If You Want to Profit From Streaming Stocks, Remember This

The Streaming Stock Wars Are About Content

Something that many of the newcomer video streaming services have learned is that, in this world, content is still king. In that regard, old stalwarts of the industry remain on top.

Shares of Netflix Inc (NASDAQ:NFLX) gained about 23% in 2019, and the company continues to dominate the streaming wars despite having numerous new challengers. Why? Because Netflix is still producing the best television among the major streaming providers.

Chart courtesy of StockCharts.com

“Apple TV+” has all the resources of the mega-corporation Apple Inc. (NASDAQ:AAPL) behind it. But all that money and resources isn’t a substitute for good programming, and that is exactly what Apple TV+ is lacking right now.

Its major offering, The Morning Show, with big stars like Jennifer Aniston, Reese Witherspoon, and Steve Carell, has been dubbed a flop so far.

Meanwhile, The Witcher has been another smash hit for Netflix. The new fantasy-based show is aiming to fill the void left by the massively popular Game of Thrones, which ran on HBO for eight seasons.

Meanwhile, Amazon Studios, part of Amazon.com, Inc. (NASDAQ:AMZN), has acquired the rights to the immensely popular Lord of the Rings and plans to release a television show in 2021. This was one of the largest deals of its kind.

Which is to say that this is big business, but we already knew that. What investors want to know is which company will emerge on top in the streaming stock wars.

For anyone looking to get into streaming stocks, the best bet is to focus on content.

I don’t think Amazon, Disney, Apple, or others have what it takes to knock off Netflix. The thing is, Netflix has a proven track record of producing solid content.

Many of Netflix’s shows have been hugely popular around the globe, not to mention that it has done a good job of acquiring the rights to favorite TV shows like the The Office and Friends (although Friends is departing Netflix soon).

In a world where content is king, it’s clear that Netflix still has the advantage.

Apple TV+ is struggling to draw viewers. Meanwhile, “Amazon Prime” is making strong inroads with critics (this year’s Fleabag being a critical darling), but none of its shows have garnered widespread adulation from viewers.

Critical acclaim isn’t enough. You need the content that resonates with people if you want to get their subscription fees. Right now, Netflix is the only one that has it.

Which isn’t to say that other companies can’t challenge Netflix in the future. There’s a long way to go in the streaming stock wars, and the winner will likely see massive increases in share value.

Here’s another feather in Netflix Inc’s cap: the company has no backup plan.

Apple Inc., Amazon.com, Inc., and Walt Disney Co (NYSE:DIS) are not centered around streaming sites. In fact, all three companies could easily fold their streaming sites if things go south and be largely unfazed.

Netflix, on the other hand, does one thing. And if it fails at that one thing—or is out-fought for market share—then that’s it for Netflix stock. It will plummet.

So there’s really no retreat for Netflix. That doesn’t necessarily mean the company win the streaming stock wars, but it does mean it will fight that much harder for people’s eyeballs.

Apple has interests in everything from self-driving cars to continuing its dominance in the music industry.

Apple TV+ will never be the company’s primary source of revenue; and that’s okay. That’s not what it’s designed to do. Instead, Apple’s streaming service is intended to bolster the company’s brand while raking in a healthy amount of money.

Companies that put all their efforts into making great content—in this case, Netflix’s only path toward success—are going to dominate the streaming market.

For those looking to invest in streaming stocks, be sure to follow viewer ratings and other important metrics that have helped determine which major TV network was on top. Nowadays, they’re important metrics to determine which streaming stock will rise above the others.

That isn’t to say the companies mentioned above won’t see healthy stock gains in the future. For now, however, I anticipate that these streaming services likely won’t be winners until they can catch the eyes of Netflix’s over 158 million subscribers.

Therefore, investors might want to focus on streaming stocks that are on the newer side of things, and ones that are making big splashes regarding their content.

Analyst Take

The future of streaming stocks has gotten a lot more interesting lately, as many of the largest companies on Earth have now thrown their hats into the ring.

With Amazon.com, Inc., Walt Disney Co, and Apple Inc. all looking to challenge Netflix Inc to become the premier streaming stock, it makes sense that investors would worry that the age of Netflix may be coming to a close.

But I believe that this fear is short-sighted. Yes, the competition is the heaviest it has been for Netflix, but at the same time, the company continues to impress with strong content and relatively few misplays. Meanwhile, services like Apple TV+ have come out of the gate limping.

Streaming services that prioritize content will continue to dominate the industry. And their stocks, as a result, will likely flourish.