The case for streaming stocks in 2024 may be summed up by the expression that the more things change, the more they stay the same. Millions of Americans have cut the cord only to find themselves with multiple streaming subscriptions to get a lot of content, much of which they don’t want to watch. In order to manage costs, they’re giving up an ad-free experience, which was supposed to be a benefit of moving to a streaming model.
Plus, this year’s National Football League season added to the frustration of many consumers who discovered that even though they had multiple streaming services, they had to have a specific streaming provider in order to watch a specific game.
These are predictable growing pains. They don’t mean the streaming model is going away. A study by Deloitte Insights reported consumers subscribe to an average of four streaming services.
But consumers are starting to see an evolution into streaming 2.0 that includes more bundling of services. Here are three streaming stocks well-positioned to compete and win in this evolving sector.
Netflix (NFLX)
What a difference a year makes. On March 10, 2023, you could have bought shares of Netflix (NASDAQ:NFLX) for less than $300 a share ($292.76). The company was facing a moment of truth that forced it to make decisions that were right for the business if not a little off-brand.
Specifically, the company launched an ad-supported, but low-priced base subscription. That was done, in part, so the company could crack down on password sharing. Analysts had mixed opinions on the company’s chances of making a successful pivot.
The company did. That speaks to the loyalty the Netflix brand has, particularly among millennials. It also highlights the company’s original content that consumers can’t seem to get enough of.
One year later, NFLX stock is over $600 a share. And with the company’s recent guidance for its operating margin, there are many reasons for investors to buy Netflix and chill.
Apple (AAPL)
Late last year, many analysts, such as Dan Ives at Wedbush, theorized that Apple (NASDAQ:AAPL) might be willing to take ESPN off Disney’s (NYSE:DIS) hands. But even if Apple doesn’t make that move, the company has made major advances in the streaming space.
One area where Apple has stood out among streaming stocks is its commitment — to date — to maintaining an ad-free experience. That, however, seems to be changing as Apple is “getting religion” from a series of ad execs it’s poaching from other companies. Conventional wisdom says Apple TV Plus will soon offer an ad-supported tier.
That may come sooner rather than later, particularly since the company recently increased the price of the streaming service by 31%. With the recent pressure on AAPL stock, the company doesn’t want to lose subscribers. Nevertheless, Apple has a surprising amount of original content and continues to make advances in the live sports arena, which is becoming a lucrative get for streaming services.
And it’s worth noting that Apple earns over $3,000 dollars a second. That means it brings a sizable amount of cash to this streaming war, should it wish to deploy it.
Disney (DIS)
The comeback at Disney has taken a while but now seems to be gaining steam. DIS stock is up 22% in the last 12 months, but that gain has come almost entirely in 2024, with the stock up 25% since the new year.
One catalyst is the company’s latest earnings report, which showed the company is finally starting to get all its parts firing together. And its Disney+ streaming service is a key cog in that flywheel. The streaming service contributed $8.4 billion of revenue for the House of Mouse in its last quarter. However, after peaking in November 2022, the number of subscribers to Disney+ has stagnated.
Disney is taking steps to remedy that. In late 2023, the company agreed to buy out Comcast (NASDAQ:CMCSA) for the rest of Hulu. Not surprisingly, that announcement came shortly after the release of the company’s Hulu, ESPN and Disney+ bundle. The company isn’t stopping there. Disney has recently made deals with both Fox (NASDAQ:FOX) and Warner Bros Discovery (NASDAQ:WBD). The net result will be a bundled live sports streaming service.
On the date of publication, Chris Markoch had a long position in AAPL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
