The quarterly reports from CBS, Viacom, and Walt Disney will decide who is taking over the streaming business. The competition between giants is increasing in this sector, as more platforms enter the market with original content.
Communication services are beating the market
The S&P 500 communication services index has increased by 20% year-to-date, while the S&P 500 has only moved up by 17%. The communication services business has beat all but two sectors of S&P, i.e., real estate and technology. The sector recovered mostly because of Facebook Inc. as investors expected the social network to grow by leaps and bounds, even if it faces regulatory pressures because of its digital currency and privacy issues.
However, with CBS Corp., Viacom Inc., and Disney ready to publish their second-quarter results, the new video streaming battles will be out in the open. All these companies are fighting against the market leader Netflix, whose stock has sunk 14% since it reported its second-quarter results on July 17. The company lost US subscribers unexpectedly in the second quarter, leading to investors worrying about the future, especially as Disney’s streaming service’s launch is just around the corner.
Disney+ all set to rattle the market
The family-friendly Disney+ streaming service on November 12 which will showcase some of the classic TV shows and movies by the company, including some new shows. Interestingly, it would include spin-off shows of Marvel’s comic book characters as well. Disney has already released four blockbuster movies this year, and its shares climbed 28%.
Horizon Investment Services’ CEO Chuck Carlson commented on the streaming wars,
“There is an analysis that has been going on among investors, looking at the number of subscribers Netflix has and the growth that Disney’s service could put up in the next three or four years, and the huge disparity in the two companies’ valuations.”
The difference between Disney and Netflix’s share price performance could foreshadow the fate of streaming services. CBS and Viacom, on the other hand, are working on an ad-supported and subscription-based model to compete with Netflix. They are also creating original content like Netflix.
CIO of Cresset Wealth Advisors, Jack Ablin said that Netflix’s box office disappointment shows the importance of the intellectual property. This is more important because Disney has a host of original shows and beloved movies that could easily take on Netflix. The company’s quarterly reports will shed more light on the scenario.
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