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Streaming Services Keep Gaining Traction: 4 Stocks to Watch

The coronavirus pandemic has given a major blow to U.S. media companies as theatre halls remain closed and shooting of big-ticket projects are stalled. However, the loss may not be that massive for those who are into video streaming service. According to a new survey by cloud video technology company Grabyo, Americans are spending an average of $1 billion a month more on video streaming.

In a way the pandemic has been working miracles for the streaming industry. Users have been increasing and companies have been garnering more revenues in the form of increased subscriptions. So it can be said with conviction that the video and music streaming industry has been one of the biggest beneficiaries of the COVID-19 pandemic.

Pandemic Driving Video Streaming Market

Americans are spending an average of $1 billion a month more on video streaming since Grabyo polled U.S. consumers back 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.

Moreover, 85% of streaming customers polled say that they are planning to keep the same number of subscription services even after the social distancing period ends. 

Moreover, the streaming time per user is rising as they are at home most of the time now. According to new data from 7Park, beginning mid-March, when the pandemic struck, streaming video on demand usage in the United States skyrocketed to nearly 600 minutes monthly from less than 300 minutes in June 2019. 

Streaming Services Poised to Grow

Almost all video streaming services companies have been witnessing a surge in new users and subscription. During its third-quarter 2020 earnings release earlier this month, The Walt Disney Company DIS reported that it now has 100 million paid subscribers across its streaming services, which include Disney+, Hulu and ESPN+. The company also revealed that the streaming service has amassed 60.5 million paid subscribers worldwide.

Last month, Netflix, Inc. NFLX released its second-quarter subscriber figures, which exceeded its own projections. The streaming giant gained 10.1 million paying customers in the second quarter, beating its own estimate of 7.5 million.

Also, Comcast Corporation’s CMCSA NBCUniversal launched it Peacock services last month, which gives the company the perfect opportunity to cash in on the coronavirus crisis by adding more subscribers. According to a recent report by Grand View Research, the global video streaming market size was valued at $42.6 billion in 2019 and will witness a CAGR of 20.4% between 2020 and 2027.

Stocks in Focus

Streaming services are among the rare few that are benefiting from the coronavirus pandemic, which has kept billions of people at home with nothing to do but stream. 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 8.7%. The Zacks Consensus Estimate for current-year earnings has improved 4.9% over the past 30 days. Apple sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Netflix, Inc. is considered a pioneer in the streaming space. It has been spending aggressively on building its original show portfolio. The company added more than 10 million paid subscribers in the second quarter.

The company’s expected earnings growth rate for the current year is 52.1%. Its shares have gained 18.2% over the past three months.  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 36.9%. The Zacks Consensus Estimate for current-year earnings has improved 58.33% over the past 30 days. Amazon carries a Zacks Rank #3.

Comcast Corporation’s 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 22.5%. The Zacks Consensus Estimate for current-year earnings has improved 2.1% over the past 60 days. It carries a Zacks Rank #3.

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