How to Analyze the Streaming War

Old and New Streaming Companies Vie for Viewers

People around the world have turned to streaming services during the pandemic to pass the time while practicing social distancing. The competition for their attention has been intense. More established streaming services like Netflix (NFLX) and Amazon (AMZN) have scrambled to maintain dominance, spending billions on content.

Meanwhile, newer services like Disney+ (DIS), HBO Max which is owned by AT&T (T), and Peacock which is owned by NBCUniversal (CMCSA), have seen their subscriber numbers pop thanks to exclusive content and marketing strategies. Other services like Quibi have shut down because they were unable to gain attention in such a crowded market.

Comparing Different Business Models

Each streaming service has a slightly different business model. Some hope to be a subscriber’s primary service while others aim to be a compliment to other platforms. Some offer free, ad-supported options while others are entirely focused on paid subscriptions. For people trying to compare streaming services for investment purposes, these different strategies can be confusing. But analysts do have some useful strategies for thinking about who is winning the streaming war.

Hitting 50 million subscribers is an important benchmark for newer services. As of last month, Peacock had 33 million and HBO Max had 37.7 million. As analysts consider the longevity of these platforms, they will be eager to see if they can reach 50 million subscribers over the course of 2021.

For context, Netflix currently leads the way with 200 million global subscribers. Disney+ is closing the gap, and currently has roughly 95 million.

Metrics for Success

Having a path to international expansion is also important. Especially for ad-supported services which will need to compete with Facebook (FB) and Google (GOOGL) for attention from brands, reaching viewers outside of the US will be essential.

Analysts also use ARPU, which stands for average revenue per user, to evaluate streaming services. They examine churn as well, meaning the number of people canceling their subscriptions during a given time period. As more people receive COVID-19 vaccines and eventually are able to do more activities outside their homes, investors will be eager to see which streaming services fall to the wayside and which ones are able to retain viewers’ attention.

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