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ValueTheMarkets News Commentary - More than 3 billion people around the world streamed or downloaded video at least once a month in 2020 according to Statista, with this projected to rise to 3.5 billion by 2025. A number of companies are seeking to take advantage of this huge opportunity. This article discusses the issue with reference to Netflix (NASDAQ: NFLX), Walt Disney Co (NYSE: DIS), Amazon (NASDAQ: AMZN) and QYOU Media (TSXV: QYOU) (OTCQB: QYOUF).
QYOU Media (TSXV: QYOU) (OTCQB: QYOUF) operates as a media company. The business produces and distributes content created by social media influencers, artists and digital content creators on television networks, satellite television, over-the-top media and mobile platforms.
QYOU Media also manages influencer marketing campaigns for major film studios and key household brands.
The company primarily operates in India, where it aims to take advantage of rapidly increasing adoption of smartphone and smart TV technology. The business has launched five entertainment channels aimed at the young Indian demographic through its The Q India brand. These include its flagship channel, The Q, which was the fastest growing channel in the entire nation last year.
Viewers can watch these channels across a number of platforms, including QYOU Media’s free ad-supported QPLAY app, which allows users to tune into the company’s five different TV channels through smartphones or smart TVs.
Now, the business is expanding beyond video streaming too, having just acquired a controlling stake in mobile gaming specialists Maxamtech Digital Ventures. With KPMG estimating that more than 420 million Indians are online gamers, the business will be hoping this move will spur further growth.
QYOU Media’s Indian offering is growing alongside its revenue. Its most recent earnings update, which covered the three months ended 30 June 2022, saw the company return record quarterly revenues of CA$6.9m, which represented year-on-year growth of 163%.
Adjusted EBITDA loss also saw an improvement in the period, with a 33% reduction in loss. Net loss did widen by 7%, but the company attributed this to the launch of new channels and programming as the business rapidly expands its entertainment footprint.
Netflix (NASDAQ: NFLX) operates as a subscription streaming service and production company. The company offers a wide variety of TV shows, movies, anime and documentaries on internet-connected devices. It serves customers worldwide.
Netflix is a company synonymous with streaming, having revolutionized the way in which consumers consume entertainment in their homes.
The company’s most recent quarterly earnings showed something of a return to form though, with paid subscriber numbers climbing by around 2.4 million after two consecutive quarterly declines.
Even so, the company appears to have been spooked by the decline and the rate of growth seen in the most recent quarter is still far slower than Netflix had become accustomed too. This hardship has led the company to move towards some sort of ad-supported offering, while also seeking to block users from password sharing.
These moves will bolster existing revenue streams and add a new one as the business faces increasing pressure from competition. New subscribers could be attracted to the service by an upcoming cheaper $7 per month offering, which includes around five minutes of advertising per hour of programming.
However, the success of this significant change in the business’ model is yet to be determined.
Walt Disney Co (NYSE: DIS) operates as an entertainment and media enterprise company. The company's business segments include media networks, parks and resorts, studio entertainment, consumer products and interactive media. The business serves customers worldwide.
Another major player in the streaming landscape, with its Disney+ offering reaching 221 million subscribers in its most recent quarterly results to make Walt Disney Co the biggest streamer in the world.
The enormous growth of its streaming service has propelled major revenue growth for Walt Disney Co, with revenues climbing by an impressive 26% compared to the same quarter 12 months prior.
However, analysts have warned that the service could lose as many as 20 million subscribers in South Asia after it failed to secure the rights to the Indian Cricket Premier League.
Vivek Couto, executive director of Media Partners Asia, told Bloomberg: “IPL drives customer acquisition. It’s regarded as entertainment not just sports by Indian households - women and men.”
Perhaps this is part of the reason behind Walt Disney Co’s decision to follow some of its competitors in creating an ad-supported subscription offering, while also hiking the price for viewers who want to enjoy Disney+ without commercials.
Jeff Bezos’ Amazon (NASDAQ: AMZN) is an online retailer that offers a wide range of products. The company’s products include books, music, computers, electronics and numerous other products.
The business offers personalized shopping services, web-based credit card payment and direct shipping to customers. It also operates a cloud platform offering services globally.
Having made a name for itself in the world of ecommerce, Amazon entered the video streaming fray all the way back in 2006. The service has grown significantly, with its popularity bolstered by the fact that subscription includes faster ecommerce delivery options, as well as ebook, music and grocery shopping services.
But the company’s streaming service appears to be building its own successful niche within this array of services, with Prime Video shows securing 30 Emmy nominations during the company’s last full quarter.
Most recently, Amazon has been making entertainment news headlines with its Lord of the Rings prequel show The Rings of Power. The fantasy series, which has been promoted through an enormous deluge of marketing, reportedly cost as much as $1bn to produce.
Millions initially tuned in to the show but reaction from audiences has been mixed, with some reviewers comparing the show unfavorably with Peter Jackson’s film adaptations of Tolkien’s Middle Earth world or fantasy TV peer House of the Dragon.
This could indicate that the show may not drive subscriber growth as much as Amazon had been hoping.
ValueTheMarkets.com News Commentary
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