Did you know that 4 out of every 5 households in the U.S. have either a Netflix, Amazon Prime, or Hulu video subscription?
When you actually sit back and think about that, it’s pretty wild.
Before 2012, standalone streaming services didn’t exist.
Eight years later, they’re in basically every living room in America.
Make no mistake. The streaming TV revolution over the past decade has been one of the most rapid and widespread disruptions… ever.
But it’s not even halfway through…
That’s right. Although we are all binge-watching Queen’s Gambit today (great show, by the way), the all-encompassing streaming TV revolution isn’t even halfway done.
How is that possible?
Because most of us still haven’t cut the cord.
Over 60% of U.S. households still pay for cable TV, meaning the most common entertainment mix in America today is a Netflix subscription and a cable TV package.
You know why that’s the case… because we still like live TV shows, news, and live sports – three things which today’s biggest streaming services do not offer.
But that’s all changing…
Over the past few years, a new class of live TV streaming services has emerged, each of which package live TV shows, news channels, and live sports into a single, over-the-top streaming service.
Think YouTube TV. Sling. AT&T TV Now. Hulu with Live TV.
These are all streaming services which essentially take everything that linear TV offers, and “streamify” it.
Now, you can finally watch everything you want without needing a cable or satellite TV package.
Now, you can finally cut the cord.
And that’s exactly what you are going to end up doing – alongside every other person out there.
Because, across everything that matters, streaming TV is superior to linear TV.
It’s cheaper (YouTube TV costs $65 per month; your average cable TV package runs north of $100 per month).
It’s more convenient, cleaner, more flexible, easier to install, and easier to maintain.
Streaming TV is just better than linear TV.
That’s why, as soon as Netflix started offering us the same quality of content as Hollywood, we stopped going to movie theaters.
It’s also why, now that YouTubeTV offers us the same content as cable TV packages, we are going to cut the cord.
The financial implications of this mass cord-cutting over the next decade are enormous.
Of course, you’re going to see huge subscriber growth in these live TV streaming services. The market’s best pure-play for this explosive sub growth is fuboTV (NYSE:FUBO) – an emerging, hypergrowth live TV streaming company whose platform is the closest analog to cable TV today.
But, at a bigger picture level, you’re going to see a seismic shift in ad spending.
Each year, over $160 billion are spent on TV advertising. Because ad dollars chase eyeballs – and because most eyeballs are still stuck in the linear channel – most of that $160 billion pie is spent on linear TV ads.
In the US, less than 10% of TV ad dollars were spent in the streaming channel last year.
But… again… ad dollars chase eyeballs. And thanks to a new class of live TV streaming services, eyeballs are going to shift more rapidly than ever before into the streaming TV channel.
Ad dollars will follow suit.
The result will be a decade of hypergrowth in streaming TV ad spending.
What’s the best way to play this megatrend?
I’ll give you a few picks.
Roku (NASDAQ:ROKU) is a top-notch play on streaming TV ad spending, because the company has essentially created an indispensable platform protected by marketplace effects that is increasingly morphing into the “cable box of streaming TV”. Roku is thus strongly positioned to win a big share of streaming TV ad dollars over the next few years.
Magnite (NASDAQ:MGNI) is another interesting play here. The company provides programmatic ad tools for CTV ad inventory sellers. Essentially, Magnite helps platforms like Hulu, YouTubeTV, and fuboTV maximize the value of their ad inventory.
There’s also The Trade Desk (NASDAQ:TTD). The Trade Desk offers the same programmatic ad tools as Magnite, except on the buy-side of the market. The company helps ad buyers maximize the value of their ad spending. Trade Desk offers these services across all digital ad formats, but has developed a reputation for being particularly strong in the CTV world.
Between these three stocks and fuboTV, investors can guarantee themselves high-quality exposure to the hypergrowth streaming TV revolution of the 2020s.
And… in so doing… investors can turbocharge their portfolio with some of the market’s best hypergrowth investments.
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.
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