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Streaming Services Get a Boost From Pandemic: 4 Stocks to Watch

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Ritujay Ghosh
·5 min read
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The pandemic has been working miracles for video streaming services. After a great 2020 that saw a record increase in paid subscribers, this year has also started on a high, with subscribers continuing to multiply. 

Also, the pandemic coincided with the launch of a number of video streaming services, which cashed in on the situation by immediately adding millions of subscribers that gave a boost to their revenues. This resulted in an increase in the user base of almost all major service providers, with the higher average household spending on streaming video services growing.

Streaming Services on a High

According to a new report from Ampere Analysis, the United States has nearly 340 million subscription contracts to OTT streaming services. This is more than the country’s population of 330 million. The figures have been compiled till the first quarter of 2021 and are projected to increase at a rapid pace.

The report further showed that at the end of first-quarter 2021, an average U.S. consumer now subscribes to four or more to VOD services, with one-quarter subscribing to even five services. Besides, 57% of the Internet users in the United States avail VOD services as their main mode of watching TV and films.  

Also, more subscriptions mean that people are paying more for the services. One big reason behind this jump is increasing options. Prior to 2020, there were only three major players, which have now doubled in just over a year. Naturally, this has also been boosting competition.

Streaming Services Poised to Grow

Pay TV has been taking a hit for quite some time. According to the report, more consumers are shifting away from pay TV to streaming services. This saw pay TV penetration in 2020 dropping below 60% for the first time.

Besides, the pandemic coincided with the launch of a number of streaming services. A number of video streaming services were launched at the end of 2019, followed by a couple more in 2020. Most of them have succeeded in adding thousands of subscribers within weeks.

Moreover, many media companies that have been waiting to release their movies in theatres have started to premiere them on OTT platforms, which have further been helping the streaming industry.

Stocks in Focus

Streaming services are one of the few beneficiaries of the pandemic, which has kept millions at home with nothing to do but stream. 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 36.9%. The Zacks Consensus Estimate for current-year earnings has improved 0.4% over the past 60 days.  Apple has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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 8.5 million paid subscribers in the fourth quarter.

The company’s expected earnings growth rate for the current year is 61.7%. The Zacks Consensus Estimate for current-year earnings has improved 1.1% over the past 60 days.  The company currently has a Zacks Rank #3 (Hold).

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 18.4%. The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the past 60 days.  Amazon carries a Zacks Rank #3.

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 current year is 8.8%. Comcast shares have gained 6.9% in the past three months. It carries a Zacks Rank #3.

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