In recent years streaming stocks have experienced exponential growth as an increasing number of platforms vie for viewer attention. But amidst the intense competition, a few names have emerged as winners in a crowded market.
The advent of streaming platforms has ushered in a new era of television, transforming how we consume media by providing greater flexibility and personalized recommendations. Gone are the days when traditional broadcasting monopolized entertainment as streaming platforms gave television a new lease on life.
Today streaming services have a ubiquitous presence in our lives. Studies show that the average person spends three hours and nine minutes on streaming platforms every day. That translates to over 21 hours a week.
The sheer dominance of streaming is a testament to the shift in the media landscape and optimistic industry trends validate this transformation. The video streaming market is projected to grow from $674.2 billion in 2024 to $2,660.8 by 2032. That presents a compound annual growth rate (CAGR) of 18.7%.
For investors, the growth of streaming companies presents a tremendous opportunity to capitalize on the gains. Moreover, several streaming companies are also large-cap stocks, which tend to be more stable and reliable investments at uncertain times. On that note, here’s a look at three streaming stocks to buy this year.
Netflix (NFLX)
In a sea of streaming stocks, Netflix (NASDAQ:NFLX) remains the undisputed leader in the industry. The company has successfully overcome its challenges over the years, experiencing exponential growth in recent times. Today, the streaming service is home to more than 278 million paying subscribers.
To put things into perspective, many rival studios see licensing content to Netflix as a path to profitability. HBO has licensed shows such as “Six Feet Under” and “Band of Brothers” to Netflix, while Warner Bros Discovery’s (NASDAQ:WBD) “Young Sheldon” is also available on the platform. The licensing deals are a testament to the sheer dominance of Netflix in the streaming world.
Unsurprisingly, this has translated into substantial gains for the company. In its previous quarter, the company reported a 17% increase in revenue year-over-year (YoY), fueled by several hit television shows and a growing ads business. Building on the strong earnings, Netflix increased revenue guidance to 14% to 15% from 13% to 15%. It also leads in market share with a 22% slice of the streaming pie.
Netflix may dominate the streaming wars but still has significant growth potential, making this stock a compelling buy.
Disney (DIS)
Disney’s (NYSE:DIS) bread and butter is legacy media, but its transition to streaming was swift and impressive. Under Bob Iger’s leadership, the company rose to the top of the streaming market in a few short years. This was partly due to the serendipitous launch of Disney+ during the pandemic, which enabled the platform to amass 100 million subscribers in its first 16 months. Despite experiencing some fluctuations since then, the streaming business, including Hulu and ESPN+, remains a major growth driver for the company.
This was fairly evident in its recent earnings report. In its third quarter, Disney’s streaming business turned a profit for the first time. The three streaming platforms Hulu, ESPN+ and Disney+ generated an operating income of $47 million. The company attributes this to the success of its TV shows and movie releases. It expects profits to improve in the next quarter. Across all its business segments, Disney reported $23.16 billion in revenue versus the estimated $23.07 billion.
Disney’s growth potential with Disney+ and its diversified businesses makes DIS one of the most compelling streaming stocks on the market today.
Apple (AAPL)
Apple’s (NASDAQ:AAPL) Apple TV+ is a relative newcomer on the streaming stocks scene but has captured a sizable share of the market by emphasizing quality over quantity. As it stands, Apple TV+ holds a 9% share of the market alongside Paramount+ — an undoubtedly impressive feat for a company that has only been in the streaming business since 2019. The success can be attributed to shows like “Ted Lasso” and “CODA,” which won several awards.
The popularity of its shows has generated strong subscriber growth with an estimated 25 million paid users. As for the financials, Apple TV+, categorized under its Apple Services, reported $24.2 billion in revenue in Q3. This is a marked increase from $21.2 billion a year ago. Looking ahead, Apple is considering introducing an ad-based tier to the platform, which could significantly boost its bottom line.
The streaming business is certainly competitive, but Apple TV+’s focus on quality will forge its path to greater growth in the coming years.
On the date of publication, Divya Premkumar did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor held a long position in DIS.
