September 15, 2020
Even before the pandemic, consumers were cutting the cord and transitioning from cable to online streaming for their content viewing. But the quarantines initiated around the world created a boom for streaming video service providers that may result in millions more leaving traditional cable television behind.
According to Comscore (Tii:SCOR), a provider of viewership intelligence, average in-home data consumption was up 33 percent during the first 10 days of May 2020 compared to the first 10 days of May 2019. This follows 28 percent and 36 percent year-over-year increases in March and April 2020, respectively. Smart TVs, mobile phones, streaming boxes/sticks, and smart speakers are driving year-over-year growth trends. Separately, a TransUnion survey found that about 45% of participants said that they saw themselves continuing to stream.
Should this trend continue (and there are no indications that it wouldn't), here are some of the public companies that may well reap the rewards.
Alphabet Inc. (Tii:GOOGL)
With more than 2 billion monthly users, video sharing platform YouTube, part of the Alphabet Inc. conglomerate, reported a sharp rise in viewership during the first few weeks of the pandemic. Unsurprisingly, leading the way were videos related to baking sourdough bread, tutorials on preparing meals at home, virtual museum tours, how to cut hair, home workouts and nature sounds. As more people worldwide look to add a little DIY into their lives, YouTube has another vast market for its content.
Netflix Inc. (Tii:NFLX)
Netflix is, of course, the king of the hill that all the other services want to topple. With 46.55 million monthly active users, they have nearly double the next contender, Hulu, who has just under 26.5 million. The streaming service manages to add new subscribers despite increasing competition and a recent price hike. Expansion into more international markets has allowed them to continue to grow. The service continues to acquire new shows and movies even during production lockdowns. With many of us continuing to watch more TV than before, their hold on viewers does not look like it will slip.
The Walt Disney Company (Tii:DIS)
Disney+ had a highly anticipated launch with the series Mandalorian. Additions of many nostalgic favorites has kept viewers happy and engaged, with new people checking out this streaming service all the time. With Disney+ being offered as a bundle with Hulu and ESPN+, they are likely to draw in new subscribers who had been holding onto cable to get live sports. Disney also has the benefit of being more than a streaming company. While their new streaming service has contributed to growth, the fact that the company is not completely reliant on this segment gives them the stability that has made them a long-term winner.
Amazon.com Inc. (Tii:AMZN)
While the free shipping is the top perk offered by Amazon Prime, Prime Video is a close second. Like Apple and Disney, Amazon is much more than a streaming company. However, multi-billion dollar investments in Prime Video content shows that Amazon is taking this segment of their market seriously. The more people who add Prime to get access to their award-winning shows, the better the results for investors.
ViacomCBS Inc. (Tii:VIACA)
When CBS launched All Access, many people were skeptical of their ability to compete in the already crowded online market. However, between CBS All Access and Showtime, ViacomCBS saw a 50% gain in subscribers between 2018 and 2019. With six highly anticipated Star Trek offerings making their debut in the fall and cult favorites like The Good Fight continuing to hold loyal viewers, this service is likely to continue to grow.
Roku Inc. (Tii:ROKU)
When looking at ways to get in on the profits of the streaming boom, don't neglect the equipment that makes it possible. Roku has its own streaming content, but its biggest assets are its software platform and physical devices. Like many publicly traded companies, Roku stock took a hard hit in March. However, the price has shot up over 100% in value since then. Multiple streams of revenue like the Roku TV, advertising revenue and more make this company a strong contender.
These are just a handful of companies building significant gains as the streaming revolution continues. Whether you're a loyal viewer of one platform or see yourself subscribing to them all, investing allows you to gain a piece of the action as viewing habits continue to change.