Amidst the evolving landscape of the streaming industry, investors are drawn to the allure of the best streaming stocks to fuel their financial ambitions. The surge in streaming services’ popularity can be largely attributed to the digital upheaval from cord-cutting and the recession of appointment viewing habits, a trend that has been gaining momentum even before the recent years of uncertainty.
Streaming services witnessed a meteoric rise during the pandemic, with American subscriptions and streaming durations soaring by a staggering 75% in 2020. Premium streaming platforms embraced a significant chunk of the American populace, growing from 55% in 2018 to an impressive 76% in 2020. The number of user subscriptions surged from three to five, undeniably signaling a transformative shift in the film industry, drawing concern from stalwarts like Ben Affleck over the fate of mid-budget films.
However, beneath the seemingly dazzling exterior of the streaming realm lies a cautionary tale. Household spending on streaming subscriptions experienced a 25% downturn, plummeting from $90 to $73 per month from 2021. Correspondingly, key streaming providers decided to slash their content budgets substantially, with a cumulative reduction of $7.8 billion anticipated.
Projections for the streaming business remain optimistic, with an expected 8% industry growth from 2024 to 2027, amounting to a substantial $137.7 billion. Navigating this uncertain terrain requires a discerning eye for the best stocks that possess the content and resources to thrive amidst the industry’s consolidation and restructuring.
Walt Disney (DIS)
Walt Disney (NYSE:DIS) has solidified its position among the crème de la crème of streaming stocks with a remarkable performance in the third quarter of fiscal 2024, marking its maiden foray into profitability.
Flipping the script from a $512 million loss in the corresponding quarter of the prior year, Disney’s trio of direct-to-consumer streaming services – Disney+, Hulu, and ESPN+ – collectively churned out a $47 million profit during Q3 2024.
The upswing in revenues, deliberate pricing adjustments, and stringent cost controls laid the groundwork for this promising metamorphosis. Bolstered by a 15% surge from the previous year, Disney’s streaming segment raked in a handsome $6.4 billion in revenue overall.
Disney is gearing up for a strategic pricing reassessment to bolster its profit margins and cater to burgeoning demand. Initiating from October 17, the ad-supported tier of Disney+ will witness a price hike to $9.99, while the ad-free version will be pegged at $15.99. Analogous pricing revamps are on the cards for Hulu and ESPN+.
Zooming out from its streaming glory, Disney outshone Wall Street predictions with its fiscal 2024 third-quarter earnings, pocketing $1.2 billion from its entertainment segment, spanning cinema, television, and streaming ventures. Notably, ESPN+ basked in the limelight, buoyed by the bonanza from NBA and WNBA broadcast rights, propelling sports streaming to new heights.
Amazon (AMZN)
Diving deep into digital content, Amazon (NASDAQ:AMZN) splurged a colossal $17.4 billion on video and music in 2023, underscoring its staunch commitment to fortifying its Prime Video empire.
Amazon’s hefty investments in content have started reaping dividends, with Prime Video seizing a substantial 22% market share in the streaming landscape, propelling Amazon into the upper echelons of premier streaming stocks.
Captaining a global fleet of over 200 million subscribers, Amazon Prime has witnessed an exponential surge in subscriptions, fueling the platform’s ascension to the zenith of popularity and revenue generation.
Bolstering these achievements, Amazon’s net sales soared by a commendable 10% in Q2 2024, swelling to a robust $148 billion. This growth narrative encapsulates Amazon’s dominance across diverse business verticals, with streaming media serving as a cornerstone in its success odyssey.
Warner Bros Discovery (WBD)
Warner Bros Discovery (NASDAQ:WBD) emerges as a potent force in the streaming sphere, intertwining a treasure trove of content assets with an enticing investment prospect, boasting a compelling 12-month price target of $12.50 and an alluring 62% upside potential.
Augmenting its arsenal with a plethora of offerings from HBO, Warner Bros., DC Universe, HGTV, Food Network, TLC, and Max, the Discovery Plus-HBO Max concoction dishes out a sumptuous platter of 35,000 hours of premium content. The membership tiers encompass a spectrum of viewing experiences, including 4K UHD content on the Ultimate Ad-Free tier with a smorgasbord of ad-supported and ad-free viewing options.
Teaming up with Disney, Warner Bros Discovery spearheads an innovative streaming bundle comprising Disney+, Hulu, and Max, amalgamating an array of distinguished entertainment brands to elevate value propositions and foster subscriber retention and expansion.
Introducing “One WBD,” a holistic solution spanning streaming, theatrical, and network platforms, Warner Bros Discovery seeks to amplify client engagement throughout the marketing lifecycle. Albeit grappling with a staggering $9.99 billion net loss in the second quarter of 2024, attributable majorly to a $9.1 billion write-down of its TV assets, Warner Bros Discovery’s swift pivot towards streaming amid plummeting shares offers a tantalizing investment narrative.