In this week’s edition of 4 Stocks This Week, we spotlight video streaming subscription providers available in Singapore.
Video streaming has been gaining widespread popularity with many of us owning at least one video streaming subscription. On the flip side, an increasing number of us are also cancelling our subscriptions with pay-TV subscriptions from the local telcos.
Source: Fitch Solutions
This theme is topical since Disney has now launched Disney+ in Singapore, with an $11.98 a month or $119.98 a year package. The other major video streaming networks will also not be a new names for us – Netflix, Amazon Prime (from Amazon), and HBO Go (from AT&T).
Disney (NYSE: DIS)
The newest player in the video streaming game is Disney+, carrying high-profile content from Disney (obviously!). Its content line-up includes well-known movies and programmes from Marvel, Pixar, Star Wars, National Geographic and Star.
When investing in Disney, we’re not just gaining exposure to its high-quality content and video streaming service, the business we invest in has five major business segments.
- Disney Parks, Experiences and Products – its theme parks, resorts, cruise line and vacation experience. It also includes consumer products, such as toys and apparel, books and videos games.
- Disney Media and Entertainment – comprising various direct-to-consumer streaming services. This business unit includes Disney+, ESPN+, hulu and hotstar.
- Content Groups – this business unit includes its 1) Studios Content such as Walt Disney Studios, Pixar Studios, Marvel Studios, LucasFilm (which creates Star Wars content), 20th Century Studios, its 2) General Entertainment Content, such as abc News, National Geographic, FX, hulu originals, and 3) Sports Content from ESPN.
In its latest 1st quarter 2021 earnings (ending 2 January 2021), its total revenue declined 22% to US$16.2 billion. This was mainly due to its Disney Parks, Experiences and Product revenue declining 53% to US$3.6 billion, which have been closed or operating at significantly reduced capacity on the back of continued COVID-19 safety measures.
Its media and entertainment distribution segment revenue dipped 5% to US$12.7 billion. This was due to content sales/licencing and other revenues. This was due to two things – 1) no significant theatrical releases of its content such as Frozen II and 2) a shift from licencing its content to its direct-to-consumer services, namely Disney+.
During the first two months of 2021, Disney’s share price has increased over 6% to US$189.04.
Netflix (NASDAQ: NFLX)
Netflix has been around for about for close to 25 years now. Its most recent 4th quarter earnings announcement, it delivered a 22% increase in revenue to US$6.6 billion. Netflix also announced that its paid subscriptions had crossed the 200 million-mark, after adding a record 37 million subscribers during its FY2020.
It currently forecasts its 1st quarter 2021 revenue to grow by over 7% to US$7.1 billion.
Netflix has also penetrated the Singapore market most significantly. According to a Fitch Solutions report, Singapore’s video streaming subscription space will continue to be dominated by Netflix. Netflix has also recently partnered with our state-owned MediaCorp and other local production houses to bring more locally produced content onto its platform.
When we invest into Netflix, we are gaining exposure to only the video streaming business. This is quite unique compared to the other stocks mentioned in the article.
Since the start of 2021, Netflix’s shares has climbed about 3% to US$538.85.
Amazon (NASDAQ: AMZN)
Amazon, which is known as a dominant e-commerce player globally, also offers video streaming subscription services via its Amazon Prime Video. In recent years, Amazon poured more resources into its video subscription services, planning to spend billions of dollars on content.
In its latest 3rd quarter results announcement (ending 30 September 2020), it recorded a profit of US$96.1 billion, which was over 37% higher compared to the previous year. Again, this revenue is for the group and not just its video streaming subscription service. Amazon is a behemoth of a company, and its Amazon Prime Video segment represents just a fraction of the company.
Amazon also announced Prime Gaming, a new service offering exclusive PC, console and mobile gaming content. This new services enables subscribers of Prime Video in over 200 territories to access for free.
Since the beginning of the year, Amazon’s share price has dipped about 3% to US$3,092.93.
AT&T (NYSE: T)
AT&T, more well-known for its telecommunications and broadband service in the US, also owns video streaming subscription service HBO Max.
In its latest 4th quarter earnings announcement (ending 31 Dec 2020) AT&T recorded a 2% drop in revenue to US$45.7 billion. In the announcement, AT&T also reported strong growth for its video streaming services HBO Max.
HBO Max has more than 41 million subscribers, a milestone number it has achieved 2 years faster than its initial forecast. According to its results announcement, HBO Max activations doubled since the 3rd quarter of 2020. Its total HBO subscribers worldwide numbered 61 million.
In the year-to-date, AT&T’s share price has declined nearly 5% to US$27.89.
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4 Stocks This Week is not a recommendation from us to buy or sell any of these stocks. For investors who are keen to find out more, you should continue researching about them before making your investment decisions.