Shift in mode: Estimated that 20% of • Improve use of real estate with shared 28 physical stores will close while spaces (e.g., parks, playgrounds) • Evaluate traffic flows, incl. ecommerce will double, further expansion of off-hours delivery & Kearney XX/ID Infrastructure increasing traffic burden delivery lanes Significant declines New York Should Brace for a Protracted Recovery and ‘New Normal’” in tourism, increased work from Competing Visions of the Future – A Framework home coupled with Focal question “Cautious Reset” Low “Protracted Recovery and Snap Back ‘New Normal’” consumer focus on What actions are saving and social required now to •Slow gross city product •Irrecoverable total gross distancing will have survive and thrive domestic product (GDP) after recovery significant impact COVID19? •Limited tourism and •Significant tourism and on New York’s business travelers business travel declines •Moderate population shift •Population migration from NYC supply chain out of NYC Forces Shaping the •Thrift dedicated consumer Future NYC Economy •Thrift oriented consumers Resiliency •Increased work from home •Distressed business closures – Rapid global economic contraction Economic r Recovery

– Uncertain timing of 24+ Months 24+ vaccine discovery Months 24 < •Rapid gross city product •Multi year gross city product and administration recovery recovery – Consumer reluctance •Tourism and business travel •Tourism and population at 2019 levels recovery… in time to take unnecessary Consumer health risks •Population growth •Distressed business continues consolidation •Better than before •Eventual relaxation of work from home mandates

High “Recovery with Vengeance” “Sober Recovery” 29 Snap Back

Kearney XX/ID How will city consumption be impacted? Key Challenges Daily Social Events Tourism1 Population2 Key Challenge: 15 Commuters3 Attendance4 – 25% drop in consumption due 25% 10% 72% 15 - 25% Decline in to decline in TBD Consumption tourism and daily • 6% decline in restaurants Current annual • 5% decline in retail • 72% decline in consumption commuters visitors: 65M Post Estimated reduction Portion of Pop. Δ ’08–09 Expected decline in 9/11 in office work, Americans willing to related to events tourism visits, which NY County 0.4% (2.6%) decreasing daily attend sporting is 9x worse than NY State 0.3% 1.0% population events post September 11th Where will consumers consume? Doubling of eCommerce • Share of eCommerce spend to go from 20% to 40% 20% causing brick and mortar DEMAND IMPACT 2X store closures • Consumers rated safety and contributions to society as eCommerce increased from 20% to the most important brand Physical stores will shut down, & 40% with a step change in use by new trait the shift of the role of stores will consumers (e.g. older demographic) accelerate and in new categories (e.g. groceries) What type of goods will consumers purchase? Increased strain on NYC – Consumers will seek brands that display real expertise, ‘no-frills’, unprejudiced infrastructure patriotism and social care • 4 – 8% uptick in traffic driven – Prioritization of safety and security will continue post-crisis by delivery vehicles – Consumer values will have shifted to focus on the ‘essential’ • 2X shipping waste (1.5 – Brands perceived “wasteful” will suffer (e.g. fast fashion) – Cardboard used for million packages going to 3 30 packages annually in US would equate to 1 Billion Trees6 million per day in NYC)

Kearney XX/ID Source: Kearney analysis : 1. UN Tourism; 2. St. Louis FED, 3. Atlantic; 4. Seton Hall study, 5. Datassential survey of 1,000 US Consumers, April 17-20. 6. FASTCOMPANY What will be the impact on supply? Key Challenges Production Capacity Reshoring Index1 Imports of Essential Items3 Key Challenge: (98 bps) 72% Reliance on imports 39% 48% 40% 35% drop in make 35% 13.1 12.1 puts essential supplies

capacity and 2018 2019 APIs Medical PPE Generic SC at risk reliance on Supplies Drugs Updated safety measures Trade wars coupled with During shutdown, China exports to Updated safety measures imports for lower production capacity of COVID-19 reversed trend in US for such supplies fell 20%, 50 lower production meat products offshore production countries have embargoed export of essentials with a medical supplies capacity by up to 35% surplus of retail and hospitality New York Employment NY Employees (000s) January 2020 Post 9/11 Δ 08–09 Δ Greater impact on ~20% of NY workforce workers tourism compared Retail Trade 916 (1.2%) (2.2%) to post 9/11 will is in industries Leisure and Hospitality 960 0.5% 2.5% likely reverse expected to decline employment Total 9,785 (1.5%) (2.5%) outcome in leisure post-pandemic, which will require a pivot in skills SUPPLY IMPACT How will the consumption channels be impacted? No. of US Outlets (000s)2 Restaurant Type Pre-Pandemic Post-Pandemic Difference Chain 219 197 (15%) Independent 464 344 (85%) Total 683 541 (20%) Voice of Estimated 20% of Channel Consumer Restaurant physical stores will Shift2 Trends Owner2 close while ecommerce will – 19% nervous they will not – Doubling of ecommerce – 72%4 will not attend social double, further increasing come back to business will put a strain on NYC events (sports) until a burden on NYC traffic – 41% seek advice on To- traffic vaccine is found Go / Delivery enablement – 6 NYC DCs will have to – Customer trips to stores – 86% Take-out sales will adapt capacity for will go down, with not offset dine-in loss increased in-home increased focus on one- 31 delivery stop-shops

Source: Kearney Analysis; 1. Reshoring Index compares US manufacturing gross output to import data from 14 Asian low-cost countries (LCCs); 2. Kearney Analysis; 3. FDA; 4. Seton Hall study Kearney XX/ID National Restaurant Association, Reuters, Euromonitor, CHD Expert, Rabobank, UBS, Technomic's Top 250 Chain Restaurant Report Break in food supply chain is Dairy Processing Food service causing farmers to (Café, restaurants, destroy their Meat and Dairy Farms schools) produce while Private DCs grocers and food Meat / Chicken Packing banks struggle to keep up demand Poultry Farms Retail Stores

Egg Packing 6 NYC DCs Illustrative – Food Supply Chain NYC (Hunts Point, College Point, etc.) Food Banks Vegetable Farms Vegetable Packing

Short Term – Food service shutdown – Active shift towards retail – Fears of drivers refusing to – Retailers struggle to keep up coupled with plant slow packaging while plants travel to pandemic hotspots with increased demand, with down / shutdown forcing struggle with illness related supply shortages in low farmers to destroy shutdowns / slowdowns income areas produce – More people turn to food banks / pantries

Post Pandemic – Reduced demand overall – Shift in demand towards – Demand at DCs will be – Food services demand will for many items due to staples consumed at home lower overall remain low due to reduced reduced demand for food – Reduced capacity / – Shift in capabilities / tourism and increased WFH service items (onions, increased automation as increased capacity will be – Demand at retail channels cheese, etc.) manufacturers manage needed to manage different will increase as more – Farmers may be forced to social distancing packaging needs and people WFH and avoid destroy further produce – Shift in capacity towards increased demand for e- restaurants – ecommerce – Continued product waste retail products and commerce / in home delivery will increase 32 (i.e. destruction) will reduce packaging – More people turn to food

cash flow, straining supply banks / pantries Kearney XX/ID We see five trends No Regrets Moves # Indexing matches executive summary

that drive no • Implement safety measures (e.g., regrets decisions Ease consumer fear and policies, infrastructure) to provide to improve supply 2 anxiety through enhanced comfort for consumers to visit social safety measures and policies establishments, including increased chain resiliency automation Demand • Develop tax incentives or subsidies Incentivize consumer spend for tourism (hotel, airline, rail) 3 • Evaluate regulations on impacted through public policy industries (e.g., outdoor dining, alcohol delivery)

• Increase eCommerce distribution capability for channel shift at: Increase DC capacity and – 6 NYC food and beverage DCs 7 automate manual activities – Company DCs, 3PLs, etc. • Develop automation to improve capacity and reduce crowding

Supply • Drive supply chain localization and essential product production (e.g., Incentivize local make and quotas, tax breaks) 8 source through public • Provide loans or grants to critical local investment business (e.g., food processors) • Spur automation innovation through subsidies or investment

• Increase sanitation capacity for Adapt to demand change incremental parcel waste Infrastructure 11 impacts with supporting • Evaluate traffic flows, including 33 public infrastructure expansion of off-hours delivery & delivery lanes Kearney XX/ID Private Public 1. Relax deposit restriction for residential renters 3. Provide subsidies for airline and/or rail tickets to NYC to encourage tourism Recommendations: 1. Offer flexible payment terms on products and 3. Relax outdoor dining restrictions services 3. Adjust delivery restrictions on alcoholic beverages Restart / Operating NYC in 2. Provide insurance style incentives (e.g., 3. Reduce city occupancy taxes for hotels to encourage tourism Re-Energize guarantees on events occurring in light of COVID) 3. Subsidize/sponsor restaurant weeks “New Normal” 2. Implement safety measures (e.g., policies, infrastructure) to provide comfort for consumers to 3. Evaluate real estate tax rates for residents and landlords Demand visit social establishments 4. Subsidize day commuter needs to spur demand related to working from office 4. Provide long-term tax incentives to businesses for occupied commercial real Invest and estate Grow 5. Provide stipend/minimum guaranteed income to low income households

6. Identify tri-state area suppliers and contract manufacturers for critical supplies to shorten supply 8. Create tax incentive plan for companies that reshore manufacturing (e.g., chain boat building, chemicals) 6. Consolidate farms and/or food processors and 8. Develop quota for domestic vs. imported products Restart / improve overhead cost efficiency 8. Create local infrastructure to rapidly produce essential items (e.g., building Re-Energize 6. Repackage goods for channel specific needs due materials, vaccines) to shift in demand (e.g., restaurant vs grocery) 8. Incentivize manufacturers to produce high demand goods with tax breaks – Monitor supplier health and secure alternate 8. Identify local suppliers to produce essential medical supplies Indexing matches executive summary sources 6. Form private and public partnerships between 8. Develop digital platform and data sharing to create transparency in essential processors and distributors to shift excess capacity Restart / Re-energize: What supplies and food availability Supply towards food banks, NYC institutions activities & strategies should 8. Create plans to repurpose capacity across facilities to support public need for 6. Reallocate supply across channels by working continue & be accelerated? medical supplies (e.g., Active Pharmaceutical Ingredients, PPE) with upstream production (e.g., brick and mortar vs. 8. Collaborate with private industry to repurpose real estate Invest and eCommerce) 8. Spur innovation of automation technology through subsidies, tax breaks or Invest and Grow: What Grow 7. Increase eCommerce distribution capability for activities & strategies should channel shift at: direct investment start or stop? – 6 NYC food and beverage DCs – Provide loans or grants to food processors, farmers and distributors to ensure cash strapped farm industry doesn’t spur a food crisis – Company DCs, 3PLs, etc. 9. Retrain leisure and hospitality workforce in manufacturing to help with 7. Develop automation/robotics to cope with reshoring and localization restrictions on labor that impacts capacity

11. Increase NYC sanitation capacity based on incremental waste impact due to shift to small parcel from bulk packaging Restart / 10. Improve use of real estate with shared spaces Re-Energize (e.g., parks, playgrounds) 11. Evaluate traffic flows, including expansion of off-hours delivery program, 34 consideration of alternative delivery vehicles (e.g., cargo bicycles, UPS truck trikes)

Infrastructure Kearney XX/ID Table of Contents 1. Logistics 2. Media & Entertainment 3. Supply Chain 4. Healthcare Innovation 5. Digital

35

Kearney XX/ID Healthcare is a critical sector for NYC’s economy

Economic Fragmented Healthcare Engine for NYC Provider Landscape Innovation Cluster

– Healthcare sector – Private hospitals make up – NYC benefits from its accounts for 8% of GDP 80%+ of NYC’s hospital unique ecosystem and 16% of employment in market share with top 5 encompassing renowned NYC providers serving 50%+ of academic institutions, doctors and proximity to – Fastest growing sector the market – fragmented Pharmaceuticals sector (3%) after Tech and fastest landscape despite cluster in NJ growing employer in NYC consolidation efforts (4%) – NYC has largest public – Building a life sciences hospital system in US innovation cluster has – Healthcare sector benefits been a strategic priority from its appeal for patients (HHC) which has undergone several for NYC through policy from outside NYC (US & support, e.g. Life Science efficiency and international) R&D Tax Credit Program effectiveness initiatives while addressing persistent – VC investment into financial challenges growing Health startup ecosystem is growing at 1) 2007 to 2019 period 36 Sources: NYU, NY Department of Labor, City of New York, PFNYC, LMIS, NYC Health Business Leaders 12% CAGR1 ($2.6B in

2019) Kearney XX/ID NYC’s Healthcare system brings a Strengths Challenges unique mix of strengths and Best-In-Class Assets Coordination of Care challenges Leading research institutions and Despite rapid pace of health system educational facilities, largest public consolidation, no single system hospital system in US (HHC) controls >17% of capacity

Diverse Medical Workforce Affordability of Care NYC at the top globally for its medical Significant uninsured and Medicaid workforce, e.g. surgeons, nurses, mental population (6th most expensive state health specialists - NY ranks second in for healthcare) US for number of doctors per population Access to Care Above Average Capacity Shortage of primary care physicians – Hospital capacity above US average (2.7 especially in lower income parts of city per 1000 people), growth in home care (e.g., East NY, Brownsville, Washington and ambulatory care Heights)

Leading Outcomes Outcomes disparity Leading in life expectancy overall (2.5 yrs Significant disparity by race and longer than US average), higher than economic status (e.g., life expectancy average physical activity difference of 4.5 yrs between high and low poverty areas – correlation with

37 Sources: NIH, NYU, Center for Health Workforce Studies, NY State of Health, NYC Health, Medbelle race / ethnicity)

Kearney XX/ID COVID-19 has put NYC’s hospital systems each lose up to $350 – NYC’s healthcare Steep financial losses across $450MM monthly due to COVID-19 treatment system under hospital systems and deferred / cancelled basic care significant pressure Unsustainable losses put independent and Mounting bankruptcy risks for small providers at bankruptcy risk due to independent / small providers extended closures and delayed procedures.

Capacity shortages for critical Large scale capacity / inventory disruptions supplies and personnel and lack of visibility, e.g. ventilators, PPE, hospital beds, personnel

Overburdening of public Peak in unemployment due to New York on systems due to increased Pause has steeply increased influx into public unemployment healthcare system, e.g. Medicaid, HHC

20-25% of healthcare workers in hard-hit Lasting mental health distress of areas expected to develop disorders, e.g. front-line healthcare workers anxiety, depression or post-traumatic stress. 6% of physicians plan to exit patient care entirely.

Lack of coordination between Patient management system had to be created providers for patient mgmt., by NY State to transfer patients between supplies and personnel hospitals (2500+ patients daily during peak)

38 Source: WSJ, New Yok-Presbyterian, NYT, Merritt Hawkins ,Bloomberg, LA Times, NIH, Kearney

Kearney XX/ID Uncertainty Possible Pandemic Wave Scenarios for COVID-19 around pandemic scenarios leads to questions about the future with – Scenario 2: Fall 2020 Peak “The New Normal” Requires reinstitution of mitigations to prevent overwhelming healthcare systems

Current wave Scenario 1: Peaks & Valleys A series of waves requiring periodic reinstitution of mitigations

NYC must be prepared for another 18 to 24 months of significant COVID-19 activity, with hot spots popping up periodically in diverse geographic areas with uncertainty around which pandemic wave scenario will realize itself Scenario 3: Slow Burn Not seen in past pandemics but a possibility

2020 2021 2022

39 Source: Center for Infectious Disease Research and Policy, University of Minnesota, NY Times, Kearney

Kearney XX/ID Phases can be cyclical NYC needs a deliberate strategy Containment / Mitigation Suppression Prevention to move from survival to optimization in a Survive Resume Optimize potentially cyclical Manage COVID surge in Continue to manage Systematically embed COVID-19 parallel with only urgent or COVID base load and hot innovations and critical emergent cases; spots through dedicated capabilities catalyzed by environment manage all elective and capacity while resuming the crisis into a post preventive care through preventive and elective COVID new normal telehealth and alternate care delivery channels

Key questions Key questions Key questions – How to quickly build critical – How to resume deferred – How to build quality and Key elements of NYC assets and supplies to elective and preventive outcomes data and remote healthcare strategy to manage COVID cases care without triggering monitoring capabilities into manage three distinct stages while continuing to flatten COVID outbreaks? telehealth to achieve and of recovery the curve? – How to build and manage sustain optimal levels? – How to implement risk segmented capacity from a – How to sustain patient stratification of non-COVID full system perspective for behavior changes driving patients to mitigate risk of COVID and base patient system-wide value (e.g., deferred care? care? mail order Rx)? – How to use forecasting / – How to sustain telehealth – How to implement analytics for full visibility of supplemented alternate resiliency where previous leading indicators, e.g. delivery channels (e.g., short comings, lessons infections monitoring, pharmacy for blood learnt and risk mitigation patient and supply flows / draws)? strategies, e.g. deliberate 40 demand management? redundancies, greater

integration? Kearney XX/ID Innovative Delivery Strategic Capacity Smart Labor The What: Models Management Management Key elements – Strengthen and scale – Expansion of hospital capacity – Agile deployment of needed in a NYC telehealth e.g., backed with through conversion of space, healthcare talent to ensure right roles in right place at right time, build back remote monitoring, quality and construction / retro-fitting of outcomes reporting additional facilities and temporary inclusive of model cross system strategy on – Expand home-care delivery , / mobile facilities deployments and movement healthcare e.g. blood work, nursing – Leverage continuum of care across the continuum of care services, physical therapy, etc. capacity by shifting activities out, – Skill set rebalancing through active management of talent – Activate alternate care sites e.g. testing, monitoring lifecycle from attraction, for diagnostics & screening, e.g. – Strengthen supplies / assets development and retention to pharmacies, drive-through, capacity with real-time visibility accelerate rebalancing of skill mobile vans of inventory and shared critical sets needed to support the new resources, e.g. PPE, ventilators normal

Supply Chain Control Frictionless Financial Digital Orchestration Tower Flows

– Buying coalitions to manage – Infusion of funding to shore – Analytics enabling capacity supplier engagement, expand up the system and enable management, e.g. predictive buying power and mitigate risk continuity of care and prescriptive analytics on critical, scarce supplies and – Cost optimization through – Virtual integration of assets (e.g., PPE, ventilators, reduction of in-person / in- electronic patient records to testing, eventual vaccine) hospital services, e.g. enable full view of patient – Physical distribution and telehealth, outside services across systems and continuum logistics of scarce supplies and (home, 3rd party, patient- of care assets linked to system wide operated) etc. – Public Health apps, such as 41 supply and demand planning contact tracing etc.

Kearney XX/ID The How: Integration, Innovation, Virtually Integrated Scaling Innovation Bold, Multi-Level Leadership Care Delivery Broadly Leadership Virtually integrate delivery across Deliberate strategy to capture and Sustainable operating model that fragmented public / private network systematize innovation that has institutionalizes public / private of payors / providers been developed during the crisis coordination of critical services

– Critical resource-sharing – Surface and deploy out small- – Strong, empowered leadership across systems to manage scale innovations, e.g. drive- to rebuild NYC’s healthcare demand peaks through blood work / system stronger coming out of immunization the crisis – Broader acceptance of insurance providers across – Incentives to sustain and – Centralization of critical systems to expand access capabilities to scale digital capabilities and capacities under solutions, e.g. telehealth, virtual single leadership, e.g. agile – Empowered telehealth to patient access etc. to reduce coalition minimize in-person visits and costs and improve patient safety reduce costs in the system – Incentivize collaboration – Crowdsourcing of best- between public / private systems – Activate alternate settings that practices, protocols and ways of to enable social distancing, e.g. working across public / private – Further elevate access and testing, diagnostics & monitoring, systems through pilot testing, affordability for under-insured back office support scaling and systematic rollout groups as a public health priority – Supply Chain Control Tower to – Dedicated funding pools for – Remove regulatory barriers to manage critical assets and multi-lateral collaboration on drive innovation for post-COVID supplies innovation healthcare system 42

Kearney XX/ID Table of Contents 1. Logistics 2. Media & Entertainment 3. Supply Chain 4. Healthcare Innovation 5. Digital

43

Kearney XX/ID 8C – Ensuring NYC Digital Access & Connectivity Digital Services, Data & Technology Assessment of Digital infrastructure access and Assessment of NYC Digital services and underlying digital access and implications on equitable outcomes data and technology stack infrastructure is sufficient post Strengths Strengths COVID-19 + Tech training programs have been massively + NYC tops several rankings as world smartest city deployed across Manhattan and Brooklyn (800+ sites + Wide variety of mobile apps are available for citizen for adults and K-12 education) services spanning across health, education, safety… PFNYC Requested inputs: + Devices have been consciously brought to + Pilot environment has been launched for exposing 1. Comparison of the strength of disadvantaged population as part of multiple public datasets and APIs the region’s digital resources programs against peer regions + Infusion of startup talents and regular hosting of + NYC has released an ambitious Internet Master Plan hackathons are spurring new ideas 2. Assessment of digital in June 2020 to address the inequitable internet infrastructure access overlaid access across the Metro area + Fail-fast philosophy has been adopted, developing 8- with considerations on which week Proof of Concepts to rapidly test new ideas + NYC has been one of the first global cities to gaps in access may drive experience 5G deployment + Social media are increasingly used by public officials inequitable outcomes more and teams generally 3. Evaluation of the region’s public Challenges Challenges sector IT systems and infrastructure – The Digital Divide remains strong in NYC, which is – NYC has moved from 2nd to 24th in 2019 Global behind peers in broadband and smartphone access Cities Outlook index, revealing negative trends in 4. Cost-benefit analysis of installing livability, FDI, entrepreneurship, private investment a 5G network throughout NY © Divide is accentuated by COVID-19, further limiting and ease of doing business (cf. appendix) Metro Region access to education, health and economic 5. Case studies of cities with strong opportunities © Citizen services related to health, education, safety, digital infrastructure © Public school ICT infrastructure (broadband, devices) etc. are developed in siloes and are not integrated remains subpar – NYC lacks a scalable cloud infrastructure, the current ©: Challenges further IT stack suffers from high technical debt accentuated by COVID-19 © Telecommunications network are saturated in some areas while they are lacking in others © No easy accessibility of Open Data & APIs and deeply rooted legacy ways of working for solution – Massive investments in 5G by private operators is very unlikely to benefit to disadvantaged population development prevent rapid innovation © More structured ecosystem partnerships could fuel 44 new investments and funding models

Kearney XX/ID Post COVID-19 Digital Access & Connectivity Digital Services, Data & Technology Addressing the Digital Divide to enable equitable Enabling Digital uptake in the New Normal, providing NYC must access to Health, Education and Economic relevant systems and tools to derive equitable implement the Opportunities outcomes prioritized digital S G– Reduce gaps in access to digital resources G R– Enhance and integrate digital services – Provide access to those with the greatest need (e.g. – Integrate disparate digital services into one portal initiatives to free public WiFi hotspots for online learning in – Enhance health, mobility related services and apps public housing, upgrading public school ICT (e.g. telemedicine, job portals, contact tracing) accelerate social infrastructure) inclusion and – Ensure all digital public services are available and R– Reduce technical debt performant on all types of devices (e.g. NYC – Replace proprietary tech frameworks and economic learning platform) languages, upgrade old tech architectures – Scale digital services by enhancing cloud-based recovery S G – Increase digital literacy infrastructure and by reducing functional data – Equip Community Boards with better tools and train siloes across departments and agencies them together with community digital ambassadors to increase community engagement and provide S G– Increase usage of open data & APIs digital resources to the ones in need – Stimulate crowdsourcing of applications from the – Incentivize tech training and education to cover community by sharing of key data sets via portals, Key Priorities for Digital underserved neighborhoods apps., accelerating publication of Key APIs – Increase transparency on public actions, sharing of Access & Infrastructure S G R – Expand communications infrastructure key data sets, e.g. operational data – Develop open access fiber optic infrastructure Objectives working with operators to prioritize neighborhoods G– Adopt new ways of working S– Social Inclusion having low service level today – Deploy interagency tribes and squads applying key G– Growth – Increase number of mobile sites to densify existing principles of Agile and Design-thinking to deploy network with 4G and 5G-ready equipment in priority solution at scale for citizens and businesses R– Resilience locations (e.g. Underserved Neighborhoods) – Deploy new ways of working within IT organization to become more attractive for tech talents S G– Develop operators partnership – Support operators by opening up new public G R– Develop ecosystem partnerships facilities and incentivizing private building owners – Foster partnerships with corporates and startups to – Negotiate counterparts with operators to reduce unlock investments and diversify funding model digital divide, with special plan rates and cheaper – Align ecosystem on shared visions and objectives 45 reconditioned devices to disadvantaged population for the City, with tangible targets to attain

Kearney XX/ID Size Internet Access Data access Device access Avg. fixed Avg. mobile Households Smartphone Improving digital Free Public Households Publicly Publicly Area (Sq broadband broadband with Penetration Population WiFi per Sq. with available available access for NYC Km) speed speed computer (of Km broadband data sets APIs (Mbps) (Mbps) access population) population is a key NYC 8.4M 784 1,398 79% 132 42 148 9 88% 80% driver of equitable SF 0.9M 121 1,477 86% 85 40 438 1 92% 89% outcomes Paris 2.1M 105 3,695 83% 136 43 291 2 79% 83% Seoul 10.0M 605 945 90% 121 81 520 NA 66% 88% Dubai 3.3M 4,114 26 85% 101 83 154 12 98% 96% Singapore 5.9M 725 464 99% 197 54 1811 25 91% 91%

Leading city among selected sample for given metric

Critical gaps to address for NYC

Internet Access Data Access Device Access Digital Literacy PFNYC Requested inputs: – NYC lags behind peers in – NYC could offer many more – NYC lags in smartphone – Tech training programs are 1. Comparison of the strength of broadband access: nearly half public data sets and APIs access, key drivers being age unequally distributed across of the 21% with no broadband the region’s digital resources – This would help individuals, (more than 1/3 of 45+ do not own Metro area (heavily skewed access do not have internet a smartphone) and income to a towards Manhattan & Brooklyn) against peer regions access at all public and private companies to come up with new applications lower extent – Teachings mostly focus on 2. Assessment of digital – Lack of broadband access differs and services – Many NYC resources (e.g. basic knowledge but does not infrastructure access overlaid widely by education (41% of those without high school learning) are not optimized for equip people to transition to with considerations on which degree), socioeconomics (44% mobile use more advanced knowledge (e.g. gaps in access may drive of those below poverty line), etc. IT developer as a career) inequitable outcomes more generally Implications on equitable outcomes Source: Kearney, NYC Comptroller, AT&T Developer program – Lack of broadband access is – Inefficiencies are less – Inequal access to public – A growing number of more important for transparent, hence less services as they move online economic opportunities are disadvantaged populations solutions are developed to – Similar to internet access, it tied to digital, tech literacy is address them – This accentuates the gap in accentuates the gap in access critical for equitable access to – Easing data access would help to health, education and those opportunities access to health, education ensure public action adheres economic opportunities 46 and economic opportunities to its equity objectives

Kearney XX/ID Key to enabling South Korea: Leading France: Closing the Sweden: Internet as a the way in 5G Digital Divide utility digital access is a Massive 5G investments Adopting gap-funding Municipality-deployed strong core early on to bring use cases model before investing networks to make fiber citywide network; to life massively in 5G available to all Countries have – Activated first 5G network – France was at the bottom of – Swedish municipalities are taken different in April 2019 EU rankings for ultra-fast responsible for around paths to achieve it – Plan to invest $26 billion to fiber optic broadband 60% of all fiber lines (~ th reach 100% 5G coverage coverage (24 /25 in 2017) 80% national fiber by 2022; $3.4 billion – In 2013, France announced coverage, ~90% in investment planned in H1 a $24 billion plan to reach Stockholm metro area) 2020 100% coverage in high- – They provide basic – Penetration of ~10% speed broadband service infrastructure, operator- (50M+ population) with by 2022 neutral networks, and PFNYC Requested inputs: 100k+ stations deployed as – France auctioned facilitate a wholesale 5. Case studies of cities – of April 2020 exclusive licenses to roll- market on dark fiber, open network investment for out fiber in non-covered for interested service equitable outcomes – New Deal to boost growth providers on equal terms after the coronavirus territories against tax pandemic massively reductions and open – Municipal networks are subsides AI and 5G access 23% to 38% cheaper deployment at scale; 5G – The Greater Paris area compared to national prices technology to generate $73 moved from about 50% but profitable; the average billion worth of exports 30 Mbps coverage in 2013 return on investment is and 600,000 jobs by 2026 to 85% by end of 2019 around 6-7% (10-11% in Stockholm) – Fixed broadband is second

47 most affordable in EU Source: Kearney, Eurostat, OECD Kearney XX/ID Expanding core In the short- to mid-term, only focusing NYC first needs to expand its current network capacity on widely deploying 5G would not be network capacity in strategic areas; pertinent for NYC from a cost-benefit preparing for wide deployment of 5G in should be the perspective the longer term main priority for NYC via a mix of Should 5G be deployed How to increase capacity 4G and 5G throughout the NYC Metro area? throughout the NYC Metro area? Kearney believes the question interventions and NYC needs to address is different development of – Current deployment focuses on enhancing – Invest in expanding the network in saturated citywide OFC mobile broadband in saturated and and underserved areas wealthier areas are able to afford new – Develop open access fiber optic hardware (low-end devices will only be infrastructure working with operators to available in 3-4 years) prioritize neighborhoods having low service level today – Current 5G-enabled use cases are of limited PFNYC Requested inputs: benefits for the society and only enhance – Increase number of mobile sites to 4. Cost-benefit analysis of existing applications (3d videos, VR/AR, cloud densify existing network with 4G and 5G- installing a 5G network gaming) ready equipment (macro-cells, small cells) throughout NY Metro Region in strategic locations – Deploying 5G throughout NYC Metro area – Establish public-private partnerships with will have an extremely high cost, requiring operators to ensure investments benefit to the high number of small cells interconnected with disadvantaged population fiber – Support operators by opening up new – Densified network is required for wide public facilities and incentivizing private deployment of Standalone 5G benefiting the building owners entire population and driving equitable – Negotiate counterparts with operators to outcomes (10-15 years horizon) reduce digital divide, with special plan rates and cheaper reconditioned devices to 48 disadvantaged population Source: Kearney, Primary and Secondary research Kearney XX/ID NYC Digital Key gaps Implications applications and Fragmented, Siloed Insufficient Online Education No Real Time Safety Services Reduced Jobs: 1-2% Community engagement – Minimal online retraining – Minimal surveillance on technology need to- – Disparate citizen services programs (e.g. Digital infectious diseases (e.g. across portals Literacy) Contact Tracing) be upgraded, – Insufficient identification of – Limited Public Schools ICT – Few, if any communications of Increased Disease burden: distressed homeless who – No e-learning on mobile police services 5-10% enabling more need shelters devices – No early warning apps, (e.g. – Minimal apps for elderly (e.g. identify quarantined zones) way finder in subways) equitable outcomes 15–30 minutes added to and enhancing the daily commute per person Lack of Real-time quality of life for its Lack of Remote Healthcare Transportation Information Insufficient Tracking of – Minimal dedicated – Lack of vehicle flow Energy Usage citizens telemedicine channels conscious traffic lights – Insufficient energy – Limited monitoring remote – No real-time public transport consumption tracking and patients stats (e.g. Occupancy rates Increased Emissions: 10- alerts – No one-click access to in Subway) 15% – No comprehensive tracking health call center – Minimal Personal alert of geo-spatial location / applications (e.g. Parking Integrated Digital Applications Digital Integrated condition of utility infra space) PFNYC Requested inputs – Manual Supply and demand planning of public transport 3. Evaluation of the region’s No easy accessibility of Open Data & APIs Reduced crowd sourced public sector IT systems and – Minimal international standards for key data sets, e.g. operational data innovations (e.g. Private Free infrastructure – Some but experimental sharing of key data sets via portals, apps., APIs Mobile apps.) – Very few publication of Key APIs (9 APIs) Proprietary, Siloed Core IT Architecture Reduced resilience of critical – Accumulated technical debt due to proprietary tech frameworks and languages, old tech architectures – systems for critical systems – Large number of functional data siloes across departments and agencies – Lack of scalable cloud infrastructure to host digital applications Selective, Few Sensors & Devices Inability to capture granular – Insufficient air/water quality sensors, waste receptacle sensors and surveillance cameras to capture data data for decision making Data & Technology & Data at scale

- Legacy, Bureaucratic Ways of Working Slower time to delivery – Deeply rooted legacy ways of working for solution development., incl. waterfall, tech-first mindset Lower ability to attract talent – Rigid supporting IT processes increasing friction points – Lack of deliberate strategy to leverage partnerships with corporates and startups

49 nance Gover

Source: Kearney, Primary and Secondary research Kearney XX/ID Appendix

50

Kearney XX/ID Table of Contents 1. Logistics 2. Media & Entertainment 3. Supply Chain 4. Healthcare Innovation 5. Digital

51

Kearney XX/ID Acceleration of e- U.S. E-commerce Sales Growth U.S. Same-day Delivery Market E-commerce sales E-commerce sales Same-day delivery growth rate Same-day delivery sales commerce and ($bn) (% of retail) (% CAGR) ($bn) same-day delivery 11.0 1.0 13 600 9.9 11 signal the future of 550 9.1 10 0.9 12 500 11 8.2 9 0.8 the Last Mile 10 450 7.3 8 0.7 9 400 6.5 7 5.9 0.6 8 350 5.4 4.9 6 7 300 600 0.5 5 6 250 522 0.4 5 459 4 10 200 9 396 0.3 4 346 3 7 150 302 6 263 3 231 0.2 5 100 199 2 2 0.1 50 1 1 0 0 0.0 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2018 2019 2020 2021 2022

Percentage of retail sales (reight axis) E-commerce sales (left axis) Growth Rate Revenue CSCMP State of Logistics Report: annual study which provides an overview of industry trends, Key insights macroeconomic factors affecting logistics costs, analysis of each – E-commerce adoption is rapidly expanding with total sales for February 2020 growing to 17% of total US retail spending, which major logistics sector, and insights is a 61% YoY increase from industry leaders – The emerging online grocery delivery category, where 2019 US sales of $32bn increasing 23% YoY, is moving toward ultra- fast delivery (defined as less than two hours from click to delivery) as consumers continue to signal that they prefer ultra-fast over in-store shopping or slower deliveries

– Exploding E-commerce and same-day delivery market has grown the U.S. Last Mile sector 11% in 2019 to $61bn and is expected to reach $107 billion by 2024, a four-year CAGR of 11.7%

– COVID-19 will have resounding and indefinite effects as e-commerce and Last Mile delivery have become critical lifelines to 52 securing essential products

Kearney XX/ID Cass Freight Index - Shipments Truckload Contract Rates (March) Truckload: The 2017 Dry Van 1.32 2018 Reefer Flatbed COVID Outbreak has 1.30 2019 $2.80/mi PPI tilted rates in favor 1.28 2020 1.26 $2.60/mi of shippers; 1.24 1.22 $2.40/mi sentiments indicate 1.20 1.18 stabilization but still $2.20/mi 1.16 advantageous for 1.14 $2.00/mi shippers 1.12 1.10 1.08 $1.80/mi 1.06 1.04 $1.60/mi 1.02 1.00

0.00 $0.00/mi CSCMP State of Logistics Report: Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan 2017 Jul 2017 Jan 2018 Jul 2018 Jan 2019 Jul 2019 Jan 2020 Jul 2020 annual study which provides an overview of industry trends, Key insights macroeconomic factors affecting logistics costs, analysis of each – Truckload volumes are down 9% YoY, likely driven by decline in “non-essential” activity driven by COVID-19 containment efforts major logistics sector, and insights from industry leaders – The current US trucking market has moved well past the Covid19 rate spike and now heavily favors shippers as the slowing economy saps demand for capacity. All indicators we track are down – Linehaul rates declined 6.6% YoY in March (the worst comp reported since June 2009)

– Sharp decline in load-to-truck ratios as shippers have reduced activity amid COVID-19 impacts

– April utilization has dropped precipitously (over 70% decrease from March) as truckload demand abates

53

Kearney XX/ID Enhancing Levers Approach – Design Solutions Sustainability Alternate Equipment Type S – Collaborative Optimization based parametric bidding to capture $/mile rate – Hybrid vehicles, Electric Trucks, information for different equipment type, fuel Levers across both Truck Size optimization for demand strategic sourcing type and mode for same lane – alternate bid and process – Optimization scenarios to calculate the cost improvement can Green Fuel S of switching to environmental friendly solution be applied to – Alternate fuel options like bio fuel, – Assign weightage to different business electricity, low carbon emission fuels constraints from both savings and minimize carbon environment impact emissions – Gather carrier’s CSR KPIs via RFI and Mode Conversion S P incorporate in carrier score card – Inter-modal fleet for lanes with less – Develop scenario recommendations in strict transit time requirements alignment with companies CSR goals

Asset Utilization P – Optimize order built up with right ratio of products that weight out to cube out – Improved utilization of assets to S – Strategic Sourcing reduce number of trucks per mileage – Load consolidation to optimize number of P – Process Improvement deliveries, specifically for internal shipments

Network & Route Optimization P – Network footprint optimization to reduce total – Redesign of distribution and logistics distance travelled by SKU network to reduce total miles – 3 point, 4 point loop formation combining – Round trip loop formation to reduce inbound and outbound shipments 54 empty miles

Kearney XX/ID Table of Contents 1. Logistics 2. Media & Entertainment 3. Supply Chain 4. Healthcare Innovation 5. Digital

55

Kearney XX/ID Media Media Mapping of NAICS NAICS Code NAICS Code subcategory subcategory codes to Media NAICS 511140 Directory and mailing list NAICS 323111 Commercial printing, except Advertising / PR Print Media and Entertainment publishers screen and books NAICS 541613 Marketing consulting services Advertising / PR NAICS 323113 Commercial screen printing Print Media sub-industries NAICS 541810 Advertising agencies Advertising / PR NAICS 323117 Books printing Print Media NAICS 541820 Public relations agencies Advertising / PR NAICS 323120 Support activities for printing Print Media NAICS 541830 Media buying agencies Advertising / PR NAICS 451212 News dealers and newsstands Print Media NAICS 541840 Media representatives Advertising / PR NAICS 511110 Newspaper publishers Print Media NAICS 541850 Outdoor advertising Advertising / PR NAICS 511120 Periodical publishers Print Media NAICS 541860 Direct mail advertising Advertising / PR NAICS 511130 Book publishers Print Media NAICS 541870 Advertising material NAICS 511199 All other publishers Print Media Advertising / PR distribution services NAICS 711110 Theater companies and dinner Theater NAICS 541890 Other services related to theaters Advertising / PR advertising NAICS 711120 Dance companies Theater NAICS 541910 Marketing research and public NAICS 711190 Other performing arts Advertising / PR Theater opinion polling companies NAICS 512230 Music publishers Music NAICS 512110 Motion picture and video TV / Film NAICS 512240 Sound recording studios Music production NAICS 512250 Record production and NAICS 512120 Motion picture and video Music TV / Film distribution distribution NAICS 512290 Other sound recording NAICS 512131 Motion picture theaters, Music TV / Film industries except drive-ins NAICS 515111 Radio networks Music NAICS 512191 Teleproduction and TV / Film NAICS 515112 Radio stations Music postproduction services NAICS 512199 Other motion picture and NAICS 711130 Musical groups and artists Music TV / Film video industries NAICS 711211 Sports teams and clubs Sports NAICS 515120 Television broadcasting TV / Film NAICS 711212 Racetracks Sports NAICS 515210 Cable and other subscription NAICS 711219 Other spectator sports Sports TV / Film programming NAICS 519130 Internet publishing and web Digital Publishing NAICS 532282 Video tape and disc rental TV / Film search portals NAICS 541922 Commercial photography Other NAICS 519110 News syndicates News NAICS 711410 Agents and managers for Other public figures NAICS 711510 Independent artists, writers, Other 56 and performers

Kearney XX/ID For this Representative interviewees assessment, we – TV / Film executives interviewed 40+ stakeholders – Broadcast executives and talent – Network affiliates – Feature film talent, directors and producers – Content pre-production (e.g., writers) and post-production (e.g., marketing, P&A) contributors – Past-Broadway and -theater participants – Music producers – National and global (e.g.,. Olympics) sports representatives – Advertising agencies – Media data science leaders (tubular and others) – Major telco board members and executives – Multiple executives at FAANG companies – Local and national news organizations

6A – Media & Entertainment – Gaming executives and experience leads – New-age digital technology providers (e.g., VR/AR, AI) 57

Kearney XX/ID NYC Media Support Programs NYC Media Lab NYC’s government Partners companies advancing new media has a number of tech. with academic programs in place institutions conducting NYC Venture Connect research in the area JumpStart New Media focused on Website serving as a central Training program to assist maintaining the information portal for displaced or entrepreneurial city’s status as a entrepreneurs, managed in junior/ mid-level employees partnership with Columbia exploring opportunities in global media University new and digital media capital

NYC Govt. Hive at 55 NYC Entrepreneurial Launched a center to Fund Media house media freelancers $22M fund targeting Non-Exhaustive Industry on a short-term basis early stage NYC-based and provide access to technology startups Support Initiatives resources

Incubators NYC Venture Fellows Partnering with academic Provides select institutions and commercial entrepreneurs from various landlords to develop ready-to- industries with resources to use high-quality office space build scalable NYC-based International and for startups to sublease businesses Domestic Recruitment Recruitment campaign to encourage multinational

58 Source: NYCEDC media companies to open offices in NYC Kearney XX/ID Traditional media stock prices

59

Kearney XX/ID US media sector analyst revisions

60

Kearney XX/ID Everything we Acceleration of media trends thought would Value Chain Assets Overall Dynamic Post-COVID happen over the Element

next 15 years in New Production Content ➔ Still lifeblood but will have new DNA media, might just Origination (Studios) happen over the Content - Catalogue & Licensed  Resurgent value in a streaming world next 15 months (esp. Movies / Series / Kids / Sports) Live Aggregation/ ➔ Alive but big shift Distribution (Premium Sports & News) (Broadcast) Scheduled (Premium e.g. HBO, Showtime & Non-premium e.g.  Eroding pillars TCM, The CW) Aggregation/ IP streaming services (e.g. Netflix, Amazon, Hulu)  Fast-becoming the default for consumers Distribution (Services & Bundling platforms Platforms) (Cable TV, SatelliteTV)  Traditional distribution, but bundling alive

IP Monetization Other  Gaming up, Others neutral Legend (Gaming, Parks, Merchandising)  Positive Advertising  Key competitive tech lever  Moderately Positive ➔ Neutral  Moderately Negative  Negative As NYC thinks about how to support the media industry, each element of the value chain will be impacted across several key dimensions: New Content, Usage Habits & Tech Implications, Market Power & Regulatory Shifts, Nationalist/Populist Psyche

61 Source: Kearney

Kearney XX/ID Select quotes from ▪ “Netflix/Amazon have figured out when content can afford perfection and when good enough discussions with will yield the same eyeballs” –Hollywood Producer industry players ▪ “Disney will stay to the masses & families, Netflix has the ability to push niche content, and Amazon will expand services to enrich the platform experience, HBO Max needs to carve out a unique positioning to take share” – SVOD Exec ▪ “Content creators will need advertising, don’t give up on AVOD; younger generations are receptive to focused personal ads as they grew with social media” – Top Broadcaster ▪ “There is so much opportunity in post production, streamlining from content to consumer would save time and lots of money” – Hollywood Agency ▪ “Users don’t just want an SVOD or an AVOD, they want an experience something they can interact and engage with” – AVOD Product Team ▪ “Creative production was critical in the drafts, some groups can execute analytics and less technical functions from home” – National Sports League Strategy ▪ “Sports will become personalized to viewer desires, the distributor that partners with leagues and OEMs to enable the best tech will monetize their rights the fastest” – Affiliate Network Director ▪ “ One thing we have learned is that consumers want more than to see something new they want experience something with their friends and family to build an experiential memory” – Telco ▪ “Someone in news will figure out that consumers want to hear the facts and talk about opinions, we have to let them talk” – Local and National News Lead ▪ “We embraced users using each other’s logins, growth is about winning mind share” – SVOD Exec 62 Source: Kearney

Kearney XX/ID Table of Contents 1. Logistics 2. Media & Entertainment 3. Supply Chain 4. Healthcare Innovation 5. Digital

63

Kearney XX/ID U.S. Manufacturing Import Ratio (MIR) U.S. Manufacturing Import Mix Change Trade war spurs (%, 2013 – 2019) (Real $billion, 2018 – 2019) sharp reversal in Driven by a collapse in imports 2019 Reshoring from China due to trade policy (98 bps)

Index, foreshadowing 13.1 12.3 12.5 12.7 12.1 11.2 Most likely China 10.5 10.3 10.6 10.6 COVID-19 test of 9.5 substitution 9.2 15 supply chain 23 90 resilience 2,213 13

31 2,174

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Import Countries 2018 China LCC Gain Mexico Europe Other 2019 1 – China – Vietnam – Philippines – Sri Lanka Imports Loss Gain Gain Gain/Loss Imports – Taiwan – Thailand – Bangladesh – Cambodia – Malaysia – Indonesia – Pakistan • While manufacturing imports to the US from China have declined, Kearney Reshoring Index: – India – Singapore – Hong Kong those from other Asian LCCs and Mexico have grown annual study that compares US manufacturing gross Key insights output to import data from 14 • In 2019, imports from the 14 Asian trading partners we studied sharply declined, particularly from China, while US Asian low-cost countries domestic manufacturing was virtually unchanged from 2018. (LCCs) • As a result, the seventh annual US Reshoring Index was by far the highest yet recorded, dramatically reversing a five-year trend. The ongoing US–China trade war was clearly the driving force in this abrupt shift.

• Intriguingly, manufactured imports from Vietnam and Mexico both increased, evidence that US companies were starting to adapt their sourcing strategies even before the COVID-19 onslaught.

• 2020 dawned with a disruption of a new order of magnitude―COVID-19. We anticipate the harsh lessons of this crisis will compel companies to go much further in rethinking their sourcing strategies―indeed, their entire supply chains.

64 1. Most likely due to increase in demand for European-specific imports (e.g. Luxury cars) MIR = Total Manufactured Goods Imports as % of Domestic Manufacturing Gross Output Source: United States International Trade Commission; United States Department of Commerce Bureau of Economic Analysis Kearney XX/ID Even today’s most Supply Chain Resiliency – Sense and Pivot sophisticated Supply chains are under tremendous pressure due to: supply chains still – Soaring customer expectations try to predict what – Expanding product portfolios will happen, then Adaptable – Channel proliferation optimize Sustainable – New competitors performance Advantage – Technological upheaval against plan. The Digitization is fundamental… – Leading companies are already digitizing problem is, the Dynamically Pivoting and automating supply chains to perform world is not responsive supply chain more reliably and efficiently predictable. You Sense However, with only digitization, supply need a supply and Pivot chains will: chain that pivots. – Still lack the flexibility to adapt in real time to unprecedented demands and Plan and Informed and Kearney Supply Chain unplanned situations Pray frictionless Resiliency Framework – Routinely fall short of expectations Perform against unplannable Supply chains must continually sense and pivot in response to changing Perform Capable against plan conditions: Digitize and Automate – Sustained competitive advantage can only be achieved by making supply chains highly attuned and adaptable to changing demands and conditions, as well as technologically competitive in terms of 65 speed, efficiency, and reliability

Kearney XX/ID What qualities have been the most important to you in shopping The COVID-19 for products before and after the pandemic? Pre-Pandemic Post-Pandemic pandemic is Quality % in the Top 3 Rank (out of 9) % in the Top 3 Rank (out of 9) Δ% in the Top 3 proving an urgent Availability 37% 4 73% 1 37% threat but will Price 78% 1 65% 2 (13%) transform the Quality 70% 2 42% 3 (28%) consumer & retail Convenience (e.g. closest store) 36% 5 41% 4 6% Safety in retail experience (trusted stores, delivery landscape 8% 8 36% 5 28% permanently or curbside process) Trusted Brands 43% 3 24% 6 (19%) Customer Service 18% 6 10% 7 (9%) Environmentally friendly or sustainable 9% 7 7% 8 (2%) Other 1% 9 2% 9 1%

Key insights

Brands who were crisis – Trust will be a top factor for consumer choice Kearney Consumer – Consumers will be drawn to brands that put consumers and employees needs Research leaders will have first and take a stand lasting trust with – In addition to authenticity, consumers will seek brands that display real expertise, consumers ‘no-frills’, unprejudiced patriotism and social care

– Customer engagement and communication will be digital first The rise in digital – eCommerce will rise from 20% to 40%, driven by shift of commodities/grocery engagement and – Delivery and quick pick-up solutions will be table stakes eCommerce will remain – Retailers and brands will be offer one-stop shops for products / services, 20% of physical stores will shut down – Consumer values will have shifted to focus on the ‘essential’ Serving value- – Retailers and brands targeting value consumers effectively will continue to strengthen 66 consumers will be new battleground – Retailers and brands will refocus offerings to essential, trend categories and eliminate “fads”, and will further push private label offerings Kearney XX/ID Table of Contents 1. Logistics 2. Media & Entertainment 3. Supply Chain 4. Healthcare Innovation 5. Digital

67

Kearney XX/ID Healthcare Three reports have been included under separate cover for Innovation: additional detail healthcare innovation: Supplementary Materials 1. When the dust has settled: healthcare after COVID-19

2. Life science supply chains: how COVID-19 will change them forever

3. How to rebound stronger from COVID-19: building resilience in manufacturing and supply

68

Kearney XX/ID Table of Contents 1. Logistics 2. Media & Entertainment 3. Supply Chain 4. Healthcare Innovation 5. Digital

69

Kearney XX/ID Kearney 2019 New York city has a consolidated position and excels in a mix of factors such as Global Cities Index business activity (established global firms, job growth, and private – NYC Summary investment), human capital (educational institutions, educated workforce), and access to information and access to information and technology, consequently NYC will continue to be a global leader.

However, New York City may struggle to sustain its position as a center of start-up activity, innovation and technology companies. The Global Cities Outlook, an indicator that measures the future potential, reveals a negative trend of FDI, entrepreneurship, and private investments.

Established global cities, like New York, may face significant competition from emerging urban hubs. This year’s study signals that some cities are arising as the challengers and they are outpacing the already established American urban hubs, such as San Francisco, New York, and Chicago.

In general, U.S. cities aren’t improving at the same pace as those in other regions. Therefore encouraging the development of human capital and the right economic and political environment are areas that U.S. cities should consider— Source: Kearney 2019 Global Cities Index especially if they want to attract corporations and secure investment from foreign investors.

70

Kearney XX/ID The ability to attract and retain -8% Human Capital is +5% +2% 9.8 essential for all North 8.5 8.3 7.5 8.1 8.3 +1% 6.6 6.9 7.0 regions, while America -1% Insights 3.9 3.9 3.9 Information (Index score) 1.6 1.6 1.5 – Business Activity Exchange and experienced growth in North America and China, while in Business Activity Europe remains flat due to the uncertainty are driving growth 0% +2% – Human capital scores 8.2 -8% 8.1 8.1 7.5 7.7 7.9 +1% declined, driven by the fact Europe that emerging cities still 5.6 5.1 +1% 4.7 4.4 4.4 4.5 struggle to keep pace with (Index score) 2.3 2.3 2.4 metric leaders – Information Exchange is Index Regional Performance gaining ground and is the growth engine in the Index +2% across regions -2% +8% 4.2 4.3 4.4 2.9 2.8 3.1 +4% 2017 China 2.8 2.7 2.7 +6% 2018 % CAGR (Index score) 1.2 1.2 1.3 Source: Kearney 2019 Global Cities Index 0.4 0.4 0.4 2019

Business Human Capital Information Cultural Political Activity Exchange Experience Engagement

71

Kearney XX/ID New York Score Trend Index position by dimension continues with 63.1 62.5 63.2 62.0 61.9 2015 2016 2017 2018 2019 strong momentum 6.2 6.2 6.4 6.4 6.0 PE 3rd 3rd 2nd 2nd 3rd in Business 9.5 9.7 9.7 9.8 9.7 CE nd nd nd rd rd Activity, while also 10.3 9.8 10.6 10.4 10.7 2 2 2 3 3 leading the global IE nd th nd th rd scores in Human 18.8 18.6 18.5 17.1 17.0 2 7 2 4 3 Capital HC 1st 1st 2nd 1st 1st 18.2 18.1 18.0 18.2 18.4 BA 1st 1st 1st 1st 1st 2015 2016 2017 2018 2019

Business Activity Human Capital Information Exchange Cultural Experience Political Engagement

Index Performance – New York Insights – New York received its highest score in Information Exchange due to more media access and new news agencies bureaus – Promoting political and civic participation via Think Thanks and International organizations can improve Source: Kearney 2019 Global Cities Index its performance in Political Engagement

72

Kearney XX/ID New York has lost Performance Outlook position by dimension ground in every 70.4 66.7 65.9 2015 2016 2017 2018 2019 dimension leaving 60.5 14.5 9.0 7.7 53.1 Inn the top 10, while 12.8 rd rd th th th 4.2 3 3 4 5 15 other emerging 20.0 21.8 23.1 14.6 15.4 Eco hubs are 11th 2nd 1st 1st 7th outpacing the big 16.7 18.8 19.1 18.5 17.9 Gov th th th th rd apple 17 14 13 15 23 16.4 17.1 16.9 16.6 15.5 PWB 51st 43rd 46th 45th 55th 2015 2016 2017 2018 2019

Personal Governance Economics Innovation Well-Being

New York in the Outlook Insights – Outlook results reveal a negative trend in FDI, entrepreneurship, and private investment, and a general decline in the ease of doing business. – Emerging cities are outpacing New York in PWB, Economics, and Innovation drove by drops in stability Source: Kearney 2019 Global Cities Index and security environment, infrastructure trend, and patents per capita

73

Kearney XX/ID Overall PWB Economics Innovation Governance New York is not 2018 2019 19 - 18 2018 2019 19 - 18 2018 2019 19 - 18 2018 2019 19 - 18 2018 2019 19 - 18 Rank 2 24 -22 45 55 -10 1 7 -6 5 15 -10 15 23 -8 keeping the pace in Score 65.88 53.05 -12.83 16.56 15.49 -1.06 23.09 15.38 -7.71 7.71 4.25 -3.46 18.52 17.93 -0.59 PWB, negative trend in FDI inflows Stability and Security FDI Inflow Raw Data FC Data Score Rank 19 Δ Raw Data FC Data Score Rank 19 Δ drives the drop in 0% -13% -28% 109 -25 -30% -77% -86% 26 -25 – Maintained the level of stability and security – FDI decrease 30% vs 2017 Economics, – NY is experienced a negative trend relative to previous performance – The data reveals a negative trend relative to its previous and other cities are increasing faster performance Innovation and Healthcare Evolution Infrastructure Trend Transparency are Raw Data FC Data Score Rank 19 Δ Raw Data FC Data Score Rank 19 Δ 0% -1% 0% 25 -5 0% -13% -14% 41 -25 also experiencing – Maintained the quality of healthcare – Infrastructure investments are dropping relative to the performance – Decrease in rank due to other cities improving at a faster rate in 2013, other cities are outpacing New York downward trends Gini Index GDP per Capita Raw Data FC Data Score Rank 19 Δ Raw Data FC Data Score Rank 19 Δ 0% 1% 0% 108 4 1% -1% 8% 3 2 – Maintained the level of Gini – Maintained the level of GDP per capita – Improved in rank due to other cities experienced a negative trend in – New York is performing is closing the gap with the leader and terms of reducing inequality performing better than other cities New York – Outlook performance by metric (1/2) Patents per 100 pop. Quality of Bureaucracy Comparison 2018-2019 Raw Data Forecast Score Rank 19 Δ Raw Data Forecast Score Rank 19 Δ 1% 5% -7% 39 - 0% 0% 0% 14 -2 – The leader is increasing at a faster pace than the flat trend of New – Maintained the quality of bureaucracy and the relative position to the York, maintained the 39th position leader, decrease in rank due to other cities outpacing NYC Private Investments Ease of Doing Business Raw Data Forecast Score Rank 19 Δ Raw Data Forecast Score Rank 19 Δ -11% -39% -63% 11 -8 0% 1% 3% 69 -28 Source: Kearney 2019 Global Cities Index – NYC decreases in private investment and it is experiencing a – Maintained the ease of doing business negative trend relative to its previous performance – Other cities experienced a positive growth trend, outpacing New – The leader and other cities are outpacing New York York in ease of doing business Entrepreneurship Transparency Raw Data Forecast Score Rank 19 Δ Raw Data Forecast Score Rank 19 Δ 0% 0% -18% 17 -5 -5% -13% -11% 22 -12 – Maintained the number of incubators in the city – New York experienced a negative trend in transparency 74 – New York’s score decrease because is not keeping the pace with – Additionally, transparency is dropping more relative to its the leader and other cities performance in previous years

Kearney XX/ID United States results show a negative trend due -1.2% -0.7% Insights to U.S. cities aren’t 18.8 +0.6% 17.5 17.0 17.5 18.3 18.4 17.9 improving at the 16.8 14.1 14.9 – Non U.S. cities are 13.5 13.7 -19.3% outpacing the U.S. cities same pace as United across the 4 dimension, those in other States 8.7 causing the negative trend 5.5 in the Outlook regions 4.7 3.7 – U.S. is still wrestling with political uncertainty and rising nationalism causing the flat performance in Governance – U.S. cities are not keeping +0.9% the pace in: livability, FDI, +3.2% entrepreneurship, and 69.9 United States Outlook trends – 71.6 private investment, and a 70.0 71.9 58.6 +1.8% Average Score 64.7 general decline in the ease 59.0 59.3 of doing business 43.2 43.7 Non U.S. 41.1 cities 39.1 -14.2% 2016 13.4 7.0 8.1 7.7 2017 Average % annual 2018 growth rate Source: Kearney 2019 Global Cities Index Personall Governance Economics Innovation Average score of 113 cities 2019 in the study since 2015 Well Being

75

Kearney XX/ID Thank you

For questions or comments on this material, please contact: William N. Callender Partner and New York Office Head

[email protected]

Stay connected with Kearney

This document is exclusively intended for selected client employees. Distribution, quotations and duplications – even in the form of extracts – for third parties is only permitted upon prior written consent of Kearney.

Kearney used the text and charts compiled in this report in a presentation; they do not represent a complete documentation of the presentation.