Streaming Services Thrive on Pandemic: 4 Stocks to Watch
The pandemic has been helping a few businesses and video streaming services are certainly one of its biggest beneficiaries. After a great 2020 that saw a record increase in paid subscribers, this year too started on a high, with subscribers multiplying.
Although experts had predicted that streaming services would start losing subscribers once the pandemic eases, that still hasn’t happened, with people now spoilt for choice with multiple launches over the past year. The pandemic’s coinciding with the launch of new streaming services has resulted in an increase in the user base for almost all major service providers.
Streaming Services on a High
According to Deloitte's 15th annual Digital Media Trends, 82% of consumers subscribe to at least one or more paid video streaming services. The churn rate for video streaming services between October 2020 and February 2021 is hovering around approximately 37%.
Given that most people have been staying home for the past year due to the pandemic, 57% of them count video streaming among the top three sources of entertainment today. The survey also found that people are ready to cancel subscriptions if the rates go up as they have options of switching to another service provider.
Most respondents said that increase in price is the main factor for canceling a paid video service. On the other hand, 55% of subscribers presently watch free ad-supported video service to cut subscription costs.
Streaming Services Poised to Grow
Pay TV has been suffering at the hand of streaming services for quite some time. According to a report form from Ampere Analysis, an increasing number of Americans are shunning pay TV for streaming services. This saw pay TV penetration in 2020 dropping below 60% for the first time.
The pandemic also coincided with the launch of multiple new streaming services. A few OTT services were launched in late 2019, followed byafew more in 2020. The competition has only intensified over time but the services have all been huge gainers in terms of subscribers and eventually revenues, thanks to the pandemic once again.
Moreover, many media companies that have been waiting to release their movies in theatres have started to release them on OTT platforms, which have further been helping the streaming industry.
Stocks in Focus
Streaming services have been on a high ever since the coronavirus outbreak. With not too many entertainment options left open, they are likely to benefit in the coming months too. This thus makes an opportune time to invest in video streaming stocks.
Apple, Inc. AAPL launched its streaming services last year and has gained immense popularity since then. The company reportedly has more than 30 million TV subscribers.
The company’s expected earnings growth rate for the current year is 55.5%. The Zacks Consensus Estimate for current-year earnings has improved 13.8% over the past 60 days.
Netflix, Inc. NFLX is considered a pioneer in the streaming space. It has been spending aggressively on building its original show portfolio. The company added more than 3.98 million paid subscribers in the first quarter of 2021 for a total of 207.64 million globally.
The company’s expected earnings growth rate for the current year is 70.6%. The Zacks Consensus Estimate for current-year earnings has improved 5.7% over the past 60 days.
Amazon.com, Inc. AMZN besides being an e-commerce giant, offers several other services. Amazon Prime, a membership program, provides access to streaming of movies and TV episodes among other services, and is one of the market leaders in the streaming space.
The company’s expected earnings growth rate for the current year is 33.4%. The Zacks Consensus Estimate for current-year earnings has improved 11.9% over the past 60 days.
Comcast Corporation’s CMCSA Peacock video streaming service boasts more than 33 million paid subscribers in less than a year of its launch. Peacock has three tiers of service: Free, Premium and Premium Plus.Peacock also offers a lineup of around 25 curated digital linear channels, featuring long-form and digital-originated programing content from NBCUniversal's broadcast and cable properties as well as third-party content providers.
The company’s expected earnings growth rate for the current year is 10.7%. The Zacks Consensus Estimate for current-year earnings has improved 2.1% over the past 30 days.
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