Pandemic Boosting Streaming Service Users: 4 Stocks to Watch
The coronavirus pandemic has dealt a major blow to U.S. media companies as theatre halls remain closed and shooting of big-ticket projects is still stalled. However, the loss may not be that massive for those who are into the streaming video on demand (SVOD) service. According to a new survey by Leichtman Research Group, more Americans are now subscribing to multiple video streaming services.
In a way, the pandemic has been working miracles for the streaming industry. Users have been increasing and companies are garnering more revenues in the form of increased subscriptions.
Service Adoption Expands on Growing Usage
According to a new survey by Leichtman Research Group, 55% of U.S. households now have more than one SVOD services, up from 43% in 2018 and 20% in 2015. As streaming service adoption expands, so does usage. According to the survey that was conducted among 1,990 households, 40% of all adults use at least one video streaming service every day, up from 30% in 2018 and 16% in 2015.
Younger adults represent the bulk of that percentage, with ages 18-44 accounting for 63% of daily SVOD users. The companies dominating the SVOD game are Netflix, Inc. NFLX, Amazon.com, Inc.’s AMZN Amazon Prime Video and Hulu. The survey says that 78% of all U.S. households now have a subscription streaming service from Netflix, Amazon Prime and Hulu.
Moreover, 55% of adults watch video on non-TV devices (including mobile phones, home computers, tablets, and eReaders) daily, up from 46% in 2018 and 33% in 2015, while 44% of adults watch video on a mobile phone daily, up from 35% in 2018 and 20% in 2015.
Streaming Services Poised to Grow Ahead
Another survey by cloud video technology company Grabyo, shows that Americans are now spending an average of $1 billion a month more on video streaming compared to what they had spent in January. Amid the pandemic, video streaming services have reached 72% penetration into American homes, up 13% since January. Pay TV currently has 56% penetration. Of the total U.S. video customers, 65% aged between 50 and 64 and 50% above 65 are now paying for online streaming.
Needless to say, almost all video streaming services companies have been witnessing a surge in new users and subscriptions. And this is likely to continue given that there are no signs of the pandemic easing. According to a recent report by Grand View Research, the global video streaming market size was valued at $42.6 billion in 2019 and is projected to witness a CAGR of 20.4% between 2020 and 2027.
Stocks in Focus
The streaming industry has been one of the biggest beneficiaries of the COVID-19 pandemic. This thus makes an opportune time to invest in video and music 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. Recently, the company announced that it will also be offering a bundled service, which is likely to further boost its subscriber figures.
The company’s expected earnings growth rate for the current year is 8.8%. The Zacks Consensus Estimate for current-year earnings has improved 4.9% over the past 60 days. Apple has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Netflix, Inc. is considered a pioneer in the streaming space. It has been spending aggressively on building its original show portfolio. The streaming giant gained 10.1 million paying customers in the second quarter, beating its own estimates of 7.5 million.
The company’s expected earnings growth rate for the current year is 52.1%. Its shares have gained 25.3% over the past three months. The company currently has a Zacks Rank #3 (Hold).
Amazon.com, Inc., 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 39.1%. The Zacks Consensus Estimate for current-year earnings has improved 60.1% over the past 60 days. Amazon carries a Zacks Rank #3.
Comcast Corporation’s CMCSA Peacock video streaming service has already gained more than 10 million paid subscribers in less than a month after 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 programming content from NBCUniversal's broadcast and cable properties as well as third-party content providers.
The company’s expected earnings growth rate for next year is 24.7%. The Zacks Consensus Estimate for current-year earnings has improved 0.8% over the past 60 days. It carries a Zacks Rank #3.
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