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Teens flock to streaming, video games amid COVID-19: RPT

Yahoo Finance’s Alexis Christoforous and Brian Sozzi discuss how teens are spending their money and time this fall with Piper Sandler Research Analyst, Yung Kim.

Video Transcript

BRIAN SOZZI: The impact of the COVID-19 pandemic isn't leaving out any demographic or age group. Piper Sandler is out with its annual teen spending survey reporting that teen spending is at an all time survey low, but the younger generations are spending their money and time on video games and movies. Joining us now to discuss is Piper Sandler Senior Equity Research Analyst Yung Kim. Yung, good to see you. So I guess no real surprise that teens are at home much more than they probably have been ever before playing a lot of video games. What interested me in this report, why is "Call of Duty" so popular? "Call of Duty" put out by Activision Blizzard. You cover Activision Blizzard. Why is this game winning, and why a "Fortnite" off its peak?

YUNG KIM: First off, thank you for having me, and good morning. I think the reason Activision is doing so well and specifically "Call of Duty" is in large part due to their launch of what they call "War Zone" in the spring. Now in the spring, we run our survey twice a year, once in the spring and once in the fall. And when we launched the survey in the spring, COVID was still in its early days, stay at home regulations were still early, so we'd noticed some uptick, but not a significant level.

What we're seeing after a summer of staying at home is that by and large, a lot of these teenagers are playing "Call of Duty," and I believe it's likely "War Zone" that they're playing, because it was initially launched in March. And yes, it did overtake "Fortnite" for the first time in our survey, and I think that's largely due to the new game on the block, so to speak, even though they do have an annual iteration. But I think the "War Zone" really hit a chord with a lot of these teens, partly because it's free to play, which "Fortnite" also is. But it's the new free to play game that happened this year, and I think our survey kind of captured that.

ALEXIS CHRISTOFOROUS: Yung, let's move away from video games for a moment and talk a little on Netflix, and lots of streaming services are popping up, Quibi among them. Is Netflix sort of losing its mojo with this demographic?

YUNG KIM: You know, I've seen so far in the last few surveys that we've done is that Netflix is still, by and large, the leader in terms of mindshare amongst these teens. Yes, there are new competitors. We did include Disney Plus as well as Apple Plus in our survey, but they actually have lost share. Apple Plus and Disney Plus actually lost share from our spring version of this survey, and Netflix continues to lead, which actually came as a bit of a surprise to me, because there is no live television component. I was thinking that amid the time of COVID, amid the time when everybody wants to hear or see breaking news that Netflix would probably take a step back to like, for example, YouTube or even cable TV, but that's not the case with Netflix amongst the teens.

BRIAN SOZZI: You know, based on the data that you have found here with regard to Netflix, do you think Netflix is in a position to successfully raise prices in early 2021, and how much do you think prices will be raised?

YUNG KIM: It's hard to say how much it'll be raised, but I think they are in a position where they can. I think what we've seen in both this survey with teens but also other surveys that we've conducted is that, you know, the consumer value proposition of Netflix has only increased amid COVID. I think, especially for the entire household where you have multiple demographics within a household, that the subscription to Netflix has become even more important so that every member of the household has something to watch at any given moment. So I think the possibility of raising prices is there. I think it does raise a very strong value proposition, but it's just hard to say what the timing will be of that, what the actual amount will be, but it seems like there is an appetite amongst the consumers to accept that to a certain degree.