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There are more streaming stocks than Netflix and Disney. Find out if any of them are worth buying in this analysis of the best streaming stocks.
Best Streaming Stocks
Before we jump into it, let’s provide some background on the streaming market:
- Average U.S. household spends $40 monthly on streaming services, up 17% YoY
- Average U.S. consumer is willing to pay for four streaming services
- Monthly subscriptions are replacing the traditional advertising model
- There are different types of streaming stocks, such as pure-play, user-generated, live sports, hybrid, and oh-we-offer-streaming-too
Alright, let’s get into the best streaming stocks. Note, this is not an ordered list.
#1. Netflix (NFLX)
Netflix has a first-mover advantage over the other streaming platforms – as it should. Netflix created the ‘streaming market’ as we know it today.
Netflix has +200 million paying subscribers and enjoys a 20% share of the video streaming market, down from 29% just a year ago.
However, we don’t believe a decrease in market share should scare NFLX investors. Household spending on streaming subscriptions will continue to increase as streaming overtakes the traditional cable model.
In the event that households cut their streaming budget, Netflix would likely be one of the last ones to go.
The success of Netflix’s original content is something to keep your eye on moving forward. Owning the IP creates downstream opportunities that will help Netflix remain on top.
Another differentiator is Netflix’s access to data, which allows its AI algorithm to provide better recommendations to the user and more insights to its executives.
#2. Disney (DIS)
Disney+ arguably saved the Walt Disney Co. during the pandemic – the streaming service went from zero to 100 million subscribers in the blink of an eye, keeping Mickey above water. At the same time, its parks, cruises, and resorts were shut down.
Disney+ is one of the more interesting business models that exist today. It creates and owns all of its content, which allows it to vertically integrate so that other platforms cannot.
For example, a new Disney movie might result in a new attraction at a park, a new toy or t-shirt, or a new cruise ship. Disney+ not only monetizes users directly via a subscription fee but continues to print dollars off-platform.
Disney+ could be free, and it might still be net positive for the company. It would be a ‘free’ advertisement for the Walt Disney Co. in 100 million households worldwide.
Not to mention the Nostalgia Multiplier that truly separates Disney from the rest. Kids get hooked on Disney stories, and it becomes part of their childhood.
These same kids grow up and put their children in front of Simba, perpetuating the cycle and lining the pockets of DIS shareholders.
Not to mention the other streaming assets that Disney owns, ESPN+ and Hulu. We believe that ESPN+ and YouTube (more on this later) are the future of live sports.
#3. Amazon (AMZN)
Prime Video is another interesting study – Amazon Studios can significantly lose due to the greater Amazon machine.
It’s difficult to measure the number of Prime Video subs because the service is included with a Prime membership, but research indicates Prime Video has 54 million active users from a paying base of 150 million Prime Members.
You can watch any movie ever created on Prime Video for a few bucks or watch one for free that’s included in your membership.
Amazon is creating their own content, too (and they’re good at it). Amazon Studios has won several Oscars in its short Hollywood existence.
The company recently purchased the MGM library for $8.45 billion, acquiring the IP to the James Bond franchise, The Handmaid’s Tale, and Rocky franchise, among many others.
Additionally, buying AMZN provides exposure to music streaming in Prime Music and video game streaming in Twitch.
It’s also important to understand the role of Amazon Web Services in streaming. AWS provides the computing power for nearly every streaming platform on this list.
#4. Spotify (SPOT)
Spotify is the Netflix of audio streaming – it created a market that it now dominates.
Spotify has 356 million worldwide users and 158 million paying subscribers, well ahead of its closest competitor in Apple Music.
Spotify’s push into podcasting has gotten both Wall Street and retail excited. Until the $100 acquisition of ‘The Joe Rogan Experience,’ few understood the potential for podcast advertising.
If they didn’t know then, they do now. Spotify also acquired the Ringer Podcast Network and Gimlet Media for $200 million each, in addition to podcasting pick-and-shovel companies like Megaphone and Anchor for $235 million and $150 million, respectively.
Most recently, Spotify signed a $60 million deal with Alex Cooper and the ‘Call Her Daddy’ podcast.
Beginning on July 21, the podcast that was previously part of Barstool Sports will be exclusively available on Spotify.
Spotify doesn’t currently separate podcasting ad revenue, but we expect its eventual ‘reveal’ to have an immense impact on shares of SPOT, similar to that of AWS and Amazon, and YouTube and Google.
#5. Google (GOOG)
Speaking of Google, YouTube is another force to be reckoned with – its financials were recently revealed, and it’s an advertising machine.
YouTube reaches more 18-49-year-olds than all linear TV networks combined. And while its user-generated content has carried it since 2006, YouTube has become a hybrid-streaming platform with the launch of YouTube TV.
This service streams live sports, news, and shows from 70+ channels. In our estimation, YouTube TV streams the ‘right kind’ of linear TV: sports.
YouTube is probably a $300+ billion company if it were to be spun off, however unlikely that event may be.
Google acquired YouTube for just $1.65 billion and built it into the platform it is today.
#6. AT&T (T)
AT&T owns HBO Max, the streaming platform with (hands down) the best content that struggles to maximize its true potential.
HBO Max is home to some of the greatest television shows of all time, from Sopranos to Game of Thrones, to Curb Your Enthusiasm, and is still creating new hits like Big Little Lies, Barry, Succession, and Mare of Easttown – so there’s no concern over the quality of its content.
But its execution is lacking. Imagine if these new shows were released on Netflix – the world would stop to watch them, and Twitter’s (TWTR) servers would get fried.
This isn’t a slight at Netflix’s content, but a compliment on the effectiveness of its distribution and network effects.
HBO Max plans to spend $1 billion on content annually, compared to Netflix’s $11.8 billion content budget in 2021. HBO Max is pound for pound the content king.
Regardless, ‘investing’ in HBO Max is fundamentally different from buying NFLX, as one is a pure-play streaming stock and the other sells phones.
#7. Apple (AAPL)
Apple TV+ has garnered a 5% share of the U.S. streaming market since its launch in 2019.
Its films and series have received 389 awards nominations and have won 112 awards during this time.
Increasing sales of the company’s smart TV will continue to fuel adoption. Apple sold 4.3 million models in Q4 ’20 for a quarter-over-quarter growth of 33%.
Apple controls just 4% of the connected TV device space and sits at the 11th spot in this market (you could see this as bullish or bearish).
This speaks to Apple’s unique positioning as a streaming service similar to that of Amazon.
Apple’s suite of other products and services can drive Apple TV+ adoption.
For example, the service can be bundled into the Apple One package, an offering that lets users combine up to six Apple services into one easy subscription.
This includes Spotify’s top competitor Apple Music.
A customer buys an Apple Watch to track her fitness, and a month later, she’s watching The Morning Show with Jennifer Aniston and Reese Witherspoon.
It’s also important to mention Apple’s AWS-like dynamic when Netflix, Spotify, and YouTube succeed… the App Store. Apple gets a 30% cut of all in-app digital purchases.
Spotify is suing Apple over this, arguing that it gives the Cupertino giant an unfair advantage.
Big Tech facing antitrust allegations is nothing new. However, amongst all the FAAMG stocks, regulators might have the strongest case with Apple and its App Store.
#8. Roku (ROKU)
Roku is a pick-and-shovel play on the growing streaming market. It creates the hardware that makes your TV smart by putting all of your streaming services in one place.
Roku bridges the gap between your TV, Netflix, and YouTube. These apps download onto your Roku device and then appear on your TV.
Roku makes money by selling these devices and collects advertising dollars for its service of connecting platforms and users.
Roku is a middleman, and this makes it susceptible to certain market innovations, but it’s certainly striking while the iron is hot.
ROKU has been one of the best-performing stocks globally and a major holding in ARKK.
#9. ViacomCBS (VIAC)
ViacomCBS stock fell off a cliff at the start of 2021, rising as high as $100 per share before collapsing below $40 in a matter of days.
The crash was a result of the Archegos Capital blowup. The firm was forced to sell large blocks of VIAC shares as some of its positions’ moved against the firm.’
This couldn’t have come at a worse time for ViacomCBS, who earlier in the week saw its stock fall 23% after announcing a $3 billion stock sale to fund its new streaming endeavors in Paramount+.
Things appear to have cooled down, and the company has begun putting that $3 billion to work.
ViacomCBS is to streaming as Oracle is to cloud computing; they’re legacy companies that are navigating massive sector disruption.
Pending survival is good value amongst pricey growth stocks (if they aren’t turning into growth stocks themselves).
There’s some rumblings of a potential merger between ViacomCBS and Comcast, a move that would join Paramount+ and NBCUniversal’s streaming platform Peacock.
#10. Peloton (PTON)
Peloton will have to be more than a stationary bike to remain at its current valuation – and streaming could be the answer.
Peloton is a media company disguised as a fitness company. PTON is a sneaky bet on the future of streaming, even if it’s exercise.
It has the subscription component. The advertising opportunity is on the table. And it has its own habit-forming behavior incentives.
Some people have to start their day on the Peloton the same way some people have to end their day with The Office.
Additionally, Peloton is actually the best-paying music streaming service, paying artists more per stream than Apple Music and Spotify.
Granted, Peloton accounts for just 0.07% of global streams and 1.28% of industry revenue, but it’s an interesting fact nonetheless.
Streaming Stocks FAQs
What are the best streaming stocks?
Netflix (NFLX) and Disney (DIS) are commonly considered the best streaming stocks. They have 200 and 100 million paying subscribers, respectively, and far more password-sharing viewers. Other streaming stocks are AT&T (T), Apple (AAPL), Amazon (AMZN), Spotify (SPOT), ViacomCBS (VIAC), Roku (ROKU), and even Peloton (PTON).
What is the best stock to buy with $1000?
The best stock to buy with $1000 depends on your investing goals and risk tolerance. Some platforms like Robinhood (HOOD) allow you to buy fractional shares of stocks, so you can divvy up that $1000 amongst countless names. Or buy an index fund like VOO and outperform the majority of individual stocks in the long-term.
What stock is better than Netflix?
Disney might be a better streaming stock than Netflix because of its off-platform monetization strategies, Nostalgia Multiplier, and IP factory. However, Netflix is taking steps to mitigate these disadvantages by launching its own merchandise store and creating more original content.
Bottom Line: Best Streaming Stocks
Keep in mind that streaming is not a zero-sum market. Netflix and Disney will beautifully co-exist and continue to pull forward growth in this ecosystem.
However, a line must be drawn somewhere. And the gap between the companies on either side of that line is enormous.
This article is for informational purposes only. It is not intended to be investment advice.